As cities throughout the state look to require hazard pay for grocery employees, California’s grocery trade is pushing again.
Kroger, which owns a number of grocery store chains, mentioned Monday it could shut two shops in Lengthy Seashore in response to metropolis guidelines mandating an additional $4 an hour in “hero pay” for grocery employees in the course of the COVID-19 pandemic. The shops slated for closure are a Ralphs on Los Coyotes Diagonal and a Meals 4 Much less retailer on South Avenue, affecting 200 employees.
“This misguided motion by the Lengthy Seashore Metropolis Council oversteps the standard bargaining course of and applies to some, however not all, grocery employees within the metropolis,” Kroger mentioned in a press release. “The irreparable hurt that may come to staff and native residents as a direct results of the Metropolis of Lengthy Seashore’s try to choose winners and losers, is deeply unlucky. We’re really saddened that our associates and prospects will finally be the actual victims of town council’s actions.”
The announcement comes simply because the Los Angeles Metropolis Council plans to vote Tuesday on whether or not to pursue an analogous ordinance requiring a $5 an hour enhance for employees at grocery shops.
Lengthy Seashore has served as a form of take a look at case for hazard pay, as a number of cities in California, together with San Jose and Oakland, think about boosts for front-line employees as nicely. Santa Monica’s Metropolis Council voted final month to require “hero pay” for grocery employees, and the Los Angeles County Board of Supervisors has moved ahead with an analogous proposal.
Kroger spokeswoman Vanessa Rosales mentioned in an electronic mail the approval of hazard pay mandates for grocery employees in different cities might result in extra retailer closures. Rosales mentioned she couldn’t share specifics about how further pay affected revenue margins on the two shops however mentioned each had been already “underperforming” even earlier than the Lengthy Seashore ordinance went into impact Jan. 19.
The Ohio chain mentioned it has spent $1.3 billion to reward employees and to implement security measures all through the pandemic.
“Kroger’s choice is unlucky for employees, buyers and the corporate,” Lengthy Seashore spokesman Kevin Lee mentioned in a press release. Lee acknowledged that the 2 shops had been “long-struggling” and mentioned town’s workforce arm would help affected staff in accessing unemployment insurance coverage advantages, emergency healthcare protection, funding for retraining, talent improvement and job placement.
The California Grocers Assn., which represents about 6,000 grocery shops throughout the state, has opposed Lengthy Seashore’s efforts to spice up wages, submitting a lawsuit towards town in federal courtroom final month. Final week, U.S. District Choose Dolly M. Gee denied the commerce group’s request for a short lived restraining order to cease enforcement of the ordinance earlier than a courtroom might hear the case, and set a listening to for Feb. 19 on the affiliation’s request for a preliminary injunction to halt the regulation whereas the case is pending.
The ordinance, which is able to final no less than 120 days, applies to chain shops with 300 or extra employees nationally and with 15 staff per retailer throughout the metropolis, that commit 70% or extra of its enterprise to retailing meals merchandise.
Ronald Fong, president of the California Grocers Assn., has argued the measure is selective, singling out grocery employees for a pay improve at the same time as others — together with nurses, EMTs, restaurant employees and public security officers — work on the entrance traces. Fong additionally mentioned the ordinance did not mandate that the most important grocery retailers, together with Goal and Walmart, pay the additional $4. Goal confirmed that primarily based on its grocery gross sales, the Lengthy Seashore proposal doesn’t embrace its three shops within the space.
“You’re mandating a 30% elevate basically, placing grocers able to make some tough choices,” Fong mentioned. “Each single firm is frightened about this.”
Fong mentioned the affiliation would pursue authorized motion towards town of Los Angeles and different native governments, ought to they enact comparable guidelines.
Lengthy Seashore Councilwoman Mary Zendejas, who sponsored the Lengthy Seashore hazard pay ordinance, mentioned in a press release Monday that she was “extremely disenchanted” to study Kroger deliberate to shut two Lengthy Seashore shops, significantly provided that the Meals 4 Much less retailer serves low-income residents.
“It’s unconscionable that, as a substitute of doing the fitting factor, Ralphs and Meals 4 Much less would reply with litigation and retaliation towards Lengthy Seashore heroes,” she mentioned within the assertion.
It’s “particularly jarring,” Zendejas mentioned, that Kroger is insisting it can not afford Lengthy Seashore’s non permanent hazard pay ordinance contemplating the corporate’s third quarter income jumped practically $2 billion from 2019 to 2020.
Zendejas mentioned she had been inspired on the onset of the pandemic when grocery shops supplied hero pay to staff. Many have since ended these applications, even because the well being disaster has gotten worse, she mentioned.
“Grocery employees are stepping into each single day and risking their life being uncovered to the virus,” Zendejas mentioned in an interview final week. “Grocery companies are experiencing a increase of their trade, they’re making earnings, document earnings, on the shoulders of their staff, and they aren’t keen to share the earnings with them.”
Neil Saunders, an analyst at GlobalData Retail, mentioned that areas performing nicely ought to have the ability to soak up an additional $4 in pay for its employees, however for weak shops, an organization like Kroger might simply level to hazard pay because the “remaining nail within the coffin.” As a result of the grocery trade operates on skinny margins, a major pay improve is “definitely one thing that’s going to erode profitability,” he mentioned.
“Companies resent being informed what they should pay, and that may simply result in battle between politicians who make these guidelines and the businesses who should pay,” Saunders mentioned.
