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SR 03-09-2021 7E City Council Report City Council Meeting: March 9, 2021 Agenda Item: 7.E 1 of 9 To: Mayor and City Council From: George Cardona, Interim City Attorney, City Attorney's Office, Municipal Law Subject: Introduction and Adoption of an Urgency Ordinance Adding Santa Monica Municipal Code Chapter 4.65.5 to Implement Hero Pay for Certain Workers Providing Essential Services During the COVID-19 Pandemic Recommended Action In accordance with prior Council direction, adopt an urgency ordinance adding Santa Monica Municipal Code Chapter 4.65.5 to implement hero pay for grocery and drug retail workers in accordance with the similar hero pay provisions adopted by Los Angeles County for unincorporated areas of the County. Summary A number of California Cities have adopted ordinances requiring between $4 and $5 in additional hourly pay (hero pay) for frontline grocery or drug retail workers who, as essential workers, are required to work during the COVID-19 pandemic. Most recently, on February 23, Los Angeles County adopted a $5 per hour hero pay ordinance applicable to grocery and drug retail workers in unincorporated areas of the County, and on February 24, the City of Los Angeles adopted a $5 per hour hero pay ordinance applicable to grocery and drug retail workers in the City of Los Angeles. Other local cities that have adopted hero pay ordinances include Long Beach, Montebello, and West Hollywood. On January 12, 2021, Council directed staff to return with an emergency ordinance implementing hero pay to require large grocery store chains and drug retailers to provide an extra $5 per hour to frontline workers temporarily during the pandemic consistent with any such measures imposed in unincorporated Los Angeles County. Staff now return with the requested emergency ordinance (Attachment A), which mirrors the provisions of the recently adopted Los Angeles County ordinance. Among other things, the emergency ordinance: 7.E Packet Pg. 754 2 of 9 • Applies to operators of retail grocery stores, retail drug stores, and large retail stores that are publicly traded or that employ 300 or more workers nationwide, and employ more than 10 employees per store; • Requires retail grocery stores, retail drug stores, and large retail stores (85,000 square feet or more) that dedicate more than 10% of their floor space to grocery or drug sales to pay employees an extra $5 per hour in hero pay; • Provides store operators with a credit against the required hero pay for voluntarily provided hazard pay; • Establishes enforcement mechanisms, including a prohibition on retaliation against any employee who seeks to enforce the hero pay provisions, administrative fines, and private causes of action for employees; and • Provides that the emergency ordinance will sunset after 120 days. This is presented as an urgency ordinance in light of the ongoing COVID-19 pandemic and the immediate need to ensure that grocery and drug retail workers are compensated for the substantial risks, efforts, and expenses they have been undertaking and continue to undertake to provide essential services in a safe and reliable manner during the COVID-19 emergency. Pursuant to City Charter Section 615, adoption as an urgency ordinance would require at least five affirmative votes, in which case, pursuant to Charter Section 619, the urgency ordinance would be adopted and effective immediately. Discussion 1. Additional Pay as Compensation for Increased Health Risks Since March of 2020, the COVID-19 pandemic has dramatically impacted Santa Monica citizens, business owners, employees, and visitors. Among these impacts, the pandemic has emphasized the importance of workers in industries now highlighted as essential, including front-line grocery and drug store workers. While health orders have required the closure of many businesses, grocery and drug stores have been recognized as critical infrastructure and allowed to remain 7.E Packet Pg. 755 3 of 9 open. Even as vaccinations continue and cases have at least temporarily leveled off, Los Angeles County’s most recent health order, issued February 18, 2021, still requires the closure of many non-essential businesses, while continuing to recognize that grocery and drug stores are essential and may remain open. As a result, while many workers in Santa Monica have shifted to working from home, lower-wage grocery and drug store workers have continued to report to work and provide critical services, required as part of that work to interact indoors with large numbers of people on a daily basis since the beginning of the COVID emergency nearly one year ago.. Both Los Angeles and West Hollywood have identified the health risks faced by grocery and drug store workers. As West Hollywood noted in a February 16, 2021 staff report submitted in support of its hero pay ordinance (Attachment B): Due to the virus, millions of frontline grocery workers nationwide have had to face new job-related hazards not previously considered especially dangerous. Los Angeles County public health data shows outbreaks at food facilities, like supermarkets, are up exponentially since early November. An NBC Investigation article from January 15, 2021, discovered 146 outbreaks last month alone at supermarkets in LA and Orange County, according to data obtained from the United Food and Commercial Workers (UFCW) Local 324.The report included 31 Ralphs, 17 Vons and 16 Albertsons. Another report from CNBC reports how the toll of COVID has been particularly hard on grocery store workers who can’t work from home and often have low pay and limited benefits. A study of grocery store workers has also shown an accelerated risk of coronavirus infection faced by workers in customer-centric roles. Additionally, new and potentially more contagious variants of the coronavirus that have been detected in California, which is hitting California just as California begins to recover from the winter surge. Similarly, a February 19, 2021 report from the City of Los Angeles’s Chief Legislative Analyst (“CLA Report”) (Attachment C) reported: A Harvard study of over 100 employees at one grocery store in Boston, Massachusetts found that employees in customer-facing roles are five 7.E Packet Pg. 756 4 of 9 times as likely to test positive for COVID-19 as their colleagues in other positions. In another study, researchers at the University of California, San Francisco analyzed death records and estimated excess mortality among Californians 18-65 years of age by occupational sector and occupation, including race and ethnicity. They found that for the period March-October 2020, working age adults experienced a 22 percent increase in mortality compared to historical periods. Excess mortality was highest in food/agriculture workers (39 percent increase), transportation/logistics workers (28 percent increase), facilities (27 percent increase) and manufacturing workers (23 percent increase). Latino Californians experienced a 36 percent increase in mortality, with a 59 percent increase among Latino food/agriculture workers. Black Californians experienced a 28 percent increase in mortality, with a 36 percent increase for Black retail workers. The researchers conclude that in-person essential work is a likely venue of transmission and must be addressed through strict enforcement of health orders and the protections of in-person workers. They add that vaccination programs prioritizing food/agriculture workers are likely to have disproportionately large benefits for reducing COVID-19 mortality. In addition, in Santa Monica, one large grocery store reported to the County Department of Public Health that it had 30 confirmed COVID-19 infections among its staff. (See https://web.archive.org/web/20210219015907/http:/www. publichealth.lacounty.gov/media/Coronavirus/locations.htm.) To address the health risks faced by grocery and drug store workers providing essential services while earning lower wages, cities in California and elsewhere have adopted hero pay ordinances requiring additional pay between $3 and $5 per hour. The CLA Report (pages 13-17) provides a summary of these ordinances. Los Angeles City, Los Angeles County, and West Hollywood have all adopted ordinances requiring additional pay of $5 per hour. In accordance with Council direction, the proposed ordinance matches Los Angeles County in requiring additional pay of $5 per hour. 2. Potential Economic Impacts The CLA Report (pages 4-11) contains an extensive analysis of grocery industry economics and potential economic impacts on grocery and drug stores. As noted 7.E Packet Pg. 757 5 of 9 in the CLA Report, research by the Brookings Institution found that at the beginning of the COVID-19 pandemic, a number of national chains provided some level of hazard pay and/or bonuses, but by July 2020 all of these companies had canceled their hourly hazard pay, while some continued to provide bonuses. As also noted, Trader Joe’s has consistently provided employees with $2 per hour hazard pay and recently increased its hazard pay to $4 per hour. On January 25, 2021, Trader Joe’s sent City Council members a letter (Attachment D) outlining “thank you” pay and enhanced benefits totaling over $6 per hour that it provides to its Crew Members in Santa Monica, requesting that this be factored into consideration of any proposed hero pay ordinance. After discussing grocery industry economics, the CLA Report identified the following potential economic impacts: • Higher wages for grocery, drug, and retail store workers, which could trigger a temporary increase in the demand for goods and services that could in turn result in more business activity in the City, benefiting other City businesses. • Temporary increases to labor costs as a percentage of sales, potentially requiring companies to take action to reduce operating expenses or increase revenue as the labor increase will eliminate the company’s current profit margin. • Potentially higher prices for consumers. • Potentially delayed store openings, renovations, and wage increases/promotions. • More pressure on struggling stores (especially independent grocers), which could lead to store closures. (The report noted the closure by Kroger of two stores, a Ralphs and Food 4 Less, in response to Long Beach’s hero pay ordinance.) • Reduced hours, wages, or jobs, as companies, to offset higher labor costs, might reduce employees’ working hours, benefits, or wage rates, or lay-off employees. 7.E Packet Pg. 758 6 of 9 After receiving the CLA Report, on February 24, 2021, the Los Angeles City Council adopted a hero pay ordinance providing for an additional $5 per hour in pay. 3. Potential Legal Risks The California Grocers Association (“CGA”), a trade association for California grocery retailers and suppliers, has filed lawsuits challenging the legality of a number of hero pay ordinances. The first lawsuit to be filed was against Long Beach’s ordinance – CGA v. Long Beach, Case No. 21-cv-00524-ODW (Central District California). On February 25. 2021, the court in that case issued an order (Attachment E) denying CGA’s request for a preliminary injunction, holding that CGA “fails to establish a likelihood of success on the merits” with respect to any of its five causes of action, which were based on “(1) NLRA preemption, (2) the Equal Protection Clause of the U.S. Constitution, (3) the Equal Protection Clause of the California Constitution, (4) the Contracts Clause of the U.S. Constitution, and (5) the Contracts Clause of the California Constitution.” With respect to the Equal Protection clause challenges, the Court held that the ordinance’s targeting of “large grocery stores” was rationally related to the City’s theory that “large grocery stores have reaped significant profits during the pandemic while their employees’ wages have remained more or less the same, despite the increased risk of exposure to COVID-19 that grocery workers face.” 4. Alternatives for Consideration In accordance with Council’s prior direction, the proposed ordinance tracks the Los Angeles County Ordinance, which is essentially the same as the Los Angeles City ordinance. As a result, the proposed ordinance would be consistent with those that apply in Los Angeles City, which borders Santa Monica on all sides, and in all unincorporated areas of Los Angeles County. There are a number of alternative provisions that the Council could consider as part of the proposed ordinance: • All grocery and drug retail stores: The ordinance could be expanded to apply to all grocery and drug retail stores, without regard to size. This would be inconsistent not only with the Los Angeles City and County ordinances, but also with those adopted by every other City. Moreover, applying the hero pay requirement only to large grocery and drug retail 7.E Packet Pg. 759 7 of 9 stores limits the required increase in pay to those stores and chains in the best position to absorb and address the economic impacts of the increase in pay. • Different level of hero pay: As noted in the CLA Report, other cities have implemented different levels of hero pay, including requiring increases of $3 per hour (San Jose) or $4 per hour (Irvine, Long Beach, Montebello, Seattle). Moving to a lower level of hero pay would decrease the economic impacts on operators of grocery and drug stores. But it would also decrease the compensation to grocery and drug store workers, and would be inconsistent with the Los Angeles City and County ordinances, and with a number of other California cities that have implemented or are in the process of implementing hero pay at $5 per hour (West Hollywood, Berkeley, Oakland). • Hero pay only for lower wage levels: The ordinance could limit hero pay to grocery and drug store workers who earn below a specified cap, for example, the minimum wage of $15 or some higher amount. This would decrease the economic impacts on operators of grocery and drug stores, and would reward operators who already pay their grocery and drug store workers higher wages. This could also substitute for, and would be less staff intensive to review and administer, than the credit for voluntary hazard pay. On the other hand, this would be inconsistent with the Los Angeles City and County ordinances, with the potential that it would require more communication and outreach efforts to avoid confusion among workers and businesses, and would also deprive some grocery and drug store workers of extra compensation for the health hazards they face. • Eliminate alternative to take hero pay as paid leave: Los Angeles County included this alternative in its ordinance based on concern that some covered grocery workers whose pay is so low that they qualify for various benefits, might lose their eligibility for those benefits if they were to receive the temporary increase in pay. Los Angeles City does not have a similar provision, nor do the other cities that have adopted hero pay ordinances. 7.E Packet Pg. 760 8 of 9 Fiscal Impacts There is no immediate financial impact or budget action necessary as a result of the recommended action. Staff will return to Council if specific budget actions are required in the future. The City contracts with the Los Angeles County Department of Consumer and Business Affairs (“DCBA”) to enforce the City minimum wage ordinance. Though the urgency ordinance implements a private right of action, which the City would defer to as the primary means of enforcement, to the extent the hero pay ordinance requires additional active enforcement efforts, additional funding for the DCBA contract may be required. There is no current estimate for the level of additional funding that may be required; were additional funding for enforcement required beyond that available in current budgets, staff would return to Council for further budget action. In addition to potential enforcement costs, staff estimates that approximately $2,000 would be needed to design and print legal notice posters and postcards to be distributed to employers for posting to notify employees of their rights under the urgency ordinance; this minimal amount is expected to be covered from currently budgeted funds. If the adopted ordinance is consistent with those of Los Angeles City and County, staff would anticipate engaging in only limited outreach, looking to employee unions to serve as the primary source of information for grocery and drug store workers. If the adopted ordinance were to vary in significant ways from Los Angeles City and County, staff likely would need to dedicate additional time to outreach with potential additional costs for communication materials. Finally, were there to be closures of grocery or drug retail stores in response the ordinance (as in Long Beach), the City would potentially lose sales tax revenue from the sales that would have taken place at those closed stores. To provide context, based on the last reporting of sales taxes – Q3 2020 – businesses in the City classified as grocery or drug stores (total was 72, 1.2% of businesses collecting sales tax) accounted for 3.6% of total sales tax collected. 