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Pandemic Pay Increases Set for Court Battles

Pandemic Pay Increases Set for Court Battles
Food retailer operators worry that local pay mandates will result in more store closures and other consequences.

The pandemic pay mandate issues keeps escalating, with federal lawsuits being filed against local governments passing such laws.  

The California Grocers Association (CGA) says it has filed federal lawsuits against the City of Oakland and City of Montebello — both in California — to challenge ordinances approved by them mandating an additional $5 per hour in extra pay for a select group of grocery store employees.

Meanwhile, the Northwest Grocery Association (NWGA) and the Washington Food Industry Association (WFIA) have filed a lawsuit against the City of Seattle challenging an ordinance approved by the Seattle City Council that took effect Feb. 3. The ordinance mandates extra pay of $4 per hour for many grocery store employees

“In addition to clearly violating federal and state law, the extra pay mandates will harm customers and workers,” said Ron Fong, president and CEO for CGA, reflecting the common complaints against these expanding pay mandates. “A $5/hour mandate amounts to a 28% average increase in labor costs for grocery stores. That is too big a cost increase for any grocery retailer to absorb without consequence. Options are few. Either pass the costs to customers, cut employee or store hours, or close. Already two stores closed in Long Beach after the city enacted a $4/hour pay increase. Nearly 200 workers lost those jobs.”

Fong was referring to the recently announced closing of two Kroger-owned stores in Long Beach. The stores scheduled to close are: The Ralphs store located at 3380 N. Los Coyotes Diagonal, and the Food 4 Less store located at 2185 E. South Street. The two closures decrease the chains’ store count by 25% in Long Beach.

A recent study found that extra pay mandates of $5 per hour could raise consumer grocery prices by about $400 annually for the typical family of four, according to the CGA. Alternatively, if grocers were forced to find offsetting savings in operational costs, it would mean a 22% across-the-board reduction in work hours, hurting the very workers these proposals aim to help, the group said.

The Oakland and Montebello lawsuits allege similar violations of law as the Long Beach case filed by CGA on Jan. 20.

The group claims that the extra pay mandates are illegal in two main ways: 1) By singling out certain grocers and ignoring other groups that employ essential front-line workers, the Ordinance violates the U.S. Constitution and the California Constitution’s Equal Protection Clauses, which require similarly situated people to be treated alike; and 2) the Ordinance is preempted by the federal National Labor Relations Act, which protects the integrity of the collective-bargaining process. The causes of action against Oakland and Montebello are the same.

The Seattle lawsuit makes similar claims.

Unfortunately, the council's unprecedented ordinance, its unilateral action, and unwillingness to work with the grocery industry has left us with no other option than to file a lawsuit against the city,” said Tammie Hetrick, president and CEO of WFIA.

The first hearing in the Long Beach case is set for Feb. 19.

The suit against Oakland was filed in the Northern District of California and the suit against Montebello was filed in Los Angeles federal court. Both ask the courts to declare the ordinances invalid and unconstitutional. Neither city offered an immediate response to the suite.

“Grocery store workers are front-line heroes, and that’s why grocers have already undertaken a massive effort to institute measures to make both workers and customers safer in stores,” said Fong. “Firefighters, police officers, health care workers, as well as transportation, sanitation and restaurant workers are essential, yet grocers are the only businesses being targeted for extra pay mandates. These ordinances will not make workers any safer.”

Not all food retailers are waiting for mandates to increase pay for workers.

Trader Joe’s recently announced that it began paying hourly employees an additional $2 per hour at the beginning of the pandemic. Effective Feb. 1, Trader Joe’s said the “thank you” premium for all hourly, non-management crew members was increased by $2, for a total of $4 an hour.

With more than 500 stores in 40-plus states, Monrovia, California-based Trader Joe’s is No. 28 on The PG 100, Progressive Grocer’s list of the top food and consumables retailers in North America. Cincinnati-based Kroger employs nearly half a million associates who serve 9 million-plus customers daily through a seamless digital shopping experience and 2,800 retail food stores under a variety of banner names. The company is No. 3 on The PG 100 list.

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