Judge to Rule on Grocers’ Bid to Block Hazard Pay For Workers

An ordinance approved by the Long Beach, California, City Council provides an extra $4 an hour in hazard pay for grocery store workers who face greater health risks in the Covid-19 pandemic.

Image by mohamed Hassan from Pixabay

LOS ANGELES (CN) — An attorney for the California Grocers Association told a federal judge Tuesday a city of Long Beach ordinance providing a $4 an hour boost in hazard pay for grocery workers interferes with ongoing labor negotiations and should be blocked. The judge didn’t seem convinced. 

The Southern California city’s “Premium Pay for Grocery Workers Ordinance” provides the $4 per hour in premium pay for essential grocery workers who face higher risk during the Covid-19 pandemic.

In court papers opposing an injunction, attorneys for Long Beach cited reports of grocery store corporations such as Kroger earning “eye-popping” profits during the pandemic while their frontline workers continue to face potential daily exposure to the novel coronavirus.

“While there has been an extraordinary economic impact on lower wage earners and small businesses, many large corporations, like large grocery stores, and higher wage earners have prospered relatively well,” the brief said. “Kroger and plaintiff’s other members seek to stop a local law by the city that provides a modicum of economic relief to front-line grocery workers. They have faced and to continue to face increased risks to their personal health and safety as they keep the city’s food distribution system functioning in these extraordinary times.”

CGA, which represents 6,000 grocery stores across California, filed a federal lawsuit against Long Beach on Jan. 21, claiming companies operate on thin profit margins and that some have already given their workers hazard pay bonuses. 

The ordinance would make grocery stores unprofitable to operate by unlawfully mandating premium pay only for union-eligible grocery workers, according to the lawsuit, which cited the recent closures of a Food 4 Less store and a Ralph’s store in Long Beach due to rising labor costs.

In court papers, attorneys for CGA said the ordinance would result in grocery stores being more crowded and food prices more expensive for customers.

“If anything, it runs counter to each of the goals articulated by the council: the ordinance is more likely to impede grocers’ efforts to develop a safe shopping environment,” CGA’s brief said. “It is likely to lead to an increase in grocery prices, and it will reduce the number of jobs and grocery stores in Long Beach at a time when the city’s unemployment is at a historic high.”

Upon filing its lawsuit in the Central District of California, CGA moved on an ex parte basis for a temporary restraining order blocking enforcement of the ordinance.

The next day, U.S. District Judge Dolly M. Gee, who had been initially assigned to the case, denied CGA’s bid, ruling that the association failed to show how it would be irreparably harmed without emergency action by the court.

Gee also called the threat of city-sanctioned lawsuits against noncomplying grocery stores “speculative,” which the ruling said cannot be the basis for granting a TRO. 

The case had since been transferred to U.S. District Judge Otis D. Wright II.

In a virtual federal court hearing Tuesday, CGA attorney William F. Tarantino told Wright a preliminary injunction should be granted because the ordinance’s alleged effect on collective bargaining is preempted by the National Labor Relations Act.

The ordinance bars grocery stores from sidestepping the wage increase by reducing the hourly wage or “earning capacity” of their employees. The restriction thus limits grocery chains’ bargaining power in labor negotiations, CGA claims. 

The policy amounts to local government interference in ongoing labor contract negotiations between grocery stores and the unions representing grocery workers; an act that violates the labor relations act, Tarantino said.

“The city came in and decided what was appropriate hazard pay regardless of current pay structure and imposed that on an urgent-ordinance basis and prevented stores from taking any action to control labor costs,” Tarantino, with Morrison & Foerster, told Wright. “This is not a minimum wage or overtime law, it’s a city mandated bonus program.”

To support CGA’s preemption claims, Tarantino cited the U.S. Supreme Court’s 1976 ruling in Machinists v. Wisconsin Employment Relations Comm, which held local governments should not interfere in business that would otherwise be determined by “the free play of economic forces.” 

Wright asked Tarantino whether grocery stores could reduce any other form of employees’ compensation if they were barred from reducing wages and hours.

“Is there anything to prevent grocers from going into collective bargaining taking the position that they won’t entertain an increase of base hourly wages of workers under the new collective bargaining agreement? You say it’s preempted and violates NLRA,” Wright said. “But in fact, it hasn’t been decided, has it?”

Tarantino said the court shouldn’t allow the city to paint the ordinance as part of a “backdrop” that doesn’t affect labor negotiations because city leaders could extend it past March 2022, when the current labor contract expires.

“This ordinance may continue beyond that,” Tarantino said.

Arguing for Long Beach, attorney Chris Pisano of Best Best & Krieger said the ordinance — which can be renewed or cancelled 120 days after passage — doesn’t restrict grocery stores from firing their workers or reducing hours, so long as it’s not tied to the hazard pay increase.

Wright asked whether the recent closure of two grocery stores in Long Beach represents a reduction in workers’ “earning capacity.”

If the workers from those stores can’t find employment at other grocery stores operated by the chain, then it could represent a reduction, Pisano said.

“I’m not sure if they’d be required to stay open,” Pisano said. “They have an obligation to their shareholders.”

Pisano told Wright that the strict scrutiny test for determining preemption doesn’t apply to the ordinance and that the city’s rational basis for approving it means the act is “virtually unreviewable” by the courts.

“Doesn’t that end the discussion for me,” Wright asked. “I’m not gonna swallow strict scrutiny. If that ordinance has a rational basis for a legitimate municipal purpose that’s about as far as I need to go.”

Wright took the matter under submission and indicated a final ruling on the preliminary injunction would be issued soon.

Tuesday’s hearing came on the same day the Los Angeles County Board of Supervisors voted 4-1 to approve an urgency ordinance requiring national grocery and drug stores chains in unincorporated LA County to pay workers an extra $5 an hour in “hero pay.”

The ordinance — which takes effect immediately and is enforceable for the next 120 days — cited frontline workers’ higher risk of contracting Covid-19 and their ongoing labor contributions as justification for the wage increase.

“Grocery and drug retail workers are among the heroes of this pandemic, putting their lives on the line –– often for low wages and minimal benefits — in order to sustain our food system and maintain healthy communities,” the ordinance said. “Despite their importance to our communities, their employers have not provided sufficient family-sustaining wages and ‘Hero Pay’ during the recent surge of Covid-19 cases.”

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