7.E Packet Pg. 761 9 of 9 Prepared By: George Cardona, Interim City Attorney Approved Forwarded to Council Attachments: A. A - Proposed Urgency Ordinance B. B - WEHO STAFF_REPORT C. C - CLAReport D. D - TraderJoeLetter E. E - CGA v. LBC - Order Denying PI F. Written Comments 7.E Packet Pg. 762 1 City Council Meeting March 9, 2021 Santa Monica, California ORDINANCE NUMBER ____ (CCS) (City Council Series) AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA ADDING CHAPTER 4.65.5 TO THE SANTA MONICA MUNICIPAL CODE TO IMPLEMENT HERO PAY FOR CERTAIN WORKERS PROVIDING ESSENTIAL SERVICES DURING THE COVID-19 PANDEMIC WHEREAS, the novel coronavirus 19 (“COVID-19”) disease is caused by a virus that reads easily from person to person and may result in serious illness or death, and is classified by the World Health Organization (“WHO”) as a worldwide pandemic; and WHEREAS, COVID-19 has broadly spread throughout California and remains a significant health risk to the community, especially members of our most vulnerable populations; and WHEREAS, the WHO has declared that COVID-19 is a global pandemic, which is particularly severe in high-risk populations such as people with underlying medical conditions and the elderly, and the WHO has raised the health emergency to the highest level, requiring dramatic interventions to disrupt the spread of this disease; and WHEREAS, on March 4, 2020, the Los Angeles County Board of Supervisors and Department of Public Health declared a local emergency and local public health emergency to aid the regional healthcare and governmental community in responding to COVID-19; and 7.E.a Packet Pg. 763 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 2 WHEREAS, on March 4, 2020, the Governor of the State of California declared a state of emergency to make additional resources available, formalize emergency actions already underway across multiple state agencies and departments, and help the State prepare for broader spread of COVID-19; and WHEREAS, on March 13, 2020, the President of the United States of America declared a national emergency and announced that the federal government would make emergency funding available to assist state and local governments in preventing the spread of and addressing the effects of COVID-19; and WHEREAS, on March 13, 2020, the City Manager, in his role as the Director of Emergency Services, proclaimed the existence of a local emergency pursuant to Chapter 2.16 of the Santa Monica Municipal Code to ensure the availability of mutual aid and an effective the City’s response to the novel coronavirus (“COVID-19”) and this local emergency was restated on March 14, 2020, through a revised declaration of local emergency to ensure compliance with all digital signature requirements; and WHEREAS, on March 19, 2020, the Governor of the State of California issued Executive Order N-33-20 directing all residents of the State of California to heed directives issued by the State Health Officer on the same date instructing all Californians to stay home except as needed to maintain continuity of operations of the federal critical infrastructure sectors. In addition to healthcare, public health, and emergency services, the Executive Order permitted workers in critical infrastructure sectors, as outlined by the federal government, to continue to work; grocery and drug retail stores were included as essential business sectors critical to protecting the health and well-being of all 7.E.a Packet Pg. 764 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 3 Californians and their workers were therefore designated as essential critical infrastructure workers; and WHEREAS, on March 19, 2020, the Los Angeles County Department of Public Health issued an enhanced Health Officer Order, the Safer at Home Order for Control of COVID-19, amending and superseding its earlier March 16, 2020 Order, closing all nonessential businesses, and limiting gatherings to 9 people or less. The County Safer at Home Order identified grocery stores and drug retail stores as essential businesses and/or parts of essential infrastructure supporting healthcare operations, with the result that they were allowed to remain open and their workers were allowed to continue going to work; and WHEREAS, on January 12, 2021, the City Council directed staff to return with an emergency ordinance implementing hero pay to require large grocery store chains and drug retailers to provide an extra $5 per hour to frontline workers temporarily during the pandemic consistent with any such measures imposed in unincorporated Los Angeles County; and WHEREAS, on January 25, 2021, noting that while there are positive signs that COVID-19 is spreading at a slower rate across the state the COVID-19 pandemic is far from over; that it is still critical that Californians continue to wear masks when they leave their homes, maintain physical distance of at least 6 feet, wash their hands frequently, avoid gatherings and mixing with other households, and follow all state and local health department guidance and get the vaccine when it is their turn; and that the majority of counties remain in the strictest, or purple, tier that indicates which activities and businesses may open based on local case rates and test positivity, the California 7.E.a Packet Pg. 765 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 4 Department of Health ended the state’s Regional Stay at Home Order, allowing all counties statewide to return to the rules and framework of the Blueprint for a Safer Economy; and WHEREAS, on February 18, 2021, the Los Angeles County Department of Public Health issued its revised Reopening Safer at Work and in the Community for Control of COVID-19 Blueprint for a Safer Economy-Tier 1 Surge Response order, which continued to require the closure of many non-essential businesses; grocery stores and drug stores remained identified as essential businesses and/or parts of essential infrastructure supporting healthcare operations, and remained allowed to stay open with their workers allowed to continue going to work; and WHEREAS, on February 23, 2021, Los Angeles County adopted an urgency ordinance requiring large grocery store chains and drug retailers to provide an extra $5 per hour to grocery and drug retail workers temporarily during the pandemic; and WHEREAS, grocery and drug retail stores are essential businesses operating in Santa Monica during the COVID-19 emergency making grocery and drug retail workers highly vulnerable to economic insecurity and health or safety risks; and WHEREAS, the Center for Disease Control reports that COVID-19 spreads more readily indoors, and essential grocery and drug retail workers must perform their jobs inside and interact with members of the public; and WHEREAS, grocery and drug retail workers working for grocery and drug retail stores are essential workers who perform services that are fundamental to the economy and health of the community during the COVID-19 crisis. They work in high-risk conditions with inconsistent access to protective equipment and other safety measures; work in 7.E.a Packet Pg. 766 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 5 public situations with limited ability to engage in physical distancing; and continually expose themselves and the public to the spread of disease; and WHEREAS, premium pay, paid in addition to regular wages, is an established type of compensation for employees performing hazardous duty or work involving physical hardship that can cause extreme physical discomfort and distress; and WHEREAS, grocery and drug retail workers working during the COVID-19 emergency merit additional compensation because they are performing hazardous duty due to the significant risk of exposure to the COVID-19 virus. Grocery and drug retail workers have been working under these hazardous conditions for months. They are working in these hazardous conditions now and will continue to face safety risks as the virus presents an ongoing threat for an uncertain period, potentially resulting in subsequent waves of infection; and WHEREAS, the availability of grocery and drug retail stores is fundamental to the health of the community and is made possible during the COVID-19 emergency because grocery and drug retail workers are on the frontlines of this devastating pandemic supporting public health, safety, and welfare by working in hazardous situations; and WHEREAS, establishing an immediate requirement for grocery and drug retail stores to provide premium pay to grocery and drug retail workers protects public health, supports stable incomes, and promotes job retention by ensuring that grocery and drug retail workers are compensated for the substantial risks, efforts, and expenses they are undertaking to provide essential services in a safe and reliable manner during the COVID- 19 emergency; and 7.E.a Packet Pg. 767 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 6 WHEREAS, on March 9, 2021, the City Council held a public meeting during which it considered the adoption of this Urgency Ordinance pursuant to California Government Code Section 36937 and Santa Monica City Charter Section 615, both of which allow the adoption of urgency ordinances to take effect immediately to ensure the immediate preservation of the public peace, health, safety, and general welfare in the City of Santa Monica; and WHEREAS, the City Council hereby finds that: the revisions to the Santa Monica Municipal Code implemented by this Urgency Ordinance are immediately necessary as an emergency measure to sustain the stability of the food supply chain by supporting the essential workers who continue to work during the COVID-19 pandemic, and thereby safeguard the health, safety, and general welfare of the public in the City of Santa Monica. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. New Santa Monica Municipal Code Chapter 4.65.5, Hero Pay, is added to read as follows: CHAPTER 4.65.5 HERO PAY 4.65.5.010 Findings and Purpose. (a) To protect the public health and welfare during the COVID-19 pandemic, California Governor Gavin Newsom and the County of Los Angeles have issued "Safer at Home" declarations that have affected every sector of the economy. While many sectors were able to transition their workforce to working from home, millions of workers in face-to-face service industries were deemed essential to ensure that our communities continue to operate, and basic needs continue to be fulfilled. 7.E.a Packet Pg. 768 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 7 (b) The City Council finds that frontline grocery retail and drug retail workers are essential workers who face potential exposure to COVID-19 through interactions with customers and co-workers. Because of their work on the frontlines, grocery retail and drug retail workers have been met with COVID-19 exposures and outbreaks in their workplaces. Their work has increased the workers' COVID-19 exposure risks and contributed to the psychological distress workers have felt during the pandemic. (c) The City Council finds that frontline grocery retail and drug retail workers are among the heroes of this pandemic, putting their lives on the line – often for low wages and minimal benefits – to maintain the food supply and distribution system necessary for healthy communities. Despite their importance to our communities, their employers have not all provided sufficient wages during the COVID-19 pandemic to compensate frontline employees for their critical function to our society and the significant risk they face in the workplace. Working in an essential industry, grocery and drug retail employees have not had the luxury of working from home to help their children with distance-learning and, as a result, have incurred additional childcare expenses. (d) The City of Santa Monica has an interest in protecting the employment environment for frontline grocery retail and drug retail workers and in maintaining the supply and distribution-chain of food. Through this ordinance, the City seeks to sustain the stability of the food supply chain by supporting the essential workers who continue to work during the pandemic, and thereby safeguard the health, safety, and welfare of the public. 7.E.a Packet Pg. 769 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 8 (e) The City Council finds it is imperative to act with urgency to support these frontline workers to be justly compensated for the unprecedented risks they encounter on the job during this pandemic and require their employers to provide for additional hazard pay, or “Hero Pay.” 4.65.5.020 Definitions. As used in this Chapter, the following words and phrases have the following meanings: (a) “Base Wage” means the hourly wage paid to Employees as of the effective date of this Chapter, less Hero Pay owed under this Chapter or any other premium hourly rate already paid to compensate Employees for working during the COVID-19 pandemic, such as Voluntary Hazard Pay or Holiday Premium Pay. (b) "City Council” means the City Council of the City of Santa Monica. (c) "City" means the City of Santa Monica. (d) "DCBA" means the Los Angeles County Department of Consumer and Business Affairs, with which the City contracts for enforcement of its various Municipal Code provisions relating to wages. (e) "Employee" means any person who: 1. In a particular week performs at least two hours of work within the City for an Employer; and 2. Qualifies as an employee entitled to payment of a minimum wage from any employer under the California minimum wage law, as provided under section 1197 of the California Labor Code and wage orders published by the California Industrial Welfare Commission. 7.E.a Packet Pg. 770 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 9 3. Presumption of Employee. For purposes of this Chapter, a person performing work for an Employer is presumed to be an Employee of that Employer. If an Employer asserts a person is not an Employee covered by this Chapter either due to the person's status as a bona fide independent contractor, or due to the person not being required to physically appear at a Store to perform their job function during the COVID-19 pandemic, then the Employer has the burden to demonstrate that the person is not an Employee. (f) "Employer" means a person, as defined in section 18 of the California Labor Code, including a corporate officer or executive, that meets all of the following: 1. Directly or indirectly or through an agent or any other person, including through the services of a temporary service or staffing agency or similar entity, employs or exercises control over the wages, hours or working conditions of any Employee; 2. Operates at least one Store; 3. Either is (i) a corporate entity the stock of which is traded on a public stock exchange, or (ii) employs 300 or more workers for compensation nationwide in the pay period preceding the effective date of this Chapter; and 4. Employs more than 10 Employees per Store in the pay period preceding the effective date of this Chapter. (g) “Enforcement Agent” means the DCBA, or such other City employee or contractor designated by the City to enforce the provisions of this Chapter, any of which shall be considered an Enforcement Officer, as defined in Section 1.09.020 of this Code, with authority to issue administrative citations. 7.E.a Packet Pg. 771 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 10 (h) "Hero Pay" means the additional wage Employers are required to pay Employees for work performed at Stores due to the risks associated with COVID-19 pursuant to Section 4.65.5.040(a), in addition to an Employee's Base Wage or Holiday Premium Pay, whichever is applicable at the time of hours worked. The Hero Pay rate shall not include compensation already owed to Employees, Holiday Premium rates, gratuities, service charge distributions, or other bonuses. (i) “Holiday Premium Pay” means the hourly wage paid to Employees for performing work during a holiday or holiday season. (j) “Retaliatory Action” means the refusal to hire, or the discharge, suspension, demotion, penalization, discipline, lowering of the Base Wage or Holiday Premium Pay, discrimination, or any other adverse action taken against an Employee regarding the terms and conditions of the Employee’s employment, for opposing any practice proscribed by this Chapter, for participating in proceedings related to this Chapter, for seeking to enforce rights under this Chapter by any lawful means, or for otherwise asserting rights under this Chapter. (k) "Store" means any of the following located within the City: 1. A retail grocery store that sells primarily food or household goods, including fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked goods, and/or prepared foods; or 2. A retail drug store that sells a variety of prescription and non- prescription medicines and miscellaneous items, including but not limited to drugs, pharmaceuticals, sundries, fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, and prepared foods; or 7.E.a Packet Pg. 772 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 11 3. A retail store that is over 85,000 square feet and: i. Dedicates 10 percent or more of its sales floor to groceries, including, but not limited to, produce, meats, poultry, fish deli products, dairy products, canned foods, dry foods, beverages, baked foods, and/or prepared foods; or ii. Dedicates 10 percent or more of its sales floor to drug retail, including, but not limited to, drugs, pharmaceuticals, sundries, produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, prepared foods, and other merchandise. (l) "Voluntary Hazard Pay" means additional premium pay for COVID-19 related purposes above and beyond an Employee's Base Wage. 4.65.5.030 Exemptions. This Chapter does not apply to public entities, such as federal, State, County, and City entities, including school districts. 