Grocers sue San Jose, Daly City over forced hazard pay for workers

The California Grocers Association is suing the cities of San Jose and Daly City over new regulations requiring large grocers to boost the hourly wages of employees who are risking their health to serve customers during the coronavirus pandemic.

Under Daly City’s “hazard pay” legislation, which went into effect immediately after it was passed March 8, large grocers must pay workers an extra $5 an hour of “hazard pay” on top of their regular wages. In San Jose, where the ordinance will go into effect in a couple of weeks, grocers will be required to provide employees with raises of $3 an hour.

The trade group, which represents grocery stores across the state, seeks to have a court declare the laws unconstitutional and halt them from taking effect.

The lawsuits filed March 12 in the Northern District of California argue that the regulations are illegal because they single out certain grocers while ignoring other groups that employ essential front line workers. The association also claims the regulations are preempted by the federal National Labor Relations Act, which protects the integrity of collectivebargaining.

“In addition to clearly violating federal and state law, the extra pay mandates will harm customers and workers,” Ron Fong, president & CEO of the California Grocers Association, said in a statement. “A $5/hour mandate amounts to a 28% average increase in labor costs for grocery stores. That is too big a cost increase for any grocery retailer to absorb without consequence.”

San Jose and Daly City are among more than a dozen cities across California to enact such laws in recent months, though not all of them have faced legal challenges from the Grocers Association. As of March 12, Long Beach, Montebello, Oakland, San Leandro and West Hollywood also have been sued by the group.

The latest lawsuits filed against San Jose and Daly City come just two days after supermarket chain owner Kroger announced it would close three stores in Los Angeles in response to the city’s “hero pay” ordinance that was passed late last month.

The California Grocers Association has long contended that the mandatory pay increases would force grocers to take cost-cutting initiatives like closing stores and increasing the price of goods to compensate for the additional labor costs.

Grocery workers and the unions representing them up and down the state, however, argue that grocery stores had an uptick in profits during the pandemic and can cover the additional costs. Many grocery stores bumped up workers’ pay early into the pandemic but then stopped when some of the public health orders were lifted.

Jim Araby, a spokesman for UFCW Local 5, which represents about 23,000 grocery workers in Northern California, said March 12 that he “feels confident we will prevail.”