Coronavirus

Mandated Pandemic Hazard Pay for Grocery Store Workers Prompts Store Closures, Lawsuits

California grocers have filed three lawsuits against local laws requiring "hero pay" during the pandemic.

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California's grocers are up in arms about city-level hazard pay laws that require them to compensate employees with "hero pay" wage premiums during the pandemic.

The California Grocers Association (CGA) has filed several suits in federal court to overturn these laws, while individual companies have announced that the new costs are forcing them to close stores.

On Wednesday, the CGA filed a lawsuit challenging the City of Oakland's ordinance. The law, which passed on Tuesday and goes into effect immediately, requires some grocers to pay their workers a $5 hourly premium on top of whatever wage they were making before.

The law applies to employees at any "large grocery store," defined as any store with at least 15,000 square feet that "sells primarily household foodstuffs for offsite consumption." The law only applies to stores operated by companies with 500 or more employees nationwide.

Employers will be on the hook for that hazard pay until Oakland qualifies for the "yellow" tier in California's Blueprint for a Safer Economy reopening scheme, which places counties in one of four color-coded tiers based on the severity of the pandemic. Yellow, the least restrictive tier, is supposed to indicate minimal spread of COVID-19.

The CGA's complaint makes two arguments against Oakland's hazard pay law. One is that it's preempted by the National Labor Relations Act. Another is that the law violates the Fourteenth Amendment's Equal Protection Clause by requiring only some grocery stores to pay the extra $5 an hour.

This, the suit says, has nothing to do with the city's stated goals of protecting workers and everything to do with rewarding a connected interest group of employees represented by the United Commercial and Food Workers (UFCW).

"By design, the Ordinance picks winners and losers. It singles out large grocery companies with unionized workforces (i.e., UCFW 5's members) without providing any reasonable justification for the exclusion of other employers or frontline retail workers," reads the complaint. "The City's stated objectives are merely an attempt to impose a public policy rationale on interest-group driven legislation for labor unions."

The CGA has raised near-identical claims in two other lawsuits. One was filed against the city of Long Beach last month. The other, launched yesterday, targets the city of Montebello. Both jurisdictions are requiring grocery stores to pay workers an extra $4 per hour in hazard pay.

On Monday, the grocery store chain Kroger's announced that it would be closing two grocery stores it operates in Long Beach, a Ralph's and a Food 4 Less, because of the increased costs imposed by the city's hazard pay ordinance.

A spokesperson for the company told the Los Angeles Times it had already spent $1.3 billion throughout the pandemic on bonus pay to workers and on safety measures to protect employees. From March through May of last year, the company provided a $2-an-hour pay bump, which was replaced by one-time bonus payments later that year.

Those store closures haven't dissuaded cities from moving ahead with their own hazard pay laws. Proponents argue any store closures are just a scare tactic.

"They absolutely can afford this increase," Los Angeles Councilman Paul Koretz said at the Tuesday city council meeting where a $5 hazard pay increase for grocery store workers was approved, reports the Times. "They absolutely should be paying this increase. And if they shut down stores, it's just out of spite."

It's a strange theory that grocery stores are greedy enough not to want to pay out hazard pay, but not so greedy that they don't mind shutting down profitable stores out of "spite."

The more likely possibility is that companies are shutting down stores that can't absorb a sudden, massive increase in their labor costs.

Grocery store workers are obviously operating under increased risks during the pandemic, and there's an understandable desire to want to reward them for that extra assumption of risk.

But COVID-19 doesn't eliminate the trade-offs and unintended consequences that come with top-down wage controls.

Some grocery store workers will see pay increases under these policies, while others will lose their jobs or have their hours cut. Consumers, many of whom are themselves struggling with the pandemic's economic fallout, will absorb these pay increases through higher prices or avoid them by shopping at stores that aren't subject to the mandates.

Even in a pandemic, central planning is hard.

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  1. So Councilman Koretz is of course doing the right thing and opening his own grocery store? And already voluntarily paying his workers that “hazard” pay, right?