4.65.5.040 Hero Pay Requirement. (a) Hero Pay Amount. For each hour of work performed by an Employee at a Store operated by an Employer, the Employer shall pay the Employee no less than five dollars ($5) per hour, in addition to the Employee's Base Wage. Such Hero Pay is intended to compensate an Employee for time spent physically present performing work at a Store where there is a heightened potential for exposure to COVID-19. Hero Pay shall not be required for any time an Employee is not physically present to perform work at a Store location, such as when remote working, teleworking, or on paid leave. 7.E.a Packet Pg. 773 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 12 (b) Offsets Prohibited. Employers shall not reduce an Employee's Base Wage, Holiday Premium Pay, or other Employee benefits to offset the requirements of this Chapter. (c) Election to Receive Hero Pay as Paid Leave. An Employee may elect to receive paid leave in lieu of Hero Pay. 1. Must be in Writing. An election to receive paid leave in lieu of Hero Pay must be made in a writing signed by the Employee. If the Employee elects to receive paid leave in lieu of Hero Pay, the Employer shall convert the Hero Pay into paid leave. 2. Calculation of Paid Leave. An Employee accrues one full hour of paid leave when the Hero Pay earned totals one hour of the Employee's Base Wage. 3. Paid Leave Increments. An Employee is entitled to earn paid leave in less than one hour increments. 4. Use of Paid Leave. Employers must allow Employees to use accrued paid leave under this subsection in the same way Employers allow other paid leaves to be used by their Employees. 4.65.5.050 Employer Credit for Voluntary Hazard Pay. (a) If an Employer provides an Employee Voluntary Hazard Pay, the obligation to provide Hero Pay under this Chapter shall be reduced for each cent the Employer provides an Employee with such Voluntary Hazard Pay. No Employer shall be credited prospectively for any past payments. No Employer shall be credited for any hourly premiums already owed to Employees, such as, but not limited to, Holiday 7.E.a Packet Pg. 774 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 13 Premiums. Nothing in this Chapter shall be interpreted to prohibit an Employer from paying more than five dollars ($5) per hour in Hero Pay. (b) In the event the credit for Voluntary Hazard Pay is challenged, the Enforcement Agent is authorized to evaluate the credibility and sufficiency of proof to determine if the Employer shall receive credit. An Employer must maintain and make available for inspection by the Enforcement Agent the following showings of proof to receive credit for Voluntary Hazard Pay: 1. A copy of the Employer’s Voluntary Hazard Pay policy. 2. A concise statement explaining Employees’ hourly base wages, hourly Holiday Premiums, hourly Voluntary Hazard Pay, and any other wage bonuses received during the prior 12 months. 3. Records and other information that allows the Enforcement Agent to review for compliance by assessing wages for the prior 12 months and that is itemized in such a way that the Enforcement Agent can understand an Employee’s Base Wage distinguished from Holiday Premiums and other bonuses or pay increases that are separate and distinct from Voluntary Hazard Pay. Acceptable evidence of Voluntary Hazard Pay wage includes: i. A spreadsheet of all Employees and their wages for each pay period for the prior 12 months that allows the Enforcement Agent to distinguish Base Wage from Holiday Premium Pay and other bonuses or pay increases that are separate and distinct from Voluntary Hazard Pay. The foregoing does not exempt any Employer from maintaining, and providing access to, the underlying payroll records described above. 7.E.a Packet Pg. 775 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 14 ii. Any offer of proof under this subsection (b) shall be accompanied by a written acknowledgement that it was submitted under penalty of perjury. 4.65.5.060 Employer Notification Requirements. (a) Hero Pay Workplace Posting. Every Employer shall post in a conspicuous place at every Store located within the unincorporated areas of the County where any Employee works a written notice prepared and made available electronically by the Enforcement Agent informing Employees of the Hero Pay Ordinance and of their rights under this Chapter. (b) Pay Period Statement. Each Pay Day, as that term is defined in Section 4.65.5.030, Employers shall provide each Employee with all information required by federal, state, and local laws, including section 226(a) of the California Labor Code, as well as the following additional information: (1) the hourly rate of Hero Pay required by this Chapter or Voluntary Hazard Pay paid by the Employer; (2) the amount of Hero Pay, Paid Leave in lieu of Hero Pay, or Voluntary Hazard Pay earned by the Employee in the pay period; and (3) the number of hours of work performed that entitled the Employee to Hero Pay or Voluntary Hazard Pay in the pay period. (c) Supplemental Disclosure Allowed. Nothing in this Section shall require Employers to duplicate disclosures required by State law, including sections 226 and 2810.5 of the California Labor Code. Disclosures required by this Section may be satisfied by supplementing any State-mandated disclosure. 7.E.a Packet Pg. 776 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 15 4.65.5.070 Employer Record Keeping and Access Requirements. (a) Payroll Records. Employers shall keep records necessary to demonstrate compliance with this Chapter, including accurate and complete payroll records pertaining to each Employee that document the name, address, occupation, dates of employment, rate or rates of pay, amount paid each Pay Period, the hours worked for each Employee, and the formula by which each Employee's wages are calculated. (b) Retention Period. Every Employer shall retain payroll records required in subsection (a) pertaining to each Employee for a period of four years. (c) Records and Interview Access; Cooperation with Investigations. To monitor and investigate compliance with the requirements of this Chapter, every Employer shall: (i) allow the Enforcement Agent access to such records required in subsection (a); (ii) allow the Enforcement Agent to interview persons, including Employees, during normal business hours; and (iii) cooperate with Enforcement Agent investigators. (d) Presumption of Violation. There shall be a rebuttable presumption that an Employer violated this Chapter if an allegation is made concerning an Employee's entitlement to Hero Pay under this Chapter and an Employer does not comply with the requirements of this Section to maintain or retain payroll records, or does not allow the Enforcement Agent reasonable access to such records. (e) Records Access Charges. When an Employer demonstrates to the Enforcement Agent that the Employer will incur a fee or charge for providing the records required in this Section, the Employer shall be required to provide the 7.E.a Packet Pg. 777 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 16 Enforcement Agent with only the prior two years of records, unless the Enforcement Agent determines that obtaining four years of records is reasonable and necessary for the enforcement of this Chapter. 4.65.5.080 Retaliatory Action Prohibited. (a) Retaliation. No Employer may discharge, reduce in compensation, or otherwise discriminate against any Employee for opposing any practice proscribed by this Chapter, for requesting Hero Pay under this Chapter, for participating in proceedings related to this Chapter, for seeking to enforce rights under this Chapter by any lawful means, or for otherwise asserting rights under this Chapter. Rights protected under this Chapter include: the right to file a complaint or inform any person about any party's alleged noncompliance with this Chapter; and the right to inform any person of potential rights under this Chapter and to assist in asserting such rights. Protections of this Chapter shall apply to any Employee who mistakenly, but in good faith, alleges noncompliance with this Chapter. (b) Rebuttable Presumption of Retaliation. Taking adverse action against an Employee, including lowering Employees’ Base Wage or Holiday Premium Pay or reduction of hours, within 90 days of the Employee's exercise of rights protected under this Chapter, shall raise a rebuttable presumption of the Employer having done so in retaliation for the exercise of such rights. 4.65.5.090 Administrative Fines for Violations. (a) Administrative Citations. Any person violating any provision of this Chapter or any rule or regulation may be subject to administrative citation pursuant to Chapter 1.09 of this Code. 7.E.a Packet Pg. 778 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 17 (b) Administrative Fines. Notwithstanding Section 1.09.040 of this Code, the administrative fines, payable to both the City and the Employee, that may be assessed for violations of the provisions of this Chapter are as follows: VIOLATION AND FINE AMOUNT Violation Code Section Fine Per Violation Payable to City Fine Per Violation Payable to Employee Failure to pay Hero Pay to Employee SMMC Section 4.65.5.040(a) Up to $100 per day, per Employee, for each day that an Employee is not paid all wages owed Up to $100 per day for each day that an Employee is not paid all wages owed Improper offset of Employee Base Wage, Holiday Premium Pay, or other benefits to satisfy Hero Pay Requirement SMMC Section 4.65.5.040(c) Up to $100 per day, per Employee, for each day that an Employee is not paid all wages owed Up to $100 per day for each day that an Employee is not paid all wages owed Failure to post written Notice at Store location SMMC Section 4.65.5.060(a) Up to $500 per violation Failure to provide complete, accurate, and timely Pay Period Statement to Employee SMMC Section 4.65.5.060(b) Up to $500 per Employee Up to $500 per Pay Period Failure to maintain payroll records or to retain payroll records for four years SMMC Section 4.65.5.070(a), (b) Up to $500 per violation Failure to allow access for inspection of books and records or to interview Employees or cooperate with investigation SMMC Section 4.65.5.070(c) Up to $500 per violation Retaliation for exercising rights under this Chapter SMMC Section 8.204.080 Up to $1,000 per employee subject to retaliation Up to $1,000 per employee, plus $100 per day until reinstatement, if ordered 7.E.a Packet Pg. 779 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 18 (c) Calculation of Administrative Fines. Each and every day that a violation exists constitutes a separate and distinct violation. The maximum administrative fine may be increased cumulatively by 50 percent for each subsequent violation of the same provision by the same Employer within a three-year period. The maximum administrative fine that may be imposed in a calendar year for each type of violation listed above shall be $20,000 per Employee, per year, with the exception of a retaliation violation, in which case the maximum fine shall be $30,000 per Employee, per year. (d) Late Payment Fee. Notwithstanding Sections 1.09.040(c) and 1.09.110 of this Code, the failure of any Employer to pay an administrative fine within 30 days shall result in the assessment of an additional late fee, which shall be ten percent of the total amount of the administrative fine assessed for each month the amounts are unpaid, compounded to include already accrued late administrative fines that remain unpaid. (e) Payments to Employees; Fines and Restitution. Every Employer who violates this Chapter, or any portion thereof, shall be liable to the Employee whose rights were violated for back wages unlawfully withheld and a fine of $100 for each day that the violation occurred or continued. A violation for unlawfully withholding wages shall be deemed to continue from the date immediately following the date that the wages were due and payable as provided in Part 1 (commencing with section 200) of Chapter 2 of the California Labor Code, to the date immediately preceding the date the wages are paid in full. For retaliatory action by the Employer, the Employee shall be entitled to reinstatement of his or her prior position, assignment, or job, if 7.E.a Packet Pg. 780 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 19 applicable, and a trebling of all back wages, fines, and penalties. (f) Interest. In any administrative or civil action brought for the nonpayment of wages under this Chapter, the Enforcement Agent, the Hearing Officer, or the court, shall award interest on all due and unpaid wages, fines, and penalties at the rate of interest specified in subdivision (b) of section 3289 of the California Civil Code, which shall accrue from the date the wages were due and payable as provided in Part 1 (commencing with section 200) of Division 2 of the California Labor Code, to the date immediately preceding the date the wages are paid in full. 4.65.5.100 Employee Remedies. (a) Private Right of Action. An Employee claiming a violation of this Chapter may file an action in the Superior Court of the State of California against an Employer, within three years of the occurrence of the alleged violation, and may be awarded: 1. Reinstatement to the position from which the Employee was discharged in violation of this Chapter. 2. Back pay unlawfully withheld. 3. All penalties or fines imposed pursuant to other provisions of this Chapter or State law, as determined by the court. 4. For retaliatory action by an Employer, the Employee shall be entitled to a trebling of lost wages and penalties or fines imposed, in addition to reinstatement, as determined by the court. 5. Interest on all due and unpaid wages at the rate of interest specified in subdivision (b) of Section 3289 of the California Civil Code, which shall accrue from the date that the wages were due and payable as provided in 7.E.a Packet Pg. 781 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 20 Part 1 (commencing with Section 200) of Division 2 of the California Labor Code, to the date the wages are paid in full. 6. Other legal or equitable relief the court may deem appropriate. 7. If an Employee is the prevailing party in any legal action taken pursuant to this Chapter, the court may award reasonable attorneys' fees and costs as part of the costs recoverable. (b) Administrative Complaint. Any Employee, or any other person, may file a complaint with the Enforcement Agent alleging a potential violation of this Chapter. A complaint should include a statement of the dates, places, and persons or entities responsible for such violation. Complaints must be filed within three years after the occurrence of the alleged violation of this Chapter. 4.65.5.110 Administrative Enforcement. (a) Payments on Employees' Behalf. The City, when enforcing on behalf of an Employee, has the authority to require that payment of all amounts due under this Chapter be paid directly to the City. The failure of an Employer to pay any amounts due under this Chapter shall constitute a debt to the City. The City, as plaintiff or judgment creditor, may file a civil action on behalf of an Employee or the City or, to the extent feasible under State law, create and impose a lien against any property owned or operated by an Employer or other person who fails to pay wages, penalties, and administrative fines, or pursue other legal and equitable remedies available to the City. The City shall be awarded reasonable attorneys' fees and costs, as well as costs associated with enforcing a violation under this Chapter. 7.E.a Packet Pg. 782 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 21 (b) Nothing in this Chapter shall limit or otherwise prohibit any governmental agency with jurisdiction over wage-related claims from enforcing, or pursuing remedies on behalf of affected Employees permitted by, the provisions of this Chapter. 