San Jose sued over hazard pay ordinance; is Santa Clara County next target?

San Jose is facing a lawsuit over its decision last month to give grocery store workers a hazard pay bump of $3 per hour.

The California Grocers’ Association on Friday announced that it had filed a federal lawsuit over the pay mandate in both San Jose and Daly City. The two suits follow similar fillings by the group against the cities of Long Beach, Montebello, Oakland, San Leandro and West Hollywood since the beginning of the year.

“In addition to clearly violating federal and state law, the extra pay mandates will harm customers and workers,” said California Grocers Association President Ron Fong, claiming a $5 per hour mandate equals a 28% increase in labor costs for grocery stores. “That is too big a cost increase for any grocery retailer to absorb without consequence. Options are few. Either pass the costs to customers, cut employee or store hours, or close.”

The organization claims that the mandates have “singled out” certain grocers, violating the U.S. and California Constitutions’ equal protection clauses, in part because the new rules only apply to national chains with more than 300 employees. The organization also claims that the mandates violate the National Labor Relations Act.

The office of San Jose’s city attorney did not immediately respond to a request for comment.

Santa Clara County also passed a hazard pay ordinance last month, originally intended for the entirety of the county, including its 15 cities. After significant pushback from businesses and organizations like the Silicon Valley Organization, supervisors limited the breadth of the measure to unincorporated parts of the county. The county’s hazard pay measure increases wages by $5 an hour for eligible grocery and pharmacy workers for 180 days starting this month.

The CGA hasn’t filed a suit against Santa Clara County, yet. Nate Rose, communications director for the organization, said the group is evaluating the pay mandate “on a case-by-case basis.” The legal challenges aren’t related to how many CGA member companies operate in any jurisdiction, Rose said.

Any time a lawsuit is filed, Rose said, the organization does so with the go ahead from local member stores.

Some companies, on the other hand, say it wasn’t a tough decision at all to budget for providing hazard pay to their employees. Save Mart companies, which include Lucky, with more than 10 locations in San Jose and FoodMaxx, with at least four locations in San Jose, is one of those companies.

“The company determined that the right thing to do for our employees was to sacrifice profits in order to provide weekly hazard pay,” said Save Mart spokeswoman Rosemary O’Brien. Once grocery workers became eligible for the COVID-19 vaccine, the store began offering paid time off for vaccination appointments as well.

The company has been offering between $2.50 and $3.50 in hazard pay for one year as of this month.

“Our stores would not operate without the dedication of our frontline store and distribution center employees,” said Hal Levitt, vice president of retail for Save Mart. “We are enormously humbled and grateful for their resilience and adaptability.”

Contact Madelyn Reese at [email protected] or follow @MadelynGReese on Twitter.