Kroger closes two stores in California instead of paying grocery workers four dollars more per hour to work at the country’s largest supermarket chain during the Coronavirus pandemic. The company blamed a decision by local officials 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 due to the law passed in January by Long Beach City Council. With a handful of cities across California weighing in on whether to ask for a “risk pay” for grocery workers, Kroger also warned it could close more stores.
Long Beach became the first city in California last month to pass a risk-paying ordinance, with the law requiring grocery stores with at least 300 workers nationwide and more than 15 employees in Long Beach to pay $ 4 extra per hour for a period of 120 days.
Research has shown that front-line employees face higher risks of coronavirus exposure at work. These workers are also more likely to be black, Hispanic, or Native American, populations who have suffered higher rates of COVID-19.
Kroger considered the city’s decision to increase the emergency wage to be “wrong.”
“As a result of the City of Long Beach’s decision to pass an ordinance requiring additional pay for grocery workers, we have made the difficult decision to permanently close long-term stores in Long Beach,” the company in a statement to CBS Los Angeles. “This wrong action by Long Beach City Council goes beyond the traditional bargaining process and applies to some, but not all, of the city’s grocery workers.”
The California Grocers Association has also filed a lawsuit against the city, alleging that the ordinance is unconstitutional because it circumvents a collective bargaining agreement between supermarket companies and unionized workers.
“Additional pay orders will have serious unintended consequences in supermarkets, but in their employees and customers,” Ron Fong, president and CEO of the commercial group, said in a statement to CBS MoneyWatch.
“A 28% increase in labor costs is huge. Traders will not be able to absorb these costs and the negative repercussions are inevitable,” Fong added, citing a study commissioned by the trading group.
“Outrageous conduct”
Long Beach officials argue that the courts have confirmed similar salary increases. Long Beach Mayor Robert Garcia in a tweet he promised a strong defense in the courts.
The United Food and Commercial Workers, a union representing 1.3 million workers, including 55,000 in Kroger, criticized the supermarket’s decisions.
“City leaders stepped up to take care of these essential grocery workers and make sure they received compensation for the danger they face. Kroger closing these stores is truly outrageous behavior and a ruthless attempt. “creating a scary effect that will deter other cities from doing anything. He is right and enacts risk-paying mandates that recognize the threat these workers face from COVID-19,” said the UFCW’s international president. Marc Perrone, in a statement.
The problem is likely to persist, especially in California. Montebello City Council last week approved a requirement for large grocery and drugstore stores to pay employees an extra $ 4 an hour for 180 days, and Pomona expects to consider a similar ordinance before March 1st. Los Angeles City Council will have to consider a similar measure on Tuesday.
More store closures?
Kroger noted that it could close additional stores in cities that adopt risk-based payment requirements. “These wrong warrants could jeopardize the closure of any troubled store,” a Ralphs spokesman told Mercury News.
Kroger in May ended what he called “hero pay” a $ 2-per-hour bonus offered to its more than 500,000 workers as of April. Instead, the company went on to pay $ 130 million in bonuses, as full-time workers received $ 400 and part-time workers received $ 200.
Kroger, at one point, asked quarantined workers with COVID-19 emergency permission to return what he called “overpayments,” demanding that workers return the extra cash or face bill collectors. . The company annulled his claim after a cry.
Kroger has set record highs as the pandemic has encouraged more Americans at home, increasing the sale of food and other groceries. The company posted more than $ 2.9 billion in operating profits during the third quarter of 2020, making an additional profit of $ 1.2 billion compared to a year earlier.
Kroger is redirecting some of that money to investors, with the $ 1 billion repurchase announced in September. On Friday, the company announced a $ 147 million dividend payment and said it expects to increase its dividend over time.
Another large grocery chain, Trader Joe’s, said Tuesday that it will temporarily increase risk pay for all of its hourly workers across the United States by an additional $ 2 per hour beginning in February. The pay rise, which will increase the risk pay of Trader Joe workers to $ 4 an hour, follows a mandate approved last week by Seattle City Council.