    After all, if running a grocery store is so easy and so lucrative, he must be willing to put his money where his mouth is.

    1. Yep, and he also sold his home for 1/4 market rate to prevent gentrification, and he kept his white children out of college to make room for racial minority kids (but not asians, they’re super-whites).

      1. He didn’t sell his home. He turned it into a rental and is now not collecting rent to help his tenants, because it’s self-evident that if we have a pandemic and the government enforces a lockdown, the costs should be paid for by landlords.

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  2. The people who wrote the Oakland law admit in the body of the law that the law creates a sizable burden.

    Or are they saying that workers at stores who are associated with entities with less than 500 people nationwide are just simply less “heroic” than people that work at big places?

    If you really believe your bullshit then it applies to everyone. Otherwise you’re simply admitting that it’s a shakedown.

    1. That is typical Oakland. This is the same city that required cannabis businesses to take on a felon or person of color as an equity partner in order to get licensed.

      1. Wait, I thought, like Twitter, that these were private businesses and could do as they like, and surely hire who they like?

      2. Does a felonious POC count double? If not, why not?

        And is it as an equity partner or “Equity” partner?

        Being Woke is so confusing. And It’s not fair!

  3. I think grocery stores tend to run pretty tight margins, like 3-4% profit and make their dough on the fast nickel. The nickel probably climbed to about 7 cents or maybe a fatter dime during the pandemic, just because supply and demand, but there were other expenses added. Extra peeps to wash carts, masks in some, plastic sneeze guards at every register, little round signs to keep people at bay. I’m sure that chipped away at whatever extra the groceries enjoyed. Let the market balance the scales if this is how gov wants to force its will. Again.

  4. “Grocery store workers are obviously operating under increased risks during the pandemic ….”

    LOL

    Okay.

    1. And yet, somehow, bars, schools, churches, restaurants, political rallies, and private are the unquestioned source of any surges or outbreaks.

      We aren’t sure where the surges are originating, so we need more testing and contact tracing to tell us that the parts of the economy we can seize control of and shut down are the right places to do so.

      1. Private gatherings, that is.

  5. Drumpf losers.

  6. They are. That’s pretty obvious.

    Are you really asserting otherwise? That’s kind of ridiculous. Their odds of catching a very communicable disease that can do a lot of damage is seriously elevated.

    1. LOL

      Okay.

    2. Their odds of catching a very communicable disease that can do a lot of damage is seriously elevated.

      If true, then closing Churches, where groups of like-minded individuals congregate once a week and attempting to ban family gatherings, where *families* congregate every couple months is relatively pointless.

      If the disease were really killing normal people at an alarming rate, grocery workers simply wouldn’t show up both because it would be too risky *and* customers wouldn’t be showing up to make it risky.

      1. The only thing “obvious” about any of it, is that it’s complete bullshit.

        1. Idiot.

          1. Fuck you.

            I work in a grocery store.

            1. That explains your superior epidemiological knowledge.

    3. They are at no greater risk than anyone else working in retail or hospitality, and yet this hazard pay only applies to grocery workers and only those at stores that are more likely to unionized

      1. You’re right. I think the hazard pay laws are silly.

        But to say that they haven’t been exposed to more risk than before the pandemic is stupid too.

        1. Is that what your helicopter moms raised you to believe?

        2. Everyone has been exposed to greater risk. Maybe we should add hazard pay to Social Security payments, since they are among the highest risk

          BTW I work in the IT department of a hospital and I’ve had to do work in the CoVid ward a few times, no one offered me hazard pay (and I didn’t ask for any either)

        3. My friends who work for Kroger got pay raises for months for “hazard pay”, as well as a bonus recently.

          No need for government to force them at all.

