Hazard pay ordinance violates National Labor Relations Act, grocers say

Grocery organizations that sued over municipalities' hazard pay mandates said in a federal court filing that Long Beach's ordinance violates federal law, including the National Labor Relations Act.

The California Grocers Association, which represents more than 6,000 food stores and grocery supply companies across the state, filed challenges to ordinances enacted by several cities in the last year, including Long Beach, West Hollywood, Oakland, San Leandro and Montebello. The coalition argued most supermarkets can't afford employee raises since they already operate on thin margins made thinner by the pandemic.

On March 26, Long Beach moved to dismiss the lawsuit and the association filed its opposition Monday.

City-mandated wage hikes violate existing contracts between grocery stores and workers, while enforcing those raises would lead to layoffs and store closures, the association said.

"Courts applying National Labor Relations Act preemption principles have held that the issues addressed by the ordinance should be free from local government interference and reserved to the free play of economic forces," wrote William F. Tarantino, who represents the association. "There is no legitimate connection to the stated government purpose, nor any other rational purpose, as the city's desire to reward private employees or rewrite contractual wage scales based on a perceived hazard is illegitimate."

Cities that enacted the ordinances contend essential workers like grocery employees have been at the front lines of the pandemic, risking their health, and should be further compensated for their work. California Grocers Association v. City of Long Beach, 21-CV-00524 (C.D. Cal., filed Jan. 20, 2021.)

The Long Beach City Council passed a hazard pay measure in January to be in effect for 120 days. Employers were required to pay an extra $4 per hour on top of existing wages. The ordinance only applied to stores that devote 70% or more of their business to retailing a general range of food products, either fresh or packaged. The measure applies to stores that have more than 300 workers nationwide, and more than 15 workers per store in the city.

Ralphs announced store closures in Long Beach after the measure was passed.

Christopher M. Pisano of Best Best & Krieger LLP represents Long Beach. He said the association failed to state a claim for relief and maintains the ordinance isn't preempted by the national law because it doesn't regulate collective bargaining.

"The ordinance facially does not prohibit any bargained employment term, but merely provides a $4 increase to whatever terms are agreed upon," Pisano wrote in his motion to dismiss the association's complaint.

The ordinance is a valid exercise of police power, and courts have been using rational basis review for economic regulations, "and no longer view liberty of contract as a fundamental right," Pisano contended.

The case is assigned to U.S. District Judge Otis D. Wright II of the Central District of California. Arguments are scheduled for April 26.