Kroger to shut two Long Beach stores due to local hazard pay mandate

The Kroger Co. is closing two supermarkets in Long Beach, Calif., because of a new municipal law that mandates hazard pay to grocery workers amid the COVID-19 pandemic.

Plans call for the Ralphs store at 3380 N. Los Coyotes Diagonal and the Food 4 Less store at 2185 E. South St. in Long Beach to close on April 17, the two Kroger divisions said yesterday. The chains said the two locations represent 25% of their Long Beach stores.

The Long Beach ordinance (Ord-27), passed by the city council in December and enacted Jan. 19, requires grocery retailers to establish “premium pay” of an extra $4 per hour to wage-earning store associates for a period of at least 120 days. Store managers or supervisors aren’t covered by the mandate, which applies to companies with at least 15 grocery workers for each store in Long Beach and with at least 300 grocery workers overall. 

In the law’s text, the city of Long Beach cites its “Safer at Home" order and the “Stay at Home” and state of emergency orders issued by California Gov. Gavin Newsom to protect public health and safety in response to the coronavirus crisis. The ordinance explained that added pay to grocery workers is warranted because they perform a key public function amid a high level of exposure to COVID-19.

Related:Sen. Bernie Sanders, UFCW locals urge Kroger to restart hazard pay

Ralphs and Food 4 Less, divisions of The Kroger Co., said the impacted locations represent 25% of their Long Beach stores.

“Requiring grocery stores to provide premium pay to grocery workers compensates grocery workers for the risks of working during a pandemic. Grocery workers face magnified risks of catching or spreading the COVID-19 disease because the nature of their work involves close contact with the public, including members of the public who are not showing symptoms of COVID-19 but who can spread the disease,” the ordinance states. “The provision of premium pay better ensures the retention of these essential workers who are on the frontlines of this pandemic providing essential services and who are needed throughout the duration of the COVID-19 emergency. As such, they are deserving of fair and equitable compensation for their work.”

Los Angeles-based Ralphs and Food 4 Less described the affected stores as underperforming and criticized the Long Beach ordinance’s premium pay mandate as “imbalanced.”

“As a result of the city of Long Beach’s decision to pass an ordinance mandating extra pay for grocery workers, we have made the difficult decision to permanently close long-struggling store locations in Long Beach,” a company spokesperson said in a statement. “This misguided action by the Long Beach City Council oversteps the traditional bargaining process and applies to some, but not all, grocery workers in the city.”

Related:UFCW, ShopRite reach deal on COVID-19 hazard pay

Ralphs and Food 4 Less also noted that the council’s mandate “does nothing” to raise wages for the frontline workers employed by the city.

“The irreparable harm that will come to employees and local citizens as a direct result of the city of Long Beach’s attempt to pick winners and losers, is deeply unfortunate,” the spokesperson added. “We are truly saddened that our associates and customers will ultimately be the real victims of the city council’s actions.”

The Kroger Co. has invested $1.3 billion in rewards — including hourly appreciation pay and bonuses, to all frontline grocery, supply chain, manufacturing, pharmacy and call center associates — and expanded benefits and safety measures during the pandemic, Ralphs and Food 4 Less reported. Kroger offered $2 hourly “hero pay” to frontline workers from late March to mid-May. 

“We are proud of our dedicated associates who are on the frontlines, serving our customers when they need us most,” the Ralphs/Food 4 Less spokesperson said.

Long Beach’s hazard pay law also is opposed by the California Grocers Association (CGA), which on Jan. 20 filed a lawsuit against the city in federal court in Los Angeles, claiming the ordinance is invalid and unconstitutional. CGA is pursuing a preliminary injunction to halt the law’s implementation until a judge rules on the suit. A hearing is slated for Feb. 19.

“Grocery store workers are frontline heroes, and that’s why grocers have already undertaken a massive effort to institute measures to make both workers and customers safer in stores. But this ordinance is clearly illegal in that it interferes with the collective-bargaining process and singles out only certain grocers while ignoring other retail workers and workers in other industries providing essential services during the pandemic,” CGA President Ron Fong said in a statement when the suit was announced. “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. We look forward to our day in court to contest the legality of this ordinance.”

"City leaders stepped up to take care of these essential grocery workers and ensure they receive hazard pay for the danger they face." — UFCW International's Marc Perrone (Photo courtesy of UFCW)

The United Food and Commercial Workers International (UFCW) union blasted The Kroger Co.’s decision to close the Ralphs and Food 4 Less stores, claiming the move was an effort to dodge Long Beach’s hazard pay law.

“Since the pandemic began, Kroger has made billions in profits because of the sacrifices of grocery workers who have been putting their own health and safety on the line every day. Rather than provide the hazard pay these grocery workers have earned and deserve, Kroger decided to threaten these workers and the community’s access to food in the middle of a public health crisis,” UFCW International President Marc Perrone stated. 

“City leaders stepped up to take care of these essential grocery workers and ensure they receive hazard pay for the danger they face,” he said. “Kroger closing these stores is truly outrageous conduct and a ruthless attempt to create a chilling effect that will discourage other cities from doing what is right and enacting hazard pay mandates that recognize the threat these workers face from COVID-19.”

Andrea Zinder, president of UFCW Local 324, which represents 22,000 members in grocery, drug, food processing and other industries in Orange County and parts of Los Angeles County, said The Kroger Co.’s move to shut the Ralphs and Food 4 Less stores comes after “all the sacrifices and the service our members have provided Long Beach during the pandemic.”

“Kroger closing these stores is a clear attempt to intimidate and discourage workers from standing up and using their voice to create better working conditions and wages,” Zinder said in a statement. “Our members, and all essential workers, have been working under enormous stress, exposed every single day they go into work to the virus, with little support from their employer. UFCW Local 324 members have proven their strength in organizing around issues like hazard pay and will continue to fight for what is right for themselves, their co-workers, and the community of Long Beach regardless of scare tactics by large corporations putting profits over people.”