4.65.5.120 No Waiver of Rights. Any waiver by an Employee of any or all of the provisions of this Chapter shall be deemed contrary to public policy and shall be void and unenforceable. 4.65.5.130 Coexistence With Other Available Relief. (a) The remedies, fines, penalties, and procedures provided under this Chapter are cumulative and are not intended to be exclusive of any other available remedies, fines, penalties, and procedures. By filing a complaint with the City, an Employee is not precluded from being able to recover remedies available to them under any other code, regulation, or law. The procedures established in this Chapter shall be in addition to any other criminal, civil, or other remedy established by law that may be pursued to address violations of this Chapter. An administrative citation issued pursuant to this Chapter shall not prejudice or adversely affect any other action, civil or criminal, that may be filed to prosecute or abate a violation, or to seek compensation for damages suffered. (b) Any Employee aggrieved by a violation of this Chapter, the City, or any other person or entity acting on behalf of the public, as provided for under applicable State law, may file a civil action in a court of competent jurisdiction against the Employer violating this Chapter and, upon prevailing, shall be entitled to such legal or equitable relief as may be appropriate to remedy the violation including, without limitation, the payment of any back wages unlawfully withheld, the payment of fines in 7.E.a Packet Pg. 783 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 22 the amount of $100 to each Employee whose rights under this Chapter were violated for each day that the violation occurred or continued, reinstatement in employment and/or injunctive relief, and shall be awarded reasonable attorneys' fees and costs. Any person or entity enforcing this Chapter on behalf of the public, as provided for under applicable State law, upon prevailing, shall be entitled only to equitable, injunctive, or restitutionary relief, and reasonable attorneys' fees and costs. Nothing in this Chapter shall be interpreted as restricting, precluding, or otherwise limiting a separate or concurrent criminal prosecution under the Santa Monica Municipal Code or State law. Jeopardy shall not attach as a result of any administrative or civil enforcement action taken under this Chapter. 4.65.5.140 Conflicts. Nothing in this Chapter shall be interpreted or applied to create any power or duty in conflict with any federal or State law. 4.65.5.150 Administrative Regulations. The Finance Director is authorized to adopt administrative regulations that are consistent with the provisions of this Chapter. Violations of the administrative regulations adopted pursuant to this section shall constitute violations of this Chapter and shall subject the violator to the penalties set forth in this Chapter. 4.65.5.160 Operative Period. (a) Operative Date and Duration of Hero Pay Requirement. The requirement to pay Hero Pay, as provided in this Chapter, shall commence at 12:00 a.m. the Thursday immediately following adoption of this Chapter by the City Council (the "Operative Date"), and shall continue for 120 days. 7.E.a Packet Pg. 784 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 23 (b) Grace Period. An Employer shall be relieved of liability for non-payment of Hero Pay during the first 45 days this Chapter is operative, so long as Hero Pay begins accruing on the Operative Date of this Chapter, and the accrued amount is paid in full on or before the next pay day immediately following the 45th day. SECTION 2. Any provision of the Santa Monica Municipal Code or appendices thereto inconsistent with the provisions of this Urgency Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Urgency Ordinance. SECTION 3. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Urgency Ordinance. The City Council hereby declares that it would have passed this Urgency Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. SECTION 4. The Mayor shall sign and the City Clerk shall attest to the passage of this Urgency Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. Pursuant to Sections 615 and 619 of the City Charter, for the reasons stated in the recitals above, the City Council declares this Urgency Ordinance to be necessary as an emergency measure for preserving the public peace, health, and safety, with the result that this Urgency Ordinance shall be introduced 7.E.a Packet Pg. 785 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 24 and adopted at the same meeting and shall become effective immediately upon its adoption. APPROVED AS TO FORM: _________________________ George S. Cardona Interim City Attorney 7.E.a Packet Pg. 786 Attachment: A - Proposed Urgency Ordinance (4472 : Urgency Ordinance - Hero Pay) 1 CITY COUNCIL FEBRUARY 16, 2021 PUBLIC HEARING SUBJECT: URGENCY AND REGULAR ORDINANCES OF THE CITY COUNCIL OF THE CITY OF WEST HOLLYWOOD ESTABLISHING PREMIUM PAY AND ASSOCIATED LABOR PROTECTIONS FOR GROCERY WORKERS WORKING IN WEST HOLLYWOOD INITIATED BY: MAYOR LINDSEY P. HORVATH COUNCILMEMBER JOHN M. ERICKSON PREPARED BY: CITY ATTORNEY’S OFFICE (Lauren Langer, Assistant City Attorney) CITY MANAGER’S DEPARTMENT (Paul Arevalo, City Manager) (Janet Jimenez, Assistant to the City Manager) (Tara Worden, Business Development Analyst) ___________________________________________________________________ STATEMENT ON THE SUBJECT: The City Council will consider an urgency and non-urgency ordinance establishing requirements for premium pay and associated labor protections for grocery workers in West Hollywood. RECOMMENDATIONS: 1. Adopt an URGENCY ORDINANCE 21-_____U OF THE CITY COUNCIL OF THE CITY OF WEST HOLLYWOOD ESTABLISHING PREMIUM PAY AND ASSOCIATED LABOR PROTECTIONS FOR GROCERY WORKERS WORKING IN WEST HOLLYWOOD AND SETTING FORTH THE FACTS CONSTITUTING SUCH URGENCY. 2.Introduce on first reading Ordinance 21-__ AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST HOLLYWOOD ESTABLISHING PREMIUM PAY AND ASSOCIATED LABOR PROTECTIONS FOR GROCERY WORKERS WORKING IN WEST HOLLYWOOD. BACKGROUND/ANALYSIS: Since March of 2020, the COVID-19 pandemic has dramatically impacted West Hollywood citizens, business owners, employees, and visitors. In April 2020, the City of West Hollywood adopted additional protections for grocery workers and customers, including regulations requiring face coverings and social distancing. The global health pandemic has emphasized the importance of workers in industries now AGENDA ITEM 3.C. 7.E.b Packet Pg. 787 Attachment: B - WEHO STAFF_REPORT (4472 : Urgency Ordinance - Hero Pay) 2 highlighted as essential, including front-line grocery workers. According to the Brookings Institute, low-wage workers in America have suffered the worst economic pain of the pandemic. One of the reasons low-wage workers have suffered disproportionate job losses is their limited ability to telework. Low-wage workers are six times less likely to be able to work from home than high-income workers, according to Brookings.1 Another report from last year also identifies that “the people likely to suffer most, both economically and health-wise, during the ongoing recession are those who are engaged in occupations where the ability to socially distance from customers and from each other is extremely low.”2 Due to the virus, millions of frontline grocery workers nationwide have had to face new job-related hazards not previously considered especially dangerous. Los Angeles County public health data shows outbreaks at food facilities, like supermarkets, are up exponentially since early November. An NBC Investigation article from January 15, 2021, discovered 146 outbreaks last month alone at supermarkets in LA and Orange County, according to data obtained from the United Food and Commercial Workers (UFCW) Local 324.The report included 31 Ralphs, 17 Vons and 16 Albertsons. Another report from CNBC reports how the toll of COVID has been particularly hard on grocery store workers who can’t work from home and often have low pay and limited benefits.3 A study of grocery store workers has also shown an accelerated risk of coronavirus infection faced by workers in customer-centric roles.4 Additionally, new and potentially more contagious variants of the coronavirus that have been detected in California, which is hitting California just as California begins to recover from the winter surge.5 At the same time, grocery stores across the country have seen record profits. The Brookings Institute, found that top retail companies had a 39% increase in profit over 2019, averaging an extra $16.9 billion in 2020.6 The Brookings Report also establishes that frontline workers at the 13 companies studied in the report received pay raises of only an average $1.11 per hour since pandemic began. UFCW 770, which represents unionized grocery store employees in West Hollywood, reports approximately 5,550 total COVID positive cases as of February 2, 2021.7 UFCW International has reported 124 grocery worker deaths, and 25,760 grocery workers 1 https://www.brookings.edu/research/reopening-america-low-wage-workers-have-suffered-badly-from-covid-19-so- policymakers-should-focus-on-equity/. https://www.brookings.edu/blog/the-avenue/2021/01/27/local-covid-19-hazard-pay-mandates-are-doing-what-congress-and-most-corporations-arent-for-essential-workers/ 2 https://www2.deloitte.com/us/en/insights/economy/issues-by-the-numbers/covid-19-impact-on-income-inequality.html. 3 https://www.cnbc.com/2020/11/23/grocery-workers-face-new-challenges-as-covid-worsens-fatigue-sets-in.html. 4 https://www.safetyandhealthmagazine.com/articles/20524-covid-19-pandemic-grocery-store-workers-face-accelerated-risk-of-infection-study-finds; https://www.bmj.com/company/newsroom/high-rate-of-symptomless-covid-19-infection-among-grocery-store-workers/ (this study also showed that the positivity rates of grocery workers were higher than that of the community generally). While data and case rates are constantly changing, this data illustrates the higher risks associated with grocery work during a health pandemic of a virus that is spread through the air and at higher rates indoors, such as in grocery stores. 5 https://www.latimes.com/california/story/2021-01-20/vaccines-aggressive-strains-and-fatigue-california-hits-3-million-covid-cases-and-a-crossroads. 6 https://www.brookings.edu/essay/windfall-profits-and-deadly-risks/. 7 https://ufcw770.org/southern-california-essential-workers-call-for-hazard-pay/. 7.E.b Packet Pg. 788 Attachment: B - WEHO STAFF_REPORT (4472 : Urgency Ordinance - Hero Pay) 3 infected or exposed. UFCW International represents workers in all 50 states.8 Grocery store employees have reported in the LA Times having to act as “de facto” public health enforcement officials asking customers to wear mask and face hostility, which creates a very stressful working environment.9 Due to these shifting emergency circumstances, at the beginning of the pandemic, a number of grocery companies initially provided extra COVID-19 related compensation to their workers. This bonus, commonly known as “Hero Pay”, often was implemented as a temporary hourly wage increase or a one-off bonus for essential workers. However, as the impacts of the pandemic subsided in June, many retail companies ended their temporary wage increase, and there has yet to be a meaningful commitment to restoring it. This has occurred even as the pandemic has continued to disproportionately impact low wage workers, leaving some grocery workers as the primary earners in their households. The December 6, 2020 stay-at-home order was lifted on January 25, 2021, but the virus continues to be widespread throughout Southern California. Vaccines are being distributed throughout Los Angeles County first to healthcare workers and persons who are age 65 and older. On January 19, 2021, the City Council requested staff to prepare the attached proposed ordinance for consideration. Given the urgent nature of the health pandemic and need to provide immediate assistance to those at higher risk of infection, the City Council may choose to adopt the Urgency Ordinance (ATTACHMENT A), which goes into effect immediately. Adoption of an urgency ordinance requires specific findings and a four-fifths vote of City Council. (Gov. Code, § 36937, subd. (d).) The Urgency Ordinance is also accompanied by an identical, non-urgency ordinance (ATTACHMENT B) that can be adopted simultaneously and will replace the urgency ordinance when it goes into effect 30 days after adoption. Details of Proposed Ordinance The proposed Ordinances would require grocery stores to provide premium pay of an additional $5.00 per hour to their workers in West Hollywood for 120 days. Similar to the Long Beach ordinance, “Grocery store” would include stores that devotes seventy percent (70%) or more of its business to retailing a general range of food products, which may be fresh or packaged. Additionally, grocery stores would only be subject to these Ordinances if they employ three hundred (300) or more workers nationally and more than fifteen (15) employees per location in the City. The “grocery store” definition differs from the City’s December 21, 2020 ordinance requiring grocery stores to post a person at each entrance, which defines “grocery store” as a retail business where the principal business activity is the sale of food. This definition does 8 https://www.ufcw.org/press-releases/new-report-hazard-pay-mandates-in-california-seattle-drive-momentum-for-congress-to-act-on-frontline-worker-protections-as-covid-infections-surge-nationwide/. 9 https://www.latimes.com/business/story/2020-08-07/retail-workers-stressed-about-being-covid-mask-police. 7.E.b Packet Pg. 789 Attachment: B - WEHO STAFF_REPORT (4472 : Urgency Ordinance - Hero Pay) 4 not include a “convenience store”, which is defined as a retail store of generally 3,500 square feet or less in gross floor area, which primarily carries prepackaged food and beverage products, but may also include other merchandise oriented to convenience shopping and travelers’ needs. Grocery stores may not, as a result of these Ordinances, retaliate against a worker by reducing compensation or otherwise limiting the worker’s earning capacity. In addition, these stores must provide their workers with notice of this Ordinance, including their right to premium pay, their right to be protected from retaliation, and their ability to bring a civil action if these rights are violated. Records showing compliance with these Ordinances must be kept for at least two years. Any grocery store that violates these Ordinances may be subject to any appropriate relief at law or equity including reinstatement of the aggrieved worker, front pay in lieu of reinstatement with full payment of unpaid compensation plus interest in favor of the aggrieved worker, and liquidated damages in an additional amount of up to twice the unpaid compensation. If a worker prevails in a civil action, reasonable attorney’s fees and costs may be awarded, in addition other legal or equitable relief as may be appropriate. The provisions of these Ordinances may be expressly waived in a collective bargaining agreement. Otherwise, any waiver by a worker of any provision will be deemed contrary to public policy, void, and unenforceable. Impacts to the Grocery Store Sector Staff has conducted outreach to the West Hollywood Chamber of Commerce to determine the impacts to grocery stores’ business operations. Initial feedback from the business community indicates that a temporary $5 increase in hourly wages would decrease the number of working hours available for employees, effectively decreasing their weekly pay. With reduced staffing, workers are likely to experience further limitations on their capacity to comply with the regulations from the Public Health Officer Orders, which require for example, additional sanitization practices. The business community anticipates that a reduction in staff may result in increased public health risks for grocery stores workers in the City. As drafted, the ordinance modeled after the City of Long Beach would apply to the following stores in the city: •Two Ralph’s locations •Pavilions •Bristol Farms •Whole Foods Market •Gelson’s Market • Smart and Final 7.E.b Packet Pg. 790 Attachment: B - WEHO STAFF_REPORT (4472 : Urgency Ordinance - Hero Pay) 5 •Sprouts Farmers Market •Two Trader Joe’s locations It is unknown at this time whether the ordinance will apply to Yummy Neighborhood Market, which would depend on the number of employees at the national and local level. The City Council received a letter (ATTACHMENT C) from Trader Joe’s Company on January 25, 2021, requesting exemption from the proposed Ordinances due to additional pay and benefits that the company has provided to employees since the beginning of the pandemic in March 2020. Specifically, the letter reports that Trader Joe’s voluntarily increased