  7. It’s easy to be generous with OPM.

    1. It’s illegal to sell OPM, so most folks just give it away.

      1. OPM is so plentiful it’s usually distributed via helicopter drops.

    2. You must have missed up above where I expressed disagreement with the law.

  8. “By design, the Ordinance picks winners and losers. It singles out large grocery companies with unionized workforces (i.e., UCFW 5’s members) without providing any reasonable justification for the exclusion of other employers or frontline retail workers,” reads the complaint.

    Close the store until the threat level drops. That’ll get UFCW’s attention.

    1. Yeah, just frame it that way instead of cost savings (or “spite” as the councilman calls it).

      COVID has been here nearly a year and only now does it warrant $5/hr hazard pay, it must mean some new threat has been identified. Out of an abundance of caution and in the interest of the safety of their employees they need to shut down until they know more about this new threat. Wouldn’t want anyone’s grandma to die, would we?

      1. I’d say flat out that I was doing it out of spite. That might explain why I’m not CEO of a grocery store chain.

        1. “Why am I closing? Because fuck you, that’s why”

    2. Clearly that’s the safest thing to do, much less risk of catching covid when you stay home

  9. > Even in a pandemic, central planning is hard.

    Even in a pandemic, central planning is stupid. Even in a pandemic, central planning is wrong.

    City council members like woodchipper posterboy Councilman Koretz don’t have the expertise to centrally plan prices, and it’s doubtful he’s even bothered to look any balance sheets. He’s just a petty tyrant wagging his petty dick to pretend it’s bigger than it is.

    1. Even in a pandemic, central planning is hard.

      Which is why politicians are proposing a $500K/year “hero pay” for elected officials. So brave.

    2. Mercilessly lobbying for the central planners for the last year makes your criticism ring hollow. You and sarc don’t get to pretend to be libertarians now.

      1. Trump isn’t libertarian and Trumpists are not libertarian. Being against Trump and being for Biden are two different things.

        But you wouldn’t be a Trumpist if your brain could comprehend issues outside of simple dichotomies.

        1. So, you’re for Biden then?

        2. I wouldn’t be a Trumpist. Biden is a central planner, so my comment is good and your criticism earns you $.50. Ching!

          1. Does being a fifty center count as owning your own business?

        3. “…Trump isn’t libertarian…”

          No he isn’t. He’s simply the closest we go in the last hundred years. And neither are you; you’re a fucking TDS-addled lefty shit

      2. What an ass. I have been against central planning since I was first subscribed to Reason. Back when Manny Klausner collected my subscription fee. So fuck off slaver.

        1. Next time don’t lobby for the party that defines themselves as central planners, bitch. You outed yourself.

    3. When a person is hung like a dust mite, as Los Angeles Councilman Paul Koretz is rumored to be, it’s easy to understand why they got into politics.

    4. I’d adjust your comment slightly to ESPECIALLY in a pandemic, central planning is hard.

  10. A spokesperson for the company told the Los Angeles Times it had already spent $1.3 billion throughout the pandemic on bonus pay to workers and on safety measures to protect employees.

    The lesson the government wants to teach businesses here is to never do the right thing for your customers or employees until it has been made mandatory. Only the government can decide what is best, and only the government will get to take credit. Doing the right thing on your own will not lessen the punishment that will be inflicted upon you. If you do it on your own, you bear the blame if you have to pay it twice.

  11. This, the suit says, has nothing to do with the city’s stated goals of protecting workers and everything to do with rewarding a connected interest group of employees represented by the United Commercial and Food Workers (UFCW).

    I’m sure the rewarding their friends is no small part of the scheme, but how you going to pretend that we’re in the midst of the Black Death unless you ratchet the panic up to eleven? Doesn’t the fact that so many essential workers are just expected to go about their jobs as if the Black Death were no big deal sort of betray the fact that our Lords and Masters don’t really believe we’re in the midst of the Black Death just as surely as every goddamn time one of them is caught violating one of their own “public safety” orders? They suddenly just realized that if they expect anybody to believe their hysteria theater, they’d better start acting like there’s something to be hysterical about.

