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Report regarding an ordinance requiring large grocery and drug stores in South San Francisco to pay employees an additional five dollars ($5.00) per hour in “hazard pay” during the coronavirus (COVID-19) pandemic (Alex Greenwood, Director of Economic & Community Development, and Sky Woodruff, City Attorney)
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RECOMMENDATION
Recommendation
At the direction of City Council, staff drafted a proposed ordinance mandating “hazard pay” for grocery and drug store workers within the City. Should Council desire to adopt a hazard pay ordinance, staff recommends adopting the proposed ordinance as an urgency ordinance. Because the proposed ordinance is an urgency ordinance, a four-fifths vote of the City Council is required for adoption. If the Council chooses to proceed with adoption, staff recommends Council additionally introduce the ordinance for a first reading and proceed to adopt the measure as a non-urgency ordinance. The non-urgency ordinance could also be introduced if the four-fifths threshold for an urgency ordinance cannot be reached.
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BACKGROUND
A. Update on Hazard Pay Ordinances in California
As indicated in the staff report for the February 10 meeting (see Attachment A), at least a dozen local jurisdictions in California are currently considering a version of a “hazard pay” ordinance that would provide extra hourly pay to certain types of retail workers during the COVID-19 pandemic in recognition of the heightened health risks associated with their work.
At the time the last staff report was drafted, three cities had adopted a hazard pay urgency ordinance: Oakland, Long Beach, and Montebello. Since then, three more cities have adopted hazard pay urgency ordinances: San Leandro, West Hollywood, and Coachella. In addition, Irvine and San Jose have both introduced non-urgency ordinances that are awaiting a second reading.
The ordinances in these cities compare as follows:
[table on following page]
Around the County since the last staff report, the city council in Belmont has decided not to pursue a hazard pay ordinance, while the council in the City of San Mateo has considered an ordinance and directed staff to draft an ordinance for adoption on March 1. News reports have also indicated that San Mateo County Supervisor David Canepa intends to introduce a $5 hazard pay ordinance by early March.
B. Update on Litigation
At the time of the last staff report, the California Grocers Association had sued each of the three cities that had then adopted a hazard pay ordinance. The grocers have now also sued West Hollywood and San Leandro.
All of the grocers association’s lawsuits are substantively identical, raising the same claims that the ordinances are invalid because they are preempted by the National Labor Relations Act (for allegedly interfering with collective bargaining) and because they are unconstitutional (for allegedly violating equal protection and contracts clauses of the United States constitution).
As of the date of this staff report, there has been no further activity to report in the litigation. The anticipated hearing on the preliminary injunction motion-which would be the first test of the grocers association’s claims-was scheduled for February 19, 2021, but was postponed until February 23, 2021 after the case was assigned a new judge. If a decision is issued prior to the February 24 City Council meeting, we will provide an oral update at the meeting.
C. Update on response from affected retailers
Since the last staff report, Kroger has announced the closure of two additional stores, this time in the Seattle area, in response to a local hazard pay ordinance.
Proposed OrdinanceS
Based on Council’s direction during the February 10, 2021 meeting, staff revised the proposed ordinance as follows:
- Rate of Hazard Pay. The proposed rate of pay was increased to $5 per hour.
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- Threshold size for grocery stores subject to the ordinance. The size of stores subject to the ordinance was lowered from 15,000 square feet to 10,000 square feet or larger.
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- Types of retailers covered. The proposed ordinance now applies to drug stores, as well as grocery stores. In addition, the definition of grocery store has been modified to include not only stores that primarily sell household foodstuffs, but also very large stores (85,000 square feet or larger) that dedicate at least 10% of space to food sales. This was intended to capture large warehouse stores such as Costco.
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- Two Weeks’ Retroactivity. The proposed ordinance, as an urgency ordinance, would continue to take effect immediately (the day following the Council’s adoption); however, the ordinance was modified to apply retroactively to any work on or after February 11, 2021, the date the ordinance would have taken effect if it had been adopted at the last meeting.
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- Non-urgency alternative. As before, the proposed ordinance is drafted as an urgency measure, reflecting Council’s direction to take action on this matter quickly. The recitals contained in the ordinance establish the basis for the urgency, including citing studies reflecting the dangers faced by the workers who would be eligible for the hazard pay and how the additional compensation would further the immediate preservation of the public health and safety. A regular ordinance has also been included for City Council introduction, if the City Council decides to proceed with adoption of an ordinance. The non-urgency version would provide a back-up, in the event that a court determined that there was not a sufficient basis to support the urgency ordinance. Additionally, should the vote threshold for an urgency ordinance not be met, the non-urgency ordinance is available for introduction and first reading.
FISCAL IMPACT
The potential fiscal impact to the City is unknown. The proposed ordinance does not create any substantive obligations on the City, and staff does not anticipate any additional City staff time or resources are necessary. There would be currently un-estimated litigation costs associated with defending a likely challenge to the ordinance.
RELATIONSHIP TO STRATEGIC PLAN
This effort potentially aligns with Priority #2 which is focused on enhancing quality of life.
CONCLUSION
Should the City Council desire to adopt a hazard pay ordinance for grocery workers within the City, staff recommends City Council adopt the proposed ordinance as an urgency ordinance. If the City Council chooses to proceed, staff recommends the City Council additionally waive reading and introduce the proposed ordinance as a non-urgency ordinance. The non-urgency version of the ordinance is also available for consideration, if the four-fifths threshold for the urgency ordinance cannot be reached.
Attachment:
1. Staff Report from February 10, 2021, meeting
2. Redline Urgency Ordinance
3696374.1