As cities across the West Coast mandate extra pay for frontline workers, grocery chains are responding with lawsuits and store closures.
As cities across the West Coast mandate extra pay for frontline workers, grocery chains are responding with lawsuits and store closures.
February 25, 2021
Nearly a year into the pandemic, a new battle is brewing over grocery workers’ right to hazard pay.
Yesterday, the Los Angeles County Board of Supervisors voted 4-1 to give grocery workers a short-term $5 per hour pay increase, following the city of Long Beach’s approval in January of an ordinance that would require grocery stores with at least 300 employees nationally to provide their employees with an extra $4 an hour on top of their established hourly wages for a minimum of 120 days.
The same day Long Beach Mayor Robert Garcia signed the city ordinance into law, the California Grocers Association (GCA), a trade group representing the industry, filed for a preliminary injunction against the city of Long Beach. The group’s complaint claims that the ordinance preempts federal labor and equal protection laws, and violates both the U.S. and California constitutions. Arguments were heard in court yesterday and a decision is expected soon.
The lawsuit is likely the first of several to make its way to court. After the Long Beach city council amended the municipal code with their ordinance, other California cities and counties including Santa Clara, Montebello, Oakland, San Leandro, and West Hollywood passed their own “hero pay” ordinances. Each was immediately sued by CGA, and the Los Angeles measure will also likely be challenged in court.
In Washington State, leaders in Seattle and the neighboring city of Burien have also passed hazard pay ordinances, and both have been sued by industry groups there.
“A disproportionate number of people of color are essential workers, and Seattle must continue to lead the way to provide relief and respect to those that have served our community throughout this pandemic,” Seattle Mayor Jenny Durkan said in a press release prior to that city’s law going into effect.
These ordinances are shining one more spotlight on long-standing inequities exposed by the pandemic. While a number of companies provided their employees—who have faced unprecedented risks at work—with hazard pay last spring, most took it away a few months later, despite record breaking profits.
Other tensions between the food industry and labor have also recently made the news. For instance, Albertsons (which owns Safeway, Vons, and other grocery stores) announced that it would eliminate in-house delivery and personal shopper positions in favor of third-party gig workers in California at the end of February. And fast food workers across the country went on strike last week to demand a hike to the minimum wage.
This week’s trial could set an important precedent. If the ordinance stands, the practice of giving workers hazard pay could spread, and possibly fuel a widespread push for higher wages and better working conditions. But a decision against the Long Beach ordinance could put a stop to the practice.
“We need some sort of policy and some sort of financial compensation for workers who are risking their health every single day.”
“These policies are critical,” says Sylvana Uribe, a communications specialist with the Los Angeles Alliance for a New Economy (LAANE). The organization works alongside community and labor groups to protect workers’ rights and dignity, in an area hard hit by COVID. “[W]ith new variants of the virus emerging, we need some sort of policy, and some sort of financial compensation for workers who are risking their health every single day.”
Although rates of COVID infections are falling and vaccinations are picking up, Uribe doesn’t think that the hazard pay ordinances have come too late. “This virus is here to stay for a bit longer. There’s some uncertainty around that, but having some sort of safety net is something that these workers and communities can count on.”
The hazard pay ordinances vary slightly from place to place. In addition to the Long Beach ordinance, one in Oakland would offer a bonus of $5 an hour, applicable to employees at stores larger than 15 thousand square feet owned by companies with at least 500 employees nationally. That ordinance will remain in place until Oakland drops into the lowest “yellow tier” of California’s COVID-19 risk assessment.
The Oakland ordinance also includes a waiver for collective bargaining agreements. However, the CGA lawsuits specifically cite federal labor laws as evidence that these local ordinances are illegal.
While the ordinances differ, proponents see them as necessary and justified. Large supermarket chains have profited handsomely during the pandemic. According to a November 2020 report analyzing top national grocery and retail companies released by the Brookings Institution, the big three grocery chains—Walmart, Kroger, and Albertsons—took in $6.8 billion more during the first three quarters of 2020 than the year previous.
But those profits haven’t gone to frontline staff. The report also found that the big three grocery chains averaged only $.76 an hour in bonus payments to their employees.