  12. Has Reason talked about the insurance ruling from the courts recently? The gist is that insurance has to pay for losses during the pandemic, because the losses were not caused by the virus, they were caused by government fiat.

    1. Government is a virus. Loopholes, loopholes.

  13. Maryland is looking at a broader law (most employers – not just retail/grocery) but they are also smart enough to make it retroactive to the beginning of the pandemic (emergency) – If passed, HB 581 would require employers to pay workers defined as essential an additional $3 per hour in hazard pay dating back to the start of a state of emergency.

    1. Now THAT could put a TON of people out of work. Maybe enough to keep them from pulling that D lever.

      1. Who doesn’t love surprise retroactive operations costs?

  14. Profit = Revenue – Expenses
    Profit Margin = profit/expenses

    The US national average profit margin for retail grocery stores is 0.5%. Yes, just one half of one percent.

    For most retail grocery operations, labor is the single biggest expense.

    The idea that retail grocers can just absorb a significant artificial increase in their payroll costs isn’t just nonsense, it’s down right delusional.

    1. Error correction, profit margin is profit/revenue not profit/expenses.

    2. Look at this guy using his racist math to support the spiteful decision not to pay the brave heroes at the *checks notes*… deli counter.

    3. well the city can just mandate that the stores stay open, and mandate the staffing levels and pay. but then they would have to mandate the prices they can charge and what their suppliers can charge them, to make sure the store can afford to stay open.

      and then everybody would starve, except the politicians setting the pay and price controls.

    4. And these low profit margins are an indicator of why they might be quick to pick up and leave for financial reasons – not out of spite. A better indicator of the financial success of an operation is return on capital. Grocery stores can be successful operating at very low profit margins because they have very low capital intensity. So if the store isn’t profitable they can shut it down without a big asset write-off, which public companies are loath to do, and if desired start a new one in a better location without the need for a lot of investment.

      1. “And these low profit margins are an indicator of why they might be quick to pick up and leave for financial reasons – not out of spite…”

        I’d bet that any and all closings have nothing to do with spite; those companies are charged with making money for the stockholders.
        If they could do so by swallowing a huge increase in labor costs, I’m sure they would, regardless of any dislike.
        Our company certainly would; regaining that clientele when/if you reopen 6 months later is going to take some serious up-front loses.

  15. Hazards? What hazards?
    The CDC, and on alternate days Fauci, have assured us THE SCIENCE says if they wear a mask, they are safe as can be.
    One might begin to think perhaps the democrats are using COVID as a smokescreen for fascism.

  16. Don’t give a sh*t about CA; Just don’t run from the responsibilities of creating the h*llhole ya’ll have created unless you’ve learned better.

  17. Cali gets what it deserved. They adopted the liberal leftie policies and got burned. Being left is wrong. Deal with that problem first.

    1. Only because we allowed progs from the lower 49 to move here. When this state was native Californians and immigrants we did just fine.

      Deport or shoot the losers from the lower 49 and this state will go back to being pleasant.

      1. There isn’t anything “lower” to CA except Mexico. In fact CA has so many illegals JUST the illegals represents anywhere from 2 to 6 extra U.S. congressmen for CA.

        But you make an interesting question; where did all the progtards come from? In my family they all came from getting GOV paid jobs. Nothing makes a socialist like a weekly paycheck of other peoples money.

  18. This article makes me want to start a nonprofit that collects money for low-income workers in grocery stores, the hospitality industry, and liquor stores (the most essential of all!). I’m happy for the guy checking my groceries to get more for working in this mess, but if it’s mandated to come from the employer, I won’t be able to find/afford groceries.

    Nice that local stores are exempt from the rule, which makes zero sense. They face the same risks.

    So perhaps the solution is to collect funds to distribute – money coming from people who willingly donate (and I suspect many people would give).

  19. The problem is not the hazard pay! It’s that prices do not reflect the hazard pay. Obviously, California needs to nationalize prices statewide. Not only will these price adjustments help grocers pay their workers a living, honest wage, but it will make pricing transparent and consistent across the state. It doesn’t matter if you live in Bakersfield or San Francisco – a dozen eggs is a dozen eggs, and should be the same price EVERYWHERE.