pay last March by $2/hour. That pay increase is still in place. Since receipt of that letter, news reports indicate that Trader Joe’s will pay workers an additional $2 ($4 total) in “Thank you” pay to its workers throughout the pandemic or until employees are “eligible for vaccines as ‘grocery workers.” The City Council should review the aforementioned correspondence and provide direction if any changes to the proposed Ordinances are desired to reflect stores that have already instituted premium pay for grocery workers. The City of Long Beach appears to be the first city in California to adopt a premium pay ordinance for grocery workers. Many other California jurisdictions are considering similar ordinances; including City of Los Angeles, Santa Monica, County of Los Angeles, County of San Mateo, City of San Mateo, Belmont, Coachella, San Jose, Berkeley, and Santa Ana. The California Grocers Association (which represents about 6,000 grocery stores across the state) filed a federal lawsuit challenging Long Beach’s hazard pay ordinance. The association argues that the ordinance is unconstitutional because it targets grocery stores over other industries and interferes with federal labor law that protects the collective bargaining process. Recently, the federal judge denied the CGA’s request for a temporary restraining order to stop enforcement of the ordinance before a court could hear the case. The judge also set a hearing for February 19, 2021, to hear the association’s request for a preliminary injunction to halt the law while the case is pending. Similar lawsuits have been filed against the cities of Oakland and Montebello. Also, on February 1, 2021 the Los Angeles Times reported that Kroger, which owns several supermarket chains, said it would close two stores in Long Beach in response to the city’s adoption of a “Hero Pay” Ordinance. The stores slated for closure are a Ralphs and a Food 4 Less store, affecting 200 workers. Alternatives: After hearing from staff and the public, the City Council may choose to: 1.Adopt the recommendations at the beginning of this report; 2.Provide direction on whether to amend the proposed ordinances to account for stores that have already implemented premium pay for grocery store workers; 7.E.b Packet Pg. 791 Attachment: B - WEHO STAFF_REPORT (4472 : Urgency Ordinance - Hero Pay) 6 3.Postpone adoption of the ordinances until after the injunction hearing in the Long Beach case on February 19, 2021; 4.Postpone adoption of the ordinance and direct staff to do further outreach with the business community, including to encourage voluntary pay increases at grocery stores; or 5.Provide additional direction to staff. CONFORMANCE WITH VISION 2020 AND THE GOALS OF THE WEST HOLLYWOOD GENERAL PLAN: This item is consistent with the Primary Strategic Goal(s) (PSG) and/or Ongoing Strategic Program(s) (OSP) of: •OSP-12: Actively Participate in Regional Issues. •OSP-11: Community Education. In addition, this item is compliant with the following goal(s) of the West Hollywood General Plan: •G-2: Maintain transparency and integrity in West Hollywood’s decision-making process. EVALUATION PROCESSES: N/A ENVIRONMENTAL SUSTAINABILITY AND HEALTH: This action has direct impacts on the health and well-being of residents and visitors of West Hollywood. COMMUNITY ENGAGEMENT: N/A OFFICE OF PRIMARY RESPONSIBILITY: CITY MANAGER'S DEPARTMENT / CITY ATTORNEY’S OFFICE FISCAL IMPACT: None at this time. ATTACHMENTS: ATTACHMENT A: Urgency Ordinance No. 21-_____U ATTACHMENT B: Ordinance No. 21-_____ ATTACHMENT C: Letter from Trader Joe’s Company 7.E.b Packet Pg. 792 Attachment: B - WEHO STAFF_REPORT (4472 : Urgency Ordinance - Hero Pay) REPORT OF THE CHIEF LEGISLATIVE ANALYST February 19, 2021DATE: Honorable Members of the City CouncilTO: Sharon M. Tso Chief Legislative Analyst Council File No. 20-1609 Assignment No. 21-02-0086 FROM: Grocery, Drug, and Retail Store COVID-19 Hazard Pay Economic Impact SUMMARY On February 2, 2021, the City Council requested that the City Attorney draft an ordinance that will provide all hourly, non-managerial employees at grocery, drug, and retail stores (with a grocery or drug component) in the City with 300 or more employees nationally and 10 or more employees on-site, with a total of five dollars per hour premium hazard pay in addition to their base wage for the next 120 days. The Council further directed the Office of Wage Standards (Bureau of Contract Administration), with assistance of the City Attorney, to promulgate rules and regulations for implementing the ordinance. Additionally, the Chief Legislative Analyst (CLA) was instructed to report on the ordinance’s economic impact, potential legal challenges, strategies to counter such challenges, and the impact on disadvantaged communities. Subsequent to Council action, the City Attorney transmitted the draft ordinance to the Council on February 5, 2021. To prepare this report, our Office reviewed the actions of other cities, interviewed stakeholders, and analyzed research papers on the matter. This report includes a discussion of the draft ordinance, grocery industry economics, potential economic impacts (including on underserved communities), and potential legal challenges. RECOMMENDATION That the City Council note and file this report as it is for informational purposes only. FISCAL IMPACT There is no impact to the General Fund. Any costs associated with the enforcement of the ordinance by the Bureau of Contract Administration will be absorbed by the department. DISCUSSION As a result of the outbreak of the COVID-19 virus, on March 4, 2020, Governor Newsom declared a State of Emergency in California and Mayor Garcetti declared a State of Emergency in the City of Los Angeles. The COVID-19 pandemic has forced the closure of schools and 1 7.E.c Packet Pg. 793 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) many businesses, including, but not limited to, movie theaters, bars, restaurants and event venues. On March 19, 2020, Mayor Garcetti issued a “Safer at Home” emergency order, requiring all residents to stay inside their homes and immediately limit all movement outside their homes beyond what is necessary to take care of essential needs. On March 19, 2020, Governor Newsom issued an executive order that required all residents to stay home, except as needed to maintain continuity of operations of essential sectors as critical to protect the health and well-being of all Californians. In accordance with this order, the State Public Health Officer designated a list of Essential Critical Infrastructure Workers. Among this list were workers supporting groceries, pharmacies, convenience stores, and other retail stores that sell food or beverage products. From the beginning of the COVID-19 pandemic, grocery and drug store employees have continued to be essential workers, who face health and safety risks as they support the community’s access to food, medicine, and other indispensable services. With restaurants either forced to close or opened for outdoor dining at limited capacity, grocery and drug stores have increasingly been the source of America’s meals. The Census Bureau reported that the grocery sector has seen an 11.2 percent increase in sales from 2019 while other types of retail stores have seen less pronounced sales increases or declines. Grocery and drug store employees work in environments where they come into close contact with large numbers of customers over the course of the workday, and these working conditions have resulted in localized outbreaks of COVID-19 across the City’s grocery and drug stores. A Harvard study of over 100 employees at one grocery store in Boston, Massachusetts found that employees in customer-facing roles are five times as likely to test positive for COVID-19 as their colleagues in other positions. In another study, researchers at the University of California, San Francisco analyzed death records and estimated excess mortality among Californians 18-65 years of age by occupational sector and occupation, including race and ethnicity. They found that for the period March-October 2020, working age adults experienced a 22 percent increase in mortality compared to historical periods. Excess mortality was highest in food/agriculture workers (39 percent increase), transportation/logistics workers (28 percent increase), facilities (27 percent increase) and manufacturing workers (23 percent increase). Latino Californians experienced a 36 percent increase in mortality, with a 59 percent increase among Latino food/agriculture workers. Black Californians experienced a 28 percent increase in mortality, with a 36 percent increase for Black retail workers. The researchers conclude that in-person essential work is a likely venue of transmission and must be addressed through strict enforcement of health orders and the protections of in-person workers. They add that vaccination programs prioritizing food/agriculture workers are likely to have disproportionately large benefits for reducing COVID-19 mortality. In April 2020, the City Council adopted Ordinance #186591, which provided grocery, drug, and food delivery workers with a series of protections: • Right to schedule changes; • Additional work hours offered to current employees before hiring new employees;• The option of a “no-contact” delivery method; and• Retaliatory actions prohibited. 2 7.E.c Packet Pg. 794 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) The ordinance has a sunset date upon the later of either the Governor or the Mayor lifting the COVID-19 emergency order. Grocery, drug, and retail store employees do not currently have a right to hazard pay, a type of additional compensation for workers performing hazardous duty or involving physical hardship. Due to the essential nature of work provided by these workers and due to the risk these workers face due to higher potential for exposure to COVID-19, the Council seeks to ensure that these workers receive hazard pay commensurate to their risk. Draft Ordinance1. On February 5, 2021, the City Attorney released a draft hazard pay ordinance (C.F. 20-1609) that would require grocers, drug, and retail stores meeting certain criteria to provide hazard pay as a result of the COVID-19 pandemic. The ordinance mandates that all non-managerial employees at grocery, drug, and retail stores in the City be paid five dollars per hour premium hazard pay in addition to their base wage for the next 120 days. According to the California Grocers Association, it is common for store managers and assistant managers to be paid on a salaried (non-hourly) basis. Should the Council wish to include managers and supervisors that are paid on an hourly basis in the hazard pay proposal, the City Attorney should be requested to amend the ordinance. As proposed, the following grocery, drug, and retail employers would be required to provide the premium hazard pay: • A grocery retail store with more than 300 employees nationwide, and more than 10 employees on-site in the City, that primarily sells food or household goods, including the sale of produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, and/or prepared foods; or • A drug retail store with more than 300 employees nationwide, and more than 10 employees on-site in the City, that sells a variety of prescription and nonprescription medicines and miscellaneous items, including, but not limited to, drugs, pharmaceuticals, sundries, produce, meats, poultry, fish, deli products, dairy products, canned foods dry foods, beverages, prepared foods, and other merchandise; or • A retail store with more than 300 employees nationwide, and more than 10 employees on-site in the City, that is over 85,000 square feet and:o Dedicates 10 percent or more of its sales floor to groceries, including, but not limited to, produce, meats, poultry, fish deli products, dairy products, canned foods, dry foods, beverages, baked foods, and/or prepared foods; or o Dedicates 10 percent or more of its sales floor to drug retail, including, but not limited to, drugs, pharmaceuticals, sundries, produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, prepared foods, and other merchandise. The ordinance also includes a private right of action (which allows a private citizen to bring a judicial action) and an urgency clause, in which case the ordinance would go into effect 3 7.E.c Packet Pg. 795 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) immediately upon publication. The Office of Wage Standards, under the Bureau of Contract Administration, would be responsible for promulgating the rules, regulations, and enforcement of the ordinance. Hazard Pay Efforts by Other Cities and Existing Hazard Pay for City of Los Angeles Employees 2. Besides Seattle, the majority of cities contemplating hazard pay for grocery and other retail employees are located in California. Five cities have adopted ordinances that provide a range of hazard pay from $3-$5 per hour. They are Long Beach ($4), Seattle ($4), San Jose ($3), Montebello ($4), and Oakland ($5). Nearly all of the cities and counties that have adopted or are drafting ordinances have an employee threshold of 300 and sunset after 120 days. For a detailed chart of each city’s ordinance, see Attachment A. While some of the cities listed here provided a staff report on their respective proposal, those reports did not provide a robust level of economic analysis. The City provides its employees with numerous types of hazard pay when the working environment has been determined to be hazardous. For example, employees performing the following work are entitled to 5.5 percent hazard pay above the base salary rate: • Working on a ladder, scaffolding, hydraulic lift platform, etc. • Spraying asphalt, chemicals, paint, etc.• Working in a deep sewer • Cleaning a homeless encampment or illegal dump site Other hazard pay examples include Airport Security Officers that work to direct traffic (11.5 percent hazard pay) and Canine Police Officers (16 percent hazard pay). Grocery Industry Economics and Response to COVID-193. In response to the COVID-19 pandemic, major grocery, drug, and retail chains have provided some form of extra COVID-19 related compensation. Research by the Brookings Institution (Brookings) found that Target, Amazon, Kroger, Albertsons, and Costco provided $2 per hour in hazard pay and some provided additional bonuses. Walgreens and CVS only provided bonuses. By July 2020, all of these companies had canceled their hourly hazard pay, while some continued to provide bonuses. Rather than continue its hourly hazard pay, Target moved up a planned increase of its nationwide starting salary to $15 in July 2020 (it had committed to the increase by the end of 2020 in 2017). Target also continues to provide bonuses. Since the beginning of the pandemic, Trader Joe’s has provided employees with $2 per hour hazard pay and recently increased the hazard pay to $4 per hour. As a result of COVID-19, the grocery, drug, and retail industry has faced a number of additional infrastructure and labor costs, including: • Providing employees with personal protective equipment • Increased sanitation and cleaning protocols 4 7.E.c Packet Pg. 796 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) • Installation of protective equipment, including plastic barriers, and social distancing markers• Supplemental paid leave • Hiring and training workers or paying overtime wages to existing workers who fill in for those out on paid leave• Biweekly or weekly COVID-19 testing costs• E-commerce staffing and capital costs Labor costs are discussed further in the economic impact section. Additional details concerning hazard pay, bonuses and other benefits provided by retail companies to their employees is described in Attachment B. Industry Overview According to Sageworks (a financial information company), the grocery industry is a low profit margin industry. Companies in this sector achieve success through the substantial volume of goods they sell. According to the United Food and Commercial Workers International Union, there are approximately 26,000 grocery workers in the City, of which 35 percent belong to a union. According to ZipRecruiter, the average pay for a grocery store worker in Los Angeles is $17.51 per hour. In their research paper on hazard pay, Brookings reported on the performance of large retailers in 2019 compared to 2020. The table below shows the change in the net income after taxes (after subtracting all costs) of select companies: Figure 1. Net income after taxes (profit) of large grocery, drug, and retail companies in $ millions (first three financial quarters)._____________________________________________________________________________ $ Change2019 Profit 2020 Profit % ChangeCompany $399 $995 $596Albertsons 149% $1,332 $2,662 $1,330 100%Kroger $8,320 $14,109 $5,789 70%Amazon $2,003 $2,227 $224Costco (only two quarters)11% $2,447 $2,988 $541 22%Target $10,740 $15,601 $4,861Walmart 45% $4,887 $6,206 $1,319 27%CVS Walgreens (only two quarters)$1,695 $885 -$810 -48% Source: Brookings Institution Report and company quarterly reports. Brookings reported that the size, scale, and e-commerce capabilities of these large companies enabled many of them to vastly outperform their 2019 profit, with the exception of Walgreens. 