Kroger is closing two stores in California rather than paying grocery workers four dollars an hour extra for work in the country’s largest supermarket chain during the coronavirus pandemic. The company blames a decision by local officials that recently approved a temporary wage increase for some employees in the supermarket.
Kroger said he would close the stores, a Ralphs and a Food 4 Less, in April because of the law passed by Long Beach City Council in January. With a handful of California cities considering setting up a “hazard payment” for grocery workers, Kroger also warned he could close more stores.
Long Beach last month became the first city in California to approve a pay-per-view approval, with the law requiring grocery stores with at least 300 workers nationwide and more than 15 employees within Long Beach to pay an extra $ 4 per hour for must pay a period of 120 days. .
Research has found that employees in the foreground have higher risks of exposure to the coronavirus at work. Such workers are also more likely to be black, Hispanic, or Native Americans, who have higher COVID-19.
Kroger calls the city’s decision to increase emergency payments misleading.
“Due to the decision of the City of Long Beach to issue a regulation requiring additional payment for grocery workers, we have taken the difficult decision to permanently close long-suffering stores in Long Beach,” the company said. a statement to CBS Los said. Angeles. “This misconduct by the Long Beach City Council goes beyond the traditional bargaining process and applies to some, but not all, grocery workers in the city.”
The California Grocery Association has also filed a lawsuit against the city, claiming the ordinance is unconstitutional because it pursues a collective bargaining agreement between supermarket businesses and union workers.
“Extra mandates will have serious unintended consequences not only for grocers, but also for their workers and customers,” Ron Fong, president and CEO of the trade group, told CBS MoneyWatch in a statement.
“A 28% increase in labor costs is huge. Grocers will not be able to bear the costs, and negative consequences are inevitable,” Fong added, referring to a study commissioned by the trade group.
“Outrageous behavior”
Long Beach officials claim courts have maintained similar wage increases. Long Beach Mayor Robert Garcia in a tweet promised a powerful defense in court.
The United Food and Commercial Workers, a union representing 1.3 million workers, including 55,000 at Kroger, has criticized decisions on groceries.
“City leaders have acted to take care of these essential grocery workers and ensure that they pay for the danger they face. Kroger closing these stores is really an outrageous behavior and a ruthless attempt at a cool operation. creating what will discourage other cities from doing what’s right and imposing hazardous wage mandates that take into account the threat posed by these COVID-19 workers, ”UFCW International President Marc Perrone said in a statement.
The problem is likely to continue, especially in California. Montebello City Council last week approved the requirement that major drug and grocery stores pay employees $ 180 extra for 180 days per hour, 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 has indicated that it may close additional stores in cities that accept the requirements for emergency payment. “These misguided mandates could endanger any struggling store to close,” a Ralphs spokesman told Mercury News.
Kroger in May end what it called ‘hero pay’ a $ 2 hourly bonus offered to more than 500,000 employees from April. Instead, the company switched to paying $ 130 million in bonuses, with full-time workers receiving $ 400 and part-time employees $ 200.
Kroger at one point demanded that workers who are in quarantine in COVID-19 be required to return what he calls ‘overpayments’, and demand that workers repay the extra cash or pay the collectors. The company his claim revoked after a shout.
Kroger achieved record earnings because the pandemic encouraged more Americans to stay home, which increased food and other grocery sales. The company posted more than $ 2.9 billion in operating profit in the third quarter of 2020, recording an additional $ 1.2 billion in earnings compared to a year earlier.
Kroger diverts some of the money to investors, with a $ 1 billion share buyback. The company announced a $ 147 million dividend payment on Friday, saying it expects to increase its dividend over time.
Another major grocery chain, Trader Joe’s, said on Tuesday that it would temporarily increase the paycheck for all its hourly workers in the U.S. by another $ 2 per hour from February. The salary increase, which will increase the paycheck for Trader Joe’s workers to $ 4 an hour, follows a mandate approved by Seattle City Council last week.