    1. Well your dozen eggs is the “same price” as whatever you are comparing it to —- WHEN YOU drive there and go get them.

  20. California wants to make sure food is still available during a pandemic, therefore, it made the distribution of food much more expensive.

    What doesn’t make sense?

  21. Their hazard pay is having a job.

  22. Politicians once again proof they are stupid.

    Grocery stores have had to deal with all kinds of added costs. They have had to purchase large amounts of disinfectants and have to pay to disinfect the store EVERY DAY. They’ve had to deal with all manner of supply chain problems. Constantly changing orders from state and local governance to update protocols, change hours of operation, give away shopping bags, prohibit providing shopping bags, add plexiglass, add signage to floors throughout their stores, and on and on. By law or by choice, they’ve paid people when they are at home to quarantine, take care of a relative, and more. Some have paid bonuses or have incurred overtime just to meet these requirements.

    What consideration do they get for all they’ve done? More costly and unexpected costs in an industry notorious for running on razor thin margins.

    Yes, politicians are stupid!

    1. They make more money on the stuff on the edge of the store like deli, meats, specialty foods, booze, and bakery. I could see where they are losing as more people like myself are buying more online for delivery or pickup so you don’t walk by and pick out that kind of stuff. They charge something for that but it is more convenient and safer and I am lazy.

      I checked on Kroger stock. It is just above what it was a year ago so I doubt they are in free fall.

  23. Joe “Big Guy” Biden wants to make America more like California where diversity and equity is required. If the rest of America becomes like California where are businesses and people going to run to? What will we do with the increase in homeless and where will we house the illegals and support them until Joe makes then all citizen Democrat voters?
    Over the last year the federal government has contributed over 400 billion to help states get through the pandemic. Now Biden has another 350 billion to bail out blue states from debt incurred before the pandemic. I really don’t think America could afford to be like California unless we all become wealthy. If California can’t afford to be like California how could the rest of us?

  24. Regarding this “hero pay”, some, perhaps many would offer the following. Regarding governmental bodies pushing this idea, let them come up with the necessary funds.

  25. Time for us to don our libertarian capes and fly to the rescue of liberals corporations being hounded by local progressive government they’ve been feeding for years!

    Nah, not in 2021. If things came down to a vote, I would vote against hero pay out of principle. Otherwise, I won’t lift a finger to help out Kroger. If there’s a union strike, I won’t go out of my way to buy things at Ralph like I did during the last big strike.

    To hear a billion dollar company whine about government bias and selective enforcement of law is a hoot. How many Americans would they cancel, blacklist, or throw under the bus for “violent rhetoric” or other such nonsense? But you give millions of dollars to radical who burned down our cities?

    If the state wants to escalate things then I’ll just have to order food from Amazon. Amazon can take over closed Ralphs Location, fire all the union workers, and automate half its operation, and we won’t have to bother with this nonsense. “Oh no, our heroes have all lost their jobs and Bezos won’t let his workers unionize, someone stop Amazon PLEASE”

    We have to allow the left to destroy each other until one of them finally decides it had enough. That sounds nihilist, but it’s almost inevitable. CA added 5 million votes to a senile man who signs a 100 EOs a day. They cancelled Lincoln and abbreviated terms because they’re “racist”. You won’t change these minds with a reasonable debate, it’s Chinatown.

    CA is kinda like Gotham seen through the eyes of Ras Al Ghul. It’s growing uncontrollably corrupt and decadent, and it has to burn itself (in a manner of speaking) out to restore balance. The state LITERALLY burns because they let forests grow wild and unchecked.

    1. “The state LITERALLY burns because they let forests grow wild and unchecked.”

      I thought it was the secret Jewish sky laser the congress lady talked about.

  26. Did people stop eating? Am I missing something?

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