Regardless of their pay, grocery store clerks are working in high-risk environments. According to the United Food and Commercial Workers International (UFCW), a union representing some 835,000 grocery store employees in the U.S. and Canada, 109 of their members died, and more than 17,400 were infected with COVID by the end of 2020.
“The pandemic has created windfall profits for these companies and those profits were earned by these brave workers. Now is the time for these companies and our elected leaders to do what is right.”
Many national grocery chains voluntarily paid hourly hazard wages early in the pandemic. But the trend began to lose steam in the late spring and early-summer as company after company quietly eliminated their bonuses. Grocery store employees continued showing up to work in increasingly dangerous and challenging work environments as cases surged across the country during the devastating fall and winter months. Their paychecks didn’t reflect the new reality of widespread infections and deaths.
The chapters have also worked to paint a picture of profitable corporations capitalizing on a beleaguered workforce. And the bonus pay ordinances are a sign that local governments are slowly responding to the political pressure.
“[W]e are urging CEOs of major food and retail companies to finally accept their responsibility and provide hazard pay for these brave workers,” UFCW president Marc Perrone said in a statement. “The pandemic has created windfall profits for these companies and those profits were earned by these brave workers. Now is the time for these companies and our elected leaders to act and do what is right.” (The UFCW did not respond to requests for comment.)
The CGA lawsuits aren’t the only sign of opposition to the union’s push for hazard pay.
In a statement, Long Beach Area Chamber of Commerce CEO Jeremy Harris said, “While we applaud and appreciate all efforts by Long Beach grocery workers throughout the coronavirus pandemic, the premium pay for grocery workers ordinance has been rushed and inadequately studied.”
A Los Angeles Times editorial called bonus pay ordinances unfair for favoring grocery store workers at large chains who are more likely to be unionized, excluding those at smaller stores, and essential workers in other industries.
In a letter to Long Beach Mayor Garcia after mandated hazard pay was first recommended by the city council, CGA Director Tim James questioned the value of mandating bonuses only for grocery workers. He wrote, “The recommendation limits its scope to only a small subset of essential critical infrastructure workers and ignores all other workers interacting regularly with the public in the same manner. As we all sadly know, COVID-19 impacts do not discriminate in any way.”
The day the Northwest Grocery Association (NWGA) jointly filed a lawsuit against Seattle’s bonus pay ordinance, the organization issued a press release. In it, President Amanda Dalton took a similar approach, suggesting that the ordinance was unfairly leaving out some workers. She said: “[O]ur expectation was a well-earned priority position for all essential workers when vaccines became available. Instead, the city council singled out some grocery workers for an increase in pay, while ignoring all other essential workers.”
Opponents have also argued that mandatory bonuses would ultimately hurt grocery workers, and their home communities. In a statement CGA President Ron Fong said, “[T]here will be significant potential negative consequences and would likely result in higher costs for groceries and increased food insecurity that disproportionately hurts low-income families, seniors, and disadvantaged communities already struggling financially. These proposals could also harm grocery workers themselves if stores are forced to reduce jobs or hours for employees due to higher costs.”
A study funded by CGA and conducted by Capitol Matrix Consulting supports that statement. It found that following a profit spike in the middle of 2020, grocery industry profits began trending downward. Researchers claimed a $5 hourly bonus would increase an average family of four’s grocery bill by $400. Alternately, if the increase in wages were not passed onto consumers, the study said that a 22 percent cut to staffing would be required to offset the new costs.
Uribe of LAANE doesn’t buy the argument that grocery store companies can’t afford to cover hazard pay bonuses themselves. “It comes down to corporate greed, putting profits over people,” she says. These companies have brought in enormous profits throughout the pandemic and they have the means to pay their workers a $5 hazard pay.”
The fight over compulsory bonus wages took a dramatic turn on February 1, when Kroger announced the April 17 closures of one Ralph’s location and one Food 4 Less location in Long Beach in response to the local ordinance. According to the company, some 200 employees will be reassigned or laid off between the two stores.
Long Beach Councilwoman Mary Zendejas, who proposed her city’s ordinance, saw the move as a political ploy. “Our Long Beach grocery workers are disproportionately low-income residents of color and oftentimes immigrants like my family and I,” she posted on Facebook. “[The fact] that corporations, who are making record profits, would rather use their health and livelihoods to make a point than pay them is just despicable and destructive.”