Citing a Jan. 27 Brookings Institution report, UFCW International said local governments have acted to help grocery workers receive compensation for their efforts during the pandemic. The union, too, noted other Brookings research finding that over 75% of Americans support hazard pay, and a rising number of municipalities are instituting or considering hazard pay or “hero pay” measures. They include Los Angeles County, Santa Monica, San Francisco, San Jose, Berkeley, Santa Ana, West Hollywood, Santa Clara, Los Angeles and San Mateo, Calif., as well as Seattle, UFCW reported. 

“This is not how you treat frontline essential workers that face daily and worsening exposure to COVID-19,” Perrone said. “Major grocery chains across the country have already agreed to new hazard pay agreements, and Americans strongly support hazard pay in recognition of the ongoing risks these grocery workers are facing. Kroger does not have the right to ignore laws designed to protect workers and the public during this escalating health crisis. 

“We go to court this month, and we will defend the workers vigorously.” — Long Beach Mayor Robert Garcia (Photo courtesy Robert Garcia/Long Beach)

“As America’s largest food and retail union, UFCW will use every tool available to ensure that Kroger follows the law and that our state and federal leaders hold companies accountable for flagrantly choosing to evade these vital workplace laws,” he added.

CGA said it commissioned a study finding that grocery costs for a family of four could increase by $400 a year with a $5-per-hour extra pay mandate, as proposed in Los Angeles County. The report pegged grocery industry average profits at 2.2% during early to mid-2020, at the height of pandemic-triggered panic buying, but determined that the higher wage would hike overall costs 4.5%, twice the size of the industry profit margin and three times historical profit margins.

“The Long Beach City Council rushed to enact the misguided extra pay mandate without any meaningful dialogue with grocers in their community. We repeatedly warned that a $4/hour increase would have major unintended consequences, including potential store closures, the reduction of work for employees, and higher grocery costs for customers,” according to CGA’s Fong, who said a $4 hourly increase translates to a roughly 28% rise in retailers’ labor costs. “There’s no way grocers can absorb that big of a cost increase without an offset somewhere else, considering grocers operate with razor-thin margins and many stores already operate in the red. The Long Beach City Council put politics ahead of families and jobs in the middle of a pandemic. This was entirely avoidable. We are hopeful that Long Beach and other cities reconsider these misguided proposals that do far more harm than good.”

In a Feb. 1 tweet, Long Beach Mayor Robert Garcia chided Kroger for opting to close the Ralphs and Food 4 Less stores. 

“The Kroger corporation is closing two markets in Long Beach because our city is requiring temporary hero’s pay for grocery workers during this pandemic. Grocers are making record profits,” Garcia wrote. “We go to court this month, and we will defend the workers vigorously.”

PCC Community Markets has called for the city of Seattle to forgo or modify a measure requiring an additional $4 per hour in hazard pay for grocery workers.

Last week, Puget Sound-area grocer PCC Community Markets sent a letter to Seattle Mayor Jenny Durkan after the Seattle City Council on Jan. 25 approved a measure requiring an extra $4 per hour in hazard pay for grocery workers for the duration of the COVID-19 pandemic. The Seattle-based retailer, with 15 stores, said the cost of the additional pay presents a hefty burden for small grocers.

“This ordinance disproportionately harms local, independent grocers like PCC Community Markets, which in 2019 had $1.7 million in net income. That may sound like a lot, but to put that in context, PCC spent $3 million — or nearly two times 2019 net income — in COVID-related expenses in 2020, including staff member appreciation pay, bonuses and in-store safety protocols, since the start of the pandemic,” PCC Community Markets CEO Suzy Monford wrote in the letter. “Although independent grocers are proud to have provided a safe and healthy shopping and working environment, our profit margins are even more slim than previous years. Unlike large corporate grocers who saw a large sustained uptick in sales nationwide, we have not had a sustained increase in sales and do not have a national footprint to rely on to offset these costs nor the cost of doing business in Seattle.

“We hope, given local business concerns, you’ll consider not signing the bill or, alternatively, modify it to exclude the smaller, local grocers who will be deeply damaged by this ordinance,” Monford said. “We encourage you to evaluate the impact on local grocery, struggling under the cost of COVID safety measures yet committed to providing a safe and healthy work environment.”

The Los Angeles City Council on Tuesday approved an emergency ordinance requiring large grocery and pharmacy retailers to give workers another $5 an hour in hazard pay due to COVID-19. Similar to the Long Beach ordinance, the measure would apply to retailers with 300 or more employees nationally and 10 or more workers per store for hourly, non-managerial employees for 120 days.

Specialty grocer Trader Joe's has responded to municipal support for hazard pay by doubling its $2-per-hour increase enacted at the start of the coronavirus crisis.  

"Since the beginning of the pandemic, Trader Joe’s has provided all hourly crew members with an additional $2-per-hour 'thank you' wage, in recognition of the outstanding, inspiring work they do every day, in our stores and communities," Trader Joe's announced Monday. "Effective Feb. 1, 2021, the 'thank you' premium for all hourly, non-management crew members, was increased by $2, for a total of $4 an hour. Moreover, during this time, we have offered crew members a few additional ways to qualify for and maintain health insurance. We want crew members to have the opportunity to take extended time off without repercussions to their benefits."

According to UFCW, at least 134 grocery workers have died from COVID-19 and 28,700 have been infected or exposed to the virus among its membership nationwide. Across UFCW’s overall 1.3 million members — which covers grocery stores, meatpacking, food processing, retail and other industries — at least 388 frontline workers have died from the disease and over 75,800 have been infected or exposed, the union reported.