Kroger closes two stores in California rather than paying food workers another $ 4 an hour to work at the country’s largest supermarket chain in coronavirus pandemic. The company blamed a decision by local officials who recently approved a temporary salary increase for some supermarket employees.
Kroger said he will close stores, a Ralphs and a Food 4 Less, in April because of the law passed in January by the Long Beach City Council. With a handful of California cities weighing in on whether to impose a “risk payment” on food workers, Kroger also warned that it could close more stores.
Last month, Long Beach became the first city in California to pass a risk ordinance, requiring grocery stores with at least 300 workers nationwide and more than 15 Long Beach employees to pay another $ 4 an hour for a period of 120 days.
Research has shown that front-line employees face higher risks of coronavirus exposure at work. Such workers are also more likely to be black, Hispanic, or Native American, populations who have suffered higher rates of COVID-19.
Kroger called the city’s decision to increase emergency payments “wrong.”
“Following the City of Long Beach’s decision to pass an ordinance requiring overpayment for food workers, we have made the difficult decision to permanently close outlets in Long Beach stores,” the company said in a statement. for CBS Los Angeles. “This wrong action by the Long Beach Local Council goes beyond the traditional negotiation process and applies to some, but not all, of the city’s food workers.”
The California Grocers Association has also filed a lawsuit against the city, arguing that the ordinance is unconstitutional because it outlines a collective bargaining agreement between supermarket companies and unionized workers.
“The additional payment warrants will have unintended serious consequences not only for the grocers, but also for their workers and customers,” Ron Fong, president and CEO of the trading group, said in a statement to CBS MoneyWatch.
“A 28% increase in labor costs is huge. Food will not be able to absorb these costs, and the negative repercussions are inevitable,” Fong added, citing a study commissioned by the trade group.
“Outrageous behavior”
Long Beach officials say the courts have confirmed similar pay increases. Long Beach Mayor Robert Garcia in a tweet he swore a vigorous defense in court.
United Food and Commercial Workers, a union representing 1.3 million workers, including 55,000 at Kroger, has criticized food decisions.
“City leaders have stepped up to take care of these essential food workers and make sure they receive hazardous payments for the danger they face. Kroger closing these stores is a truly outrageous behavior and a ruthless attempt to create a terrible effect that discourages other cities from doing what they do right and adopts payment orders for risks that recognize the threat these COVID-19 workers face, “said UFCW International President Marc Perrone in -a declaration.
The problem is likely to persist, especially in California. Montebello City Council last week approved a requirement for major drug stores and grocery stores to pay employees an additional $ 4 an hour for 180 days, and Pomona expects to consider a similar ordinance by March 1st. The Los Angeles City Council will consider a similar measure on Tuesday.
More store closures?
Kroger said it could close additional stores in cities that adopt risk payment requirements. “These wrong warrants could jeopardize the closure of any struggling store,” a Ralphs spokesman told Mercury News.
Kroger in May ended what he called the “hero’s pay” a $ 2 per hour bonus offered to over 500,000 workers in April. Instead, the company went on to pay $ 130 million in bonuses, with full-time workers receiving $ 400 and part-time workers receiving $ 200.
Kroger once asked quarantined workers on COVID-19 emergency leave to return what he called “overpayments”, asking workers to reimburse extra money or deal with bill collectors. Company canceled his request after a shout.
Kroger made record gains as the pandemic encouraged more Americans to stay home, boosting sales of food and other food. The company posted operating profits of more than $ 2.9 billion by the third quarter of 2020, making an additional gain of $ 1.2 billion compared to a year earlier.
Kroger is redirecting some of that money to investors, with a $ 1 billion buyback announced in September. On Friday, the company announced a $ 147 million dividend payment and said it expects to increase its dividend over time.
Another major food chain, Trader Joe’s, said Tuesday that it will temporarily increase the payment of risks for all its hourly workers in the US by another $ 2 per hour starting in February. The pay rise, which will increase the risk pay for Trader Joe’s workers to $ 4 an hour, follows a mandate adopted last week by Seattle City Council.