5 7.E.c Packet Pg. 797 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) In order to compare the performance of grocery companies pre-COVID and post-COVID, a more appropriate measurement is the net profit margin, which defines how much profit is generated as a percentage of revenue. Put another way, it illustrates how much of each dollar in revenue collected by a company translates into profit. Sageworks reported that the 2017 average net profit margin for the Grocery Stores NAICS code (4451) was 2.2 percent, which is among the lowest among American industries1. Taken separately, the net income (profit) of these large retailers is impressive, but it is the net profit margin figure that allows comparison between companies and the industry average to determine the performance of the companies. Net profit margin for 2020 is discussed further below. Publicly Traded Grocers For the publicly traded grocers, we focus on the performance of Kroger (Ralphs and Food 4 Less) and Albertsons (including Vons and Pavilions). These companies are the first and third largest grocery chains in the United States respectively and have a combined 100 stores in the City. These chains have full service stores that are on average 50,000 square feet and have between 100 and 175 employees per store. In 2019, the net profit margin of Kroger and Albertsons was near or below the industry average. The chart below shows the change in net profit margin for both companies from 2019 to 2020 and compares it to the 2017 average net profit margin for grocery stores, supermarkets, and convenience stores (Kroger divided 2020 into three unequal quarters, so they did not have a fourth quarter result for 2020.): Figure 2. Kroger and Albertsons 2019 vs. 2020 Net Profit Margin After Taxes # Kroger ■ Albertsons 2017 Average 4.00% 3.00% 2.00% 1.00% 0.00% 2019 Q1 2019 Q2 2019 Q3 2020 Q1 2020 Q2 2020 Q3 Source: Company quarterly earnings as reported to the U.S. Securities and Exchange Commission At the beginning of the pandemic, net profit margins spiked in the first quarter of 2020 as customers stocked up on essential food and home items. In the most recent financial report for i NAICS codes are used to categorize industries. NAICS code 4451 includes grocery stores, supermarkets, and convenience stores. Convenience stores are not included in the draft ordinance. 6 7.E.c Packet Pg. 798 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) the 3rd Quarter 2020, the net profit margin for Kroger returned to the first quarter of 2019 level, with Albertsons seeing a slight increase over the same period in 2019. While the 2017 average net profit margin of 2.2 percent does contain convenience stores, we use this average as the best available benchmark to grade the performance of Kroger and Albertsons during the last two years. Both companies did not earn above average profits until the first quarter of 2020 during the COVID-19 shopping spike and by the third quarter had dropped below the average. For additional historical context of the economic performance of both Kroger and Albertsons, the following chart shows the fiscal year net profit margin after taxes for both companies between 2015-2019. Only Kroger produced above industry average results during this timeframe (in 2018). Albertsons had a negative net profit margin in 2015 and 2016. Figure 3. Kroger and Albertsons Fiscal Year Net Profit Margin After Taxes # Kroger ■ Albertsons 2017 Average 3.00% 2.00% 1.00% 0.00% -1.00% 2015 2016 2017 2018 2019 Source: Company fiscal earnings as reported to the U.S. Securities and Exchange Commission Independent Grocers For privately held grocers, we use the 2020 Independent Grocers Financial Survey for information on this industry segment, which provides data on the nation’s privately held grocery stores. Independent stores are smaller in footprint at an average of 27,000 square feet. Independent stores have an average of 72 employees per store. Labor and benefit costs are 18.42 percent of sales in the western region, meaning that grocers must spend $18.42 in labor and benefit costs in order to receive $100 in sales. The Independent Grocers Financial Survey provides net profit margin before taxes versus the Kroger and Albertsons data above which provides after tax performance. The following chart shows the western region independent grocers net profit before taxes from 2015 to 2019: 7 7.E.c Packet Pg. 799 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) Figure 4. Western Region Independent Grocers Net Profit Margin Before Taxes 2015-2019 9 Net Profit Margin Before Taxes — — 2015-2019 Average 3.00% 2.00% 1.00% 0.00% 2015 2016 2017 2018 2019 The average net profit before taxes was 1.85 percent for independent grocers for the five years before the pandemic. The data also shows that while the western region grocers experienced a net profit of 2.44 percent in 2019, during that year 25 percent of companies had a negative net profit. Much like the publicly traded grocers, COVID-19 resulted in independent grocers experiencing two of the biggest weeks in the history of food retailing in terms of trips, sales, and basket size (the quantity of goods purchased in a single trip). After the March 2020 surge, the number of trips to stores fell well below 2019 levels as shoppers quarantined at home. The Independent Grocers Financial Survey reports that overall sales were up 13.3 percent for the first six months of 2020 vs. the same period in 2019. No net profit margin data is available for 2020. Potential Economic Impacts4. Businesses that will be required to provide hazard pay To provide the Council with context of the impact of the hazard pay draft ordinance, our Office prepared a list of the potential grocery, drug, and retail chains that could be affected (Attachment C). For the major local and nationwide chains, there is no question these companies have over 300 employees and thus would be subject to providing hazard pay. For the smaller chains, we assume these chains are privately owned and thus their average employee count per store is 72 (based on the Independent Grocers Survey discussed above). To determine how many smaller chains would be included, we must make an educated assumption on the average number of employees for the independent grocery chains located in Los Angeles with more than one location. We also must add employees to account for the corporate or other support (back office) employees who do not work in the store (but who are counted toward the nationwide 300 8 7.E.c Packet Pg. 800 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) employee threshold). We inferred that 80 employees per store is a more likely average for the purposes of this analysis. We multiplied the nationwide number of stores by 80 to arrive at an estimated total nationwide employee count for each chain. We note that Attachment C includes drug stores and retail chains. In these industries, there is less of a middle market, with the majority of the stores being either a nationwide chain or small mom and pop establishments (which would not be covered by the ordinance). We reiterate that this list is simply a projection to gauge the degree of how many chains could be included in the hazard pay requirement, and is not the final list of companies that will be required to comply. For the retail chains, we did not analyze which chains have 10 percent or more of their sales floor dedicated to grocery or drug retail. Large Retailers Large retailers like Walmart and Target would be subject to the draft ordinance, however, as written, the ordinance requires hazard pay on a store by store basis. Target, for example, would be required to include hazard pay for its employees that work at stores larger than 85,000 square feet that dedicate at least 10 percent of the sales floor to grocery or drug retail. Target has several stores that operate in a smaller footprint, including: • 59,000 square foot store at 415 S. La Brea Ave. (CD 4)• 25,000 square foot store at 8900 Sepulveda Blvd. (CD 11) • 39,600 square-foot (future) location at 7021 Hollywood Blvd. (CD 13)• 49,000 square-foot (future) location at 17401 Ventura Blvd. (CD 5) • 24,000 square-foot (future) location at 330 Westlake Ave. (CD 13) Because these stores are under 85,000 square feet, Target would not be required to provide hazard pay to the employees working in these stores. Should the Council wish to include smaller footprint stores of major retailers, the City Attorney would need to amend the draft ordinance to include a provision that if a retailer has one store located in the City that meets the hazard pay ordinance, all stores located in the City would be required to provide hazard pay, regardless of store size. Economic Impacts Implementing the proposed ordinance could have several economic impacts. In order to determine these impacts, we have prepared projections based on certain factors, including the reaction to the City of Long Beach ordinance (which requires hazard pay of $4 for grocery employees), research of the wages of impacted employees, and the number of companies located in the City that could be required to implement hazard pay under the proposed ordinance. Below are the potential economic impacts: • Higher wages for grocery, drug, and retail store workers. According to ZipRecruiter, the average pay for grocery store workers in Los Angeles is $17.51 per hour. A $5 per hour hazard pay would increase the average salary to $22.51 per hour, an increase of 29 percent from the base wage. Employees would have a temporary earnings boost and more spending power, which could trigger a temporary increase in the demand for goods. This 9 7.E.c Packet Pg. 801 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) extra demand for goods could result in more business activity in the City, benefiting other City businesses. Employees could also use the higher wages to pay down debt or increase their savings rate. The pay increase will be temporary, lasting for 120 days, unless the ordinance is extended. • Temporarily increases labor costs as a percentage of sales. As discussed above, labor and benefit costs are 18.42 percent of sales in the western region for independent grocers, meaning that grocers must spend $18.42 in labor and benefit costs in order to receive $100 in sales. For the national grocery industry as a whole, including the publicly traded companies, labor expenses account for 13.2 percent of sales, according to a 2019 study conducted by Baker-Tilly, a tax consulting firm. An increase of the base wage rate by $5 will increase the labor costs as a percentage of sales 4-5 percent to between 17 percent of sales for publicly traded companies and 24 percent of sales for independent companies. Companies would be required to take action to reduce costs or increase revenue as the labor increase will eliminate all current profit margin. The increase will be temporary, lasting for 120 days, unless the ordinance is extended. • Potentially higher prices for consumers. Affected companies could raise prices to counteract the additional wage cost. Economic analysis from the California Grocers Association (which analyzed data from the Bureau of Labor) shows that if grocers pass on the entirety of the hazard pay labor cost to consumers, a typical family of four could see grocery prices increase by $33 per month, for a total of $132 in extra costs over the 120 days the ordinance would be in effect. Based on our limited discussions with grocers, there is a lower likelihood that grocers would pass on 100 percent of the labor costs to consumers. Shoppers are extremely price conscious, particularly in chains that serve low-income communities. However, prices could increase on average to a lesser degree. According to a December 2020 survey conducted by the Public Policy Institute of California, 39 percent of Los Angeles County households making under $40,000 reported reducing the number of meals or cutting back on food as a result of the turmoil caused by COVID-19. Increased food costs may cause further negative impact on these lower income households. • Potentially delayed store openings, renovations, and wage increases/promotions. It is more likely that grocery chains will put a temporary hold on expansion plans and reduce or eliminate wage increases/promotions (this is more likely with non-union stores). • More pressure on struggling stores (especially independent grocers), which could lead to store closures. The Independent Grocers Financial Survey reported that in 2019, 25 percent of western region companies reported a negative net profit. According to the California Grocers Association, between one-sixth to one-third of association stores reported negative earnings. More profitable stores often subsidize unprofitable stores within the same chain. Smaller chains with fewer stores will have less capacity to rely on their profitable stores to make up the increase in labor costs. This will be especially acute 10 7.E.c Packet Pg. 802 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) in smaller chains with a majority of stores located in jurisdictions that have passed hazard pay mandates. The publicly traded grocers have stores throughout the country and have more capacity to rely on the profits of stores throughout the nation to subsidize the local labor cost increase. To contain costs, companies may close stores. In response to the City of Long Beach ordinance that provides $4 per hour in hazard pay, Kroger, the parent company of Ralphs and Food 4 Less, announced it was permanently closing two stores located there. It has been reported that both of these stores have historically underperformed for some time before the City Long Beach hazard pay was enacted. Kroger also closed two stores in Seattle in response to the city’s $4 hazard pay policy. Closures of stores affect three groups: Employees - experience a reduction in earnings and could slow or stop certain spending, negatively impacting the local economy. According to the Los Angeles Times, the Long Beach closures will affect 200 workers. Product Vendors/3rd Party Service Providers - vendors that support the store, for example food vendors, custodial, and security, will see reduced demand for their services. Vendors might lay off or reduce hours of their employees as a result. o Customers - will have to find new grocery locations. The closures of stores could lead to an increase in “food deserts” that lack access to fresh groceries. The California Healthy Places Index (HPI) is a new tool developed by the Public Health Alliance of Southern California that combines economic, education, housing, health care access, neighborhood, environment, transportation, and social factors into an index score at the census tract level. While the Long Beach Ralphs location set for closure is in a tract with a HPI score of 85.5 (meaning the area has healthier community conditions than 85.5 percent of other California census tracts), the Food 4 Less set for closure has an HPI score of 29.2 (and adjacent to an area with a score of 9.9) signifying that this location is located in a disadvantaged neighborhood. We are researching the number of affected stores that are located in or near a food desert and will provide that information in a separate report. • Reduced hours, wages, or jobs. To offset higher labor costs, companies might reduce working hours, benefits, wage rates, or lay-off employees. Potential Legal Challenges5. As requested by the Council, we are providing an overview of current legal challenges to similar ordinances. The California Grocers Association (CGA), the trade association for the state’s 11 7.E.c Packet Pg. 803 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) approximately 300 grocery retailers and 150 grocery supply companies, recently filed suit against the City of Long Beach in opposition to the city’s adopted $4 per hour grocery hazard pay ordinance. In its lawsuit, the CGA asserts that the Long Beach ordinance is invalid on several grounds: Violates the National Labor Relations Act (NLRA) by regulating zones of activity that Congress intentionally left to be controlled by the free play of economic forces. Violates the Equal Protection Clause of the United States and California Constitution by improperly singling out certain grocery businesses for disparate treatment while ignoring employers or essential frontline workers outside the industry. No significant and legitimate public purpose exists for the ordinance. The stated purpose for the ordinance (to protect public health, address economic insecurity, and promote job retention) is not rationally related to the discriminatory treatment of CDA’s members. While the city has the ability to enact ordinances to further the health and safety of its citizens, including minimum wage laws, this ordinance is not a minimum labor standard, rather a mandatory hourly bonus, regardless of the wage negotiated during collective bargaining or other agreements. Violates the Contracts Clause of the United States and California Constitution. Interferes with collective bargaining. The CGA filed a request for a temporary restraining order, which was rejected by the Court. The case is scheduled for a Court hearing on February 23rd for a hearing on a preliminary injunction, which would stop the law while the case is pending. The CGA has also sued the cities of Oakland and Montebello, who have adopted similar actions. At your request we conferred with the City Attorney to discuss the legal strategies that could be used to lessen the likelihood of legal action against the City in relation to this proposal. If the Council wishes to discuss the legal strategies related to the proposed ordinance, we recommend that the City Attorney be requested to address these issues in closed session. Clay McCarter Analyst Attachments:A. Other Jurisdictions Hazard Pay ActionsB. Bonuses and other benefits provided by retail companies C. Projected Companies That Will Be Required to Include Hazard Pay Under the Draft Ordinance 12 7.E.c Packet Pg. 804 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) Attachment A Other Jurisdictions Hazard Pay Actions Ordinance Sunset DateJurisdictionHazard Pay Impacted Businesses Eligible EmployeesStatus Grocery or drug retail, including retail stores with 85,000 square feet or more that dedicate 10 percent of the sales floor to grocery or drug retail. Must employ over 300 employees nationally and 10 or more employees on-site. City of Los Angeles (Proposed) Draft ordinance submitted to Council all hourly, non-managerial employees$5.00 120 days 70% or more of the business activity involves the selling of groceries, and the company employs over 300 covered employees nationally, and has more than 15 employees per site. Employed at a grocery store, except managers, supervisors, and confidential employees.