“These shutdowns place the blame on the cities passing hazard pay, place the blame on workers who want a few dollars’ increase for their labor during a pandemic.”
In an emailed statement from Kroger indicated that the two stores were “underperforming,” and that the anticipated 20-30 percent increase in operating costs could not be sustained. Six other Kroger- owned markets will remain open for business in Long Beach, however.
“These shutdowns place the blame on the cities passing hazard pay, place the blame on workers who want a few dollars’ increase for their labor during a pandemic,” says Uribe. “Companies aren’t willing to take responsibility for being able to actually provide this pay. They’re just placing the blame and using this as intimidation for asks that are quite warranted.”
“To be clear, we’re not opposed to wage increases,” a Kroger spokesperson told Civil Eats. “We’ll continue to operate stores in both cities, and our associates will receive the additional pay as mandated by the local government.”
Andrea Zinder, president of the UFCW Local 324, is quoted in the Long Beach Post as saying, “Sales at both these stores increased 30 percent during the pandemic.” She goes on to accuse Kroger of closing the stores to send a message to other cities considering similar ordinances.
Kroger recently announced that they will also be closing two “underperforming” QFC locations in Seattle, noting that the average hourly wage for Seattle QFC employees is already roughly $20, and that Kroger is offering $100 incentives for employees to get vaccinated as well as a $50 million rewards package of store credits and points.
The Seattle ordinance was signed into law on February 3 by Mayor Jenny Durkan. Employees of grocery stores employing 500 worldwide and larger than 10,000 square feet, or retailers over 85,000 square feet with at least 30 percent of space set aside for groceries, are now entitled to an additional $4 per hour until the city ends its COVID state of emergency.
That same day, Seattle and neighboring Burien, which is mandating a $5 hourly bonus, were hit with lawsuits by the NWGA and the Washington Food Industry Association (WFIA). In a press release, WFIA President Tammie Hetrick said, “If the City Council had requested input from grocers, they would have seen real data that almost all the individual stores in Seattle experienced significantly decreased sales and profits compared to the year before.”
The lawsuit mirrors those being filed throughout California—it claims the law is unconstitutional and supersedes federal labor laws. But this is not the first time that Seattle has legislated wages, which began an incremental increase back in 2014 after a successful Fight for $15 battle.
The ordinances target large-scale national chains which are more likely able to absorb increased labor costs. But in Seattle local co-op PCC Community Markets, a 15-store chain spread throughout the metro region, also falls under the mandate. Just before the ordinance was to go into effect, company CEO Suzy Monford wrote the mayor asking that the ordinance be revised or stricken altogether, claiming that PCC would be unable to offset bonuses, citing that the company incurred almost double their 2019 net income in COVID expenses.
But, in an about face illustrating the tricky politics of local business, PCC announced that it was negotiating with its workers representative with UFCW Local 21 over extending the bonus pay to roughly 700 hourly staff employed outside Seattle city limits. A deal was struck February 10, with the union agreeing to consider implementing curbside pickup.
Not all national supermarket chains have responded to the increasing demand for compulsory hazard pay bonuses with store closures or political pressure. For instance, Trader Joe’s hasn’t stopped paying the $2 hourly bonus it implemented early in the pandemic. On February 1, the company doubled its existing “thank you” premium, paying an extra $4 an hour to all non-management workers.
“[I]t’s clear that some companies are stepping up to do the right thing for these essential workers,” UFCW president Marc Perrone said in a statement.
But it is not yet clear whether other companies will step up if local hero pay ordinances are defeated in court. If they do pass these first legal hurdles, pressure will grow on the private sector to act of their own accord.
Although not mentioned publicly, a letter to staff obtained by The Seattle Times, and purportedly signed by Trader Joe’s executives, cites the local ordinances passed in California and Seattle as reasons for the increased bonus. The company concluded that not providing raises where ordinances go into effect would be unfair to employees working in those cities.
But even if the Long Beach court rules that hazard pay bonuses are illegal, Uribe believes that there’s still a lot of energy and support behind them. “Communities have stood by workers, so I still anticipate some sort of push back to in some way bring dignity to these jobs,” she says. “I don’t know that the fight would be over.”
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