Kroger is closing two stores in California, instead of paying grocery workers an extra four dollars an hour to work at the nation’s largest supermarket chain during the coronavirus pandemic. The company blamed the decision by local authorities who recently approved a temporary salary increase for some supermarket employees.
Kroger said it will close stores, a Ralphs and a Food 4 Less, in April because of the law, passed in January by Long Beach City Hall. With a handful of cities across California considering whether to impose “hazard pay” on grocery workers, Kroger also warned that he could close more stores.
Long Beach last month became the first city in California to pass a health hazard law, with the law requiring supermarkets with at least 300 workers across the country and more than 15 employees in Long Beach to pay an extra $ 4 an hour per hour. a period of 120 days.
The survey found that frontline employees face greater risks of exposure to coronavirus at work. These workers are also more likely to be black, Hispanic or Native American, populations that have experienced higher rates of COVID-19.
Kroger called the city’s decision to increase the emergency payment “wrong”.
“As a result of the City of Long Beach’s decision to pass a decree requiring extra payment for grocery workers, we made the difficult decision to permanently close stores in Long Beach,” the company said in a statement to CBS Los Angeles. “This erroneous action by the Long Beach City Council goes beyond the traditional negotiation process and applies to some, but not all, grocery workers in the city.”
The California Grocers Association has also filed a lawsuit against the city, claiming that the law is unconstitutional because it circumvents a collective labor agreement between supermarket and union workers.
“Extra payment obligations will have serious unintended consequences not only for merchants, but also for their employees and customers,” said Ron Fong, president and CEO of the trading group, in a statement to CBS MoneyWatch.
“A 28% increase in labor costs is huge. Grocery stores will not be able to absorb these costs and negative repercussions are inevitable,” added Fong, citing a study commissioned by the commercial group.
“Outrageous conduct”
Long Beach officials say the courts have sustained similar salary increases. Long Beach Mayor Robert Garcia in a tweet swore a vigorous defense in court.
United Food and Commercial Workers, a union representing 1.3 million workers, including 55,000 at Kroger, criticized the supermarket’s decisions.
“City leaders took care of these essential grocery workers and made sure they were paid for the danger they face. Kroger closing these stores is truly outrageous conduct and a relentless attempt to create a frightening effect that will discourage other cities from doing the same. who is right and promulgating risk payment mandates that recognize the threat these workers face from COVID-19, “said UFCW International President Marc Perrone in a statement.
The problem is likely to persist, especially in California. Montebello City Council approved last week the requirement that large drugstores and supermarkets pay employees an extra $ 4 an hour for 180 days, and Pomona hopes to consider a similar law by March 1. The Los Angeles City Council is expected to consider a similar measure on Tuesday.
More store closings?
Kroger has signaled that it may close additional stores in cities that adopt risk payment requirements. “These misguided orders can put any store at risk of being closed,” a Ralphs spokesman told Mercury News.
Kroger in may ended what he called the “hero payment”, a $ 2 hourly bonus offered to its more than 500,000 workers as of April. Instead, the company went on to pay $ 130 million in bonuses, with full-time workers receiving $ 400 and part-time workers receiving $ 200.
At one point, Kroger asked quarantined workers with a COVID-19 emergency license to return what he called “overpayments”, demanding that workers refund the extra money or face collectors. The company terminated his demand after an outcry.
Kroger reported record gains as the pandemic encouraged more Americans to do this at home, increasing sales of food and other groceries. The company recorded more than $ 2.9 billion in operating profits through the third quarter of 2020, earning an extra $ 1.2 billion in profits compared to the previous year.
Kroger is redirecting some of that money to investors, with a $ 1 billion share buyback announced in September. On Friday, the company announced a dividend payment of $ 147 million and said it hopes to increase its dividends over time.
Another major supermarket chain, Trader Joe’s, said on Tuesday that it will temporarily increase the hazard pay for all its hourly workers in the U.S. by another $ 2 an hour starting in February. The salary increase, which will increase Trader Joe’s workers’ health risks to $ 4 an hour, follows an order approved last week by the Seattle City Council.