$4.00Long Beach Adopted 120 days Grocery stores, convenience stores, liquor stores and other retail locations that sell food or beverage products located in unincorporated Los Angeles County and are publicly traded or have at least 300 employees nationwide and more than 10 employees per store. Ordinance in the process of being drafted Los Angeles County $5.00 All workers 120 days 120 days or until the city declares the coronavirus local emergency to be over, whichever is longer. Ordinance in the process of being drafted Grocery store chains that are publicly traded or have at least 300 employees nationwide and more than 10 employees per store. West Hollywood $5.00 Frontline workers 13 7.E.c Packet Pg. 805 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) Ordinance Sunset DateJurisdictionHazard Pay Impacted Businesses Eligible EmployeesStatus Adopted an action to prepare an order or ordinance consistent with any such measures imposed in unincorporated areas of Los Angeles County. Grocery stores, convenience stores, liquor stores and other retail locations that sell food or beverage products located in unincorporated Los Angeles County and are publicly traded or have at least 300 employees nationwide and more than 10 employees per store.$5.00Santa Monica All workers 120 days Grocery and drug stores that are publicly traded or have at least 300 employees nationwide and more than 15 employees per store Employees not including managers, supervisors or confidential employees$4.00MontebelloAdopted 180 days 14 7.E.c Packet Pg. 806 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) Ordinance Sunset DateJurisdictionHazard Pay Impacted Businesses Eligible EmployeesStatus Retail establishment that employs at least 15 employees on site and employs 300 or more employees nationally and a. (i) devotes 70% or more of its sales floor area to retailing a general range of food products, which may be fresh or packaged, or (ii) receives 70% or more revenue from retailing a general range of food products; b. is more than 85,000 square feet and devotes 10% or more of its sales floor area to the sale of merchandise that is non-taxable pursuant to Section 6359 of the Revenue and Taxation Code; or c. is retail pharmacy that sells a variety of prescription and nonprescription medicines Individual who performs at least two hours of work in a calendar week but does not include managerial, supervisory, or confidential employees of a covered employer. Ordinance in the process of being drafted $4.00Irvine 120 days 15 7.E.c Packet Pg. 807 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) Ordinance Sunset DateJurisdictionHazard Pay Impacted Businesses Eligible EmployeesStatus Hazard Pay is required during a Widespread (purple), Substantial (red) or Moderate (orange) Risk Level, and until such time as Risk Levels return to Minimal (yellow). Any individual working in a qualified grocery store who qualifies as an employee entitled to payment of a minimum wage. Grocery stores with 500 or more employees nationwide and a retail/wholesale store over 15,000 square feet.$5.00OaklandAdopted Ordinance is valid from the period of the effective date through and until such time as the County returns to the Yellow-Tier 4 designation of COVID-19 or 120 days from the effective date of the ordinance Grocery stores (defined by NAICS Code 445110 - Supermarkets and Other Grocery Stores, except Convenience Stores, with a total floor area over 25,000 square feet, and publicly traded entities or businesses with over 300 employees. Ordinance in the process of being drafted $5.00Berkeley All employees 16 7.E.c Packet Pg. 808 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) Ordinance Sunset DateJurisdictionHazard Pay Impacted Businesses Eligible EmployeesStatus Until the Santa Clara County Health Officer has lifted mandatory directives for implementing the State's Regional Stay at Home Order related to the Retail establishments that sell meats, poultry, dairy products, fresh fruits and vegetables and have at least 300 employees nationwide. Includes a credit for retail establishments that currently provide pay increases related to the COVID-19 pandemic.$3.00AdoptedSan Jose COVID-19 pandemic. Grocery business with more than 500 employees worldwide. "Grocery business" would include a retail store that is either: 1. Over 10,000 square feet in size and that is primarily engaged in retailing groceries for offsite consumption; or 2. Over 85,000 square feet and with 30 percent or more of its sales floor area dedicated to the sale of groceries. Valid for as long as the city's coronavirus civil emergency remains in effect. All employees except executive, administrative, or professional roles.$4.00SeattleAdopted 17 7.E.c Packet Pg. 809 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) Attachment B Bonuses and Other Benefits Provided by Retail Companies to Their Employees 2• Target (an increase by $1 billion from 2019 employee benefits) o Bonus Payments■ April 2020: $250-$1,500 to 20,000 employees ■ July 2020: $200 to all hourly employees in stores and distribution centers■ October 2020: $200 to 350,000 employees ■ January 2021: $500-$2,000 to 375,000 employees o Free virtual healthcare visitso 30-day paid leave for vulnerable team members susceptible to the coronavirus o Paid leave options for team members who are symptomatic, have a confirmed case of coronavirus, or have been quarantined due to exposure. o Mental health resources• Amazon ($2.5 billion on special bonuses and incentives in 2020) o Bonus Payments■ June: $150-$500 for warehouse, Whole Foods, and delivery workers■ December 2020: $150 or $300 for operations employeeso An employee diagnosed with COVID-19 receives up to two weeks of pay o Established a $25 million relief fund for employees facing financial hardship or quarantine• Walmart o Bonus Payments■ March 2020: $150 or $300 ■ June 2020: $150 or $300 ■ November 2020: $150 or $300 ■ December 2020: $150 or $300o Employees required to quarantine will receive up to two weeks of pay • Albertsonso Bonus Payments■ June 2020: equal to $4 per hour for the average hours worked between March 15 and June 13 ■ December 2020: equal to $5 per hour for weekly average hours worked during the recent 12-week period• Costco o Bonus Payments■ None • Kroger (over $1 billion in new benefits in 2020) o Bonus Payments ■ March 2020: $150 or $300■ May 2020: $200 or $400 ■ June 2020: $200 or $400■ February 2021: $100 for employees who get vaccinated o Store credits and fuel points 2 The source of all employer COVID-19 investments is their respected websites. 18 7.E.c Packet Pg. 810 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) o Two weeks paid time off for employees diagnosed with COVID-19, placed under quarantine, or practicing self-isolationo $15 million available to provide financial assistance to employees who face hardship due to COVID-19 o Mental health resources • WalgreensBonus Payment■ March 2020: $150 or $300 o • CVS Bonus Payments■ March 2020: $150-$50014-day paid leave for any employee who tests positive for COVID-19 or needs to be quarantined as a result of potential exposure Employee Relief Fund o o o 19 7.E.c Packet Pg. 811 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) Attachment C Projected Companies That Will Be Required to Include Hazard Pay Under the Draft Ordinance Number of Locations Employees (estimated)Mid-Size Grocery Stores * Super King 8 640 Mitsuwa 11 880 Nijiya 12 960 Lassens 11 880 Zion 7 560 Han Kook 4 320 Erewhon 6 480 Big Saver 10 800 Eataly 8 640 Island Pacific Market 16 1,280 Marukai 4 320 Numero Uno 24 1,920 Super A Foods 8 640 *The number of store locations is multiplied by 80 to determine total employees Bristol Farms H Mart Mother's Large Grocery Stores Northgate Sprouts Kroger (Ralphs/Food 4 Less) Albertsons (Vons/Pavilions) Aldi/Trader Joe's Grocery Outlet Gelsons Vallarta Superior Smart and Final Jons Market El Super Whole Foods 99 Ranch Costco Seafood City Large Retail Stores Walmart/Sam's Club Target Large Drug Stores Walgreens CVS (including Longs Drugs) Rite Aid 20 7.E.c Packet Pg. 812 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) 21 7.E.c Packet Pg. 813 Attachment: C - CLAReport (4472 : Urgency Ordinance - Hero Pay) COMPANY P.O. BOX 5049 • 800 SOUTH SHAMROCK AVE. MONROVIA, CA 91016-6346 (626) 599-3700 A National Chain of Neighborhood Grocery Stores www.traderjoes.com January 25, 2021 Dear Council Members Davis, Brock, Parra, McKeown, and de la Torre: I write in regard to the Santa Monica City Council decision to enact a temporary premium pay measure for grocery workers to the extent such a measure is adopted by the City of Los Angeles. We understand this proposal is driven by reports that grocery store workers are exposed to a much higher risk of contracting COVID-19 than the general public, while grocery companies reap outsize profits and do little to reward their employees for their work. This is not true at Trader Joe’s. We have invested in a comprehensive safety program that has ensured our Crew Members are not at high risk for contracting COVID-19 when they come to work. And we have voluntarily and continuously rewarded their work during this unprecedented time with “thank you” pay and enhanced benefits totaling well over $6 per hour. Here are the results for our Crew Members and their hourly remuneration in Santa Monica: Impact per hour Compensation Increases $2.25 $2/hr Thank You Pay $2.00 Extra COVID-19 Paid Leave $0.41 Cash Bonus $0.28 Additional Benefits $0.38 Additional Retirement Contributions $0.09 Grandfathered Medical Coverage $0.86 Additional 10% Crew Member Discount $0.33 Total $6.60 For Trader Joe’s, the impact of our decisions to put safety first and give our Crew Members increased compensation during this unprecedented time has not resulted in the “windfall” 40% profit increase that some large grocery and retail chains are reported to have experienced. See https://www.brookings.edu/essay/windfall-profits- and-deadly-risks/. To the contrary, because we operate stores that are one-third the size of typical grocery stores, our social distancing practices have dramatically reduced the number of customers who can shop in our stores and resulted in declining revenues while our operating costs have increased over $150 million due to the pandemic. 7.E.d Packet Pg. 814 Attachment: D - TraderJoeLetter (4472 : Urgency Ordinance - Hero Pay) COMPANY P.O. BOX 5049 • 800 SOUTH SHAMROCK AVE. MONROVIA, CA 91016-6346 (626) 599-3700 A National Chain of Neighborhood Grocery Stores www.traderjoes.com We hope the information in this letter will help you understand why a “one size fits all” approach to increasing pay at all Santa Monica grocery stores is not necessary, and current compensation and/or COVID-19 safety performance should be factored in to your consideration. Increased Compensation: The base compensation we pay our Crew Members is well above market, and well above the $15 per hour minimum wage in the City of Santa Monica. The regular hourly rate of pay at our two Santa Monica stores currently averages $20 per hour, with some Crew Members earning over $37 per hour. Beginning in March 2020, we voluntarily added $2 per hour to all Crew Members’ pay to thank them for their work. Unlike every other grocery company of which we are aware, Trader Joe’s has paid this premium continuously throughout the pandemic. Trader Joe’s is committed to continuing to pay the “thank you” premium as long as this crisis is causing our communities to shelter in place, and creating the need for our Crew Members to show up every day at our essential business. To date, Trader Joe’s has incurred over $500,000 in additional payroll expense to provide this benefit to our Santa Monica store Crew Members. In addition to these industry-leading wages, Trader Joe’s provides generous benefits including a bonus/401(k) program where we contribute up to an extra 10 percent of annual compensation. We offer generous health insurance coverage, and fair and considerate paid sick leave programs that are among the best of any retailer in America. As a result of the pandemic, we removed our eligibility requirements to allow all Crew Members to maintain their pre-existing health insurance coverage through December 31, 2020, and made it easier to qualify for coverage in 2021. In our Santa Monica stores, this has allowed 24 Crew Members who otherwise would not have qualified for our health insurance to maintain coverage, at a cost to Trader Joe’s of over $100,000. We also have paid over $100,000 in extra paid time off to our Santa Monica Crew Members through December 31, 2020. This includes additional COVID-19 paid leave and “pay as scheduled” when stores were closed for extra cleaning. We also have continued to pay hourly wage increases for Crew Members that “meet expectations” every six months on top of our “thank you” pay premium. There has been no change in this process which generates approximately a 7% annual increase for the nearly 86% of Crew Members that qualify for the raise. 7.E.d Packet Pg. 815 Attachment: D - TraderJoeLetter (4472 : Urgency Ordinance - Hero Pay) COMPANY P.O. BOX 5049 • 800 SOUTH SHAMROCK AVE. MONROVIA, CA 91016-6346 (626) 599-3700 A National Chain of Neighborhood Grocery Stores www.traderjoes.com During the pandemic, we also doubled the Crew Member discount for those purchasing products from Trader Joe’s to 20%. This benefit has been utilized and appreciated by our Crew Members in Santa Monica, at an incremental cost of over $60,000 to date. The effect of all of these voluntary measures—which we undertook without any governmental mandate—was to substantially increase our Crew Members’ compensation by an average of $6.60 per hour above their 2019 compensation. Store, Crew Member, and Customer Safety: Trader Joe’s stores are not typical grocery operations. We run small (under 15,000 square feet) stores that focus on in-person shopping—due to the small size of our stores and parking lots, we are not able to accommodate curbside pickup, ecommerce, or delivery. Instead, we choose to focus on offering our customers personal service and great value. From the inception of the pandemic through December 31, 2020, our Santa Monica stores have reported low COVID-19 case rates, averaging well below one case per week. To our knowledge, none of these Crew Members has been hospitalized, and over 95% have already recovered and returned to work. While we have experienced increases in the periods following Fourth of July and the Thanksgiving holiday, those anomalies reflect increases in community spread in the same periods. We closely review the circumstances of each positive, and our internal review indicates that positives are likely caused by close contacts occurring outside of work, rather than activity within our stores. However, in every case, we have performed additional analysis to further limit the potential for any in-store transmission. Details regarding our extensive pandemic safety measures, which meet or exceed all guidelines—and to which we attribute these positive results—are enclosed with this letter. The net impact of these measures has been to reduce our customer traffic, impacting revenue and necessitating near-constant lines outside our stores, while also increasing our expenses substantially. We willingly invested in these measures to protect our Crew Members and customers, because it is the right thing to do. As we look forward to our Crew Members receiving the COVID-19 vaccine in the near term, we also look forward to a future in which our Crew Members’ and customers’ lives and our store operations can return to something more like normal. In the 7.E.d Packet Pg. 816 Attachment: D - TraderJoeLetter (4472 : Urgency Ordinance - Hero Pay) COMPANY P.O. BOX 5049 • 800 SOUTH SHAMROCK AVE. MONROVIA, CA 91016-6346 (626) 599-3700 A National Chain of Neighborhood Grocery Stores www.traderjoes.com meantime, as always, we will continue to do the right thing for our Crew Members and communities—by putting their health and safety first. We would ask that you consider Trader Joe’s experience when evaluating the proposed legislation, as any additional mandated pay may negatively impact our ability to maintain current store hours and pricing for our Santa Monica customers. If we can be of any further assistance with regard to this important issue, please contact me at the phone number above or via email at jbasalone@traderjoes.com. Sincerely, Jon Basalone President of Stores Enclosure 7.E.d Packet Pg. 817 Attachment: D - TraderJoeLetter (4472 : Urgency Ordinance - Hero Pay) 7.E.d Packet Pg. 818 Attachment: D - TraderJoeLetter (4472 : Urgency Ordinance - Hero Pay) 1/25/2021 Announcements | Trader Joe's https://www.traderjoes.com/announcement/coronavirus-update-how-trader-joes-is-caring-for-crew-members-and-customers 2/5    We require customers wear a face covering that meets the standards of applicable health authorities while shopping in our stores. Unless otherwise directed by local rule or law, this does not apply to young children and those with medical conditions who are not able to wear face coverings. In California, due to limited capacity, we will require all customers wear a face covering that meets the standards of applicable health authorities while shopping in our stores, without exceptions. Customers with disabilities who are unable to wear a face covering will be offered reasonable accommodations (please ask at your store for more information).  As the situation evolves, we continue to look to the CDC as well as state and local health ofcials for guidance on best health and safety practices. We provide all Crew Members with gloves, should they choose to use them, and emphasize that they do not replace proper hand hygiene, which is one of the most effective protections from COVID-19. In line with current recommendations from health authorities, we have also provided our Crew Members with face masks and are urging that they use them for their protection and the protection of those around them.   All of our stores are conducting Crew Member Wellness Checks with all Crew Members prior to the start of each shift.  The Wellness Checks screen for potential exposure to COVID-19 and for symptoms consistent with a COVID-19 infection.  Wellness Checks are an extra precaution we are taking to reduce the possibility of any Crew Members inadvertently exposing their fellow crew or our customers to illness.       In addition to reducing store hours and closing all locations at 9:00pm to support our Crew Members in taking care of one another and our customers, we have continued to evaluate our response to support customers who are most vulnerable to COVID-19. Unless otherwise directed by local rule or law, on Wednesdays and Sundays, during the rst hour of operation (either 8AM-9AM or 9AM-10AM depending on the store), Trader Joe's stores prioritize service for our senior customers over the age of 60 and customers with disabilities who may need additional assistance while shopping. To nd the hours for your store, please visit our locations page.      We are providing continuous reminders about good hygiene practices and supporting our Crew Members with necessary resources. For instance, ensuring every Crew Member at the registers has the opportunity to regularly wash their hands.   In line with our longstanding commitment to provide a safe and clean shopping environment, stores have increased the frequency of cleanings, paying close attention to high touch areas such as restrooms, register areas, grocery carts and hand baskets. In addition, we have implemented a daily in-depth cleaning in our stores that the CDC 7.E.d Packet Pg. 819 Attachment: D - TraderJoeLetter (4472 : Urgency Ordinance - Hero Pay) 1/25/2021 Announcements | Trader Joe's https://www.traderjoes.com/announcement/coronavirus-update-how-trader-joes-is-caring-for-crew-members-and-customers 3/5 recommends anytime someone who is  positive for COVID-19 is suspected to have recently been in a place of business. Rather than wait until we learn of a suspected case, we have chosen to make this enhanced cleaning and disinfecting an everyday process as an extra precaution.   Crew Members have been asked to exercise increased precautions to safeguard their health and the health of their community, including staying home if they have any symptoms of illness or do not feel well. To better support each Crew Member in making community-minded decisions, since March 2nd we have been providing up to two weeks of additional paid sick time to Crew Members who have any symptoms of illness.  In recognition of the outstanding, inspiring work being done by our Crew Members, as they continue to take care of our customers and our communities, a $2/hour additional “thank you” wage is being applied for every hour worked. Moreover, during this time, we have offered Crew Members a few additional ways to qualify for and maintain health insurance.  We want Crew Members to have the opportunity to take extended time off without repercussions to their benets.     Understanding one of the most common ways this virus spreads is between people who are in close contact with one another, our stores have taken measures to ensure our customers and Crew Members maintain appropriate distance to avoid close contact. We are limiting the number of people in our stores; monitoring and marking the distance between customers waiting in line outside and at checkout; having every other register open (and alternating open registers for regular cleanings); not allowing customers to bag their own groceries at our registers;  and paying careful attention to what is happening throughout the store, continuing to remind and encourage our customers and Crew Members to practice social distancing.   To further support social distancing efforts and prevent the potential spread of the virus, we have installed temporary plexiglass barriers at all of our check stands.   We are closely monitoring the situation, and regularly providing all of our stores and Crew Members with the most up-to-date safety guidance, as recommended by the CDC and other health ofcials.  We believe in being transparent in addressing issues, and we value information and clear communication. With this in mind, we have temporarily closed some stores related to COVID-19 concerns, including for additional precautionary cleaning and sanitization. We have made sure all Crew Members at the respective locations have been informed and understand the steps to take to best safeguard their own health and the health of their community. For any unplanned store closure, Trader Joe’s pays all Crew Members for their scheduled shifts. 7.E.d Packet Pg. 820 Attachment: D - TraderJoeLetter (4472 : Urgency Ordinance - Hero Pay) 1/25/2021 Announcements | Trader Joe's https://www.traderjoes.com/announcement/coronavirus-update-how-trader-joes-is-caring-for-crew-members-and-customers 4/5    We understand that during this extraordinary time, providing for the essential needs of our customers is as vital as ever. We’ve been working closely with our partners throughout the supply chain to ensure that our stores remain well stocked with the products our customers need and want, as always ensuring we are maintaining great values – providing the best quality products for outstanding prices.  Our commitment to value means that we are always conscientious about making any price change––being quick to pass along savings to our customers by reducing our prices when our costs go down; and when our costs inch-up, making every effort not to raise our retail prices. If an increase in price is necessitated due to rising costs, and it means that a product is no longer a value, we will stop carrying it.  Offering great values is a cornerstone of how we do business at Trader Joe’s, and our commitment to this practice is as strong today as it has ever been.  It’s been our long-running policy to donate 100% of products that go unsold but are safe for consumption. In this time of crisis, we have continued this important everyday effort to support people in need in our communities. We face this unprecedented challenge together as a community, and we are deeply grateful to all our Crew Members, customers, and vendor partners, each of who continues to play a vital role in our effort as your neighborhood grocery store.  – Trader Joe’s Contact Us FAQs Locations by State Sitemap QUESTIONS Gluten Free Kosher Vegan DIETARY LISTS Terms of Use Privacy Policy Transparency in Supply Chains Act LEGAL STUFF TJ'S E-NEWSLETTER SIGNUP Want more product stories, funky recipe ideas and a first look at the Fearless Flyer? Sign up to receive the Trader Joe's E‑newsletter: Email A Zip C Submit 7.E.d Packet Pg. 821 Attachment: D - TraderJoeLetter (4472 : Urgency Ordinance - Hero Pay) O United States District Court Central District of California CALIFORNIA GROCERS ASSOCIATION, Plaintiff, v. CITY OF LONG BEACH, Defendant. Case № 2:21-cv-00524-ODW (ASx) ORDER DENYING PRELIMINARY INJUNCTION [18] UNITED FOOD & COMMERCIAL WORKERS LOCAL 324, Intervenor. I. INTRODUCTION The COVID-19 pandemic has been awful. In an effort to avoid illness, permanent health damage, and death, we have lived in a state of quarantine for an entire year and counting. Meanwhile, certain workers deemed “essential” have continued to work in roles that do not practically permit quarantining from others. For example, grocery workers have served an essential function by keeping stores open, stocked, and sanitized, despite the perils of working frequently within six feet of the general public. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 1 of 17 Page ID #:947 7.E.e Packet Pg. 822 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 This case concerns the Premium Pay for Grocery Workers Ordinance (“Ordinance”), recently enacted by Defendant City of Long Beach (“City”), which mandates that all grocery workers in the area must be paid four dollars ($4.00) more than their hourly wage, for a period of at least 120 days. (See Compl. Ex. A (“Ordinance”), ECF No. 2.) The Ordinance also prohibits employers from reducing compensation or limiting a worker’s earning capacity, so employers cannot directly circumvent the Ordinance’s effect by lowering the dials on wages or hours. Plaintiff California Grocers Association (“CGA”) brings this action against the City, arguing that the Ordinance is invalid under federal and constitutional law. (See Compl., ECF No. 2.) Presently before the Court is CGA’s request for a preliminary injunction stopping the enforcement of the Ordinance. (See Ex Parte Appl. for Temp. Restraining Order (“Application” or “Appl.”), ECF No. 18; Min. Order Denying Appl. (“Min. Order”), ECF No. 22 (denying ex parte application for a TRO but setting hearing to consider a preliminary injunction).) The preliminary injunction issue has been fully, if not excessively, briefed. (See Appl.; Opp’n to Appl. (“Opp’n”), ECF No. 20; Suppl. Opp’n to Mot. Prelim. Inj. (“Suppl. Opp’n”), ECF No. 24; Reply ISO Mot. Prelim. Inj. (“Reply”), ECF No. 26.) On February 23, 2021, the Court took the matter under submission after thorough oral arguments. (Minutes, ECF No. 40.) For the reasons that follow, CGA’s motion for a preliminary injunction is DENIED. (ECF No. 18.) II. BACKGROUND The City enacted the Ordinance on January 19, 2021. (See Compl. ¶ 5.) The Ordinance “aims to protect and promote the public health, safety, and welfare during the new coronavirus 19 (COVID-19) emergency by requiring grocery stores to provide premium pay for grocery workers performing work in Long Beach.” (Ordinance § 5.91.005.) It also acknowledges that “[g]rocery workers face magnified risks of catching or spreading the COVID-19 disease because the nature of their work involves close contact with the public, including members of the public who are not showing symptoms of COVID-19 but who can spread the disease.” (Id.) Thus, the Ordinance Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 2 of 17 Page ID #:948 7.E.e Packet Pg. 823 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 contemplates that “premium pay better ensures the retention of these essential workers who are on the frontlines of this pandemic,” and that grocery workers “are deserving of fair and equitable compensation for their work.” (Id.) In pertinent part, the Ordinance provides:  “Hiring entities shall provide each grocery worker with premium pay consisting of an additional Four Dollars ($4.00) per hour for each hour worked.” (Id. § 5.91.050(A).)  “Hiring entities shall provide the [$4.00 premium pay] for a minimum of one hundred twenty (120) days from the effective date of th[e] Ordinance.” (Id. § 5.91.050(B); see also id § 5.91.050(C) (“Unless extended by City Council, this ordinance shall expire in one hundred twenty (120) days.”).)  “No hiring entity shall, as a result of this Ordinance going into effect . . . [1] Reduce a grocery worker’s compensation; [or 2] Limit a grocery worker’s earning capacity.” (Id. § 5.91.060(A).)  “‘Grocery worker’ means a worker employed directly by a hiring entity at a grocery store. Grocery worker does not include managers, supervisors[,] or confidential employees.” (Id. § 5.91.020.)  “‘Grocery store’ means a store that devotes seventy percent (70%) or more of its business to retailing a general range of food products, which may be fresh or packaged.” (Id. § 5.91.020.)  “‘Hiring entity’ means a grocery store that employs over three hundred (300) grocery workers nationally and employs more than fifteen (15) employees per grocery store in the City of Long Beach.” (Id. § 5.91.020.)  “The provisions of this Ordinance are declared to be separate and severable. If any clause, sentence, paragraph, subdivision, section, subsection, or portion . . . , or the application thereof . . . is held to be invalid, it shall not affect the validity of the remainder of this Ordinance, or the validity of its application to other persons or circumstances.” (Id. § 5.91.150.) Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 3 of 17 Page ID #:949 7.E.e Packet Pg. 824 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The day after the Ordinance was enacted, CGA brought this action “on behalf of its members who are grocery store employers.” (Compl. ¶ 12.) CGA’s members “operate grocery stores in the City that employ members of a specific labor union, United Commercial Food Workers International, Local 324 (‘UCFW 324’), and those employees are parties to collective bargaining agreements that govern the terms of their employment, including wage scales.”1 (Compl. ¶ 13.) Now, CGA seeks a preliminary injunction to enjoin enforcement of the Ordinance. (See Appl.; Reply.) III. LEGAL STANDARD A preliminary injunction is “an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008); see also Fed. R. Civ. P. 65 (governing the issuance of preliminary injunctions). “An injunction is an exercise of a court’s equitable authority,” which should not be invoked as a matter of course, but “only after taking into account all of the circumstances that bear on the need for prospective relief.” Salazar v. Buono, 559 U.S. 700, 714 (2010). To obtain a preliminary injunction, the moving party must establish: (1) a likelihood of success on the merits; (2) a likelihood of irreparable harm to the moving party in the absence of preliminary relief; (3) that the balance of equities tips in favor of the moving party’s favor; and (4) that an injunction is in the public interest. Am. Trucking Ass’ns, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009) (quoting Winter, 555 U.S. at 20). IV. DISCUSSION A preliminary injunction is not warranted because CGA fails to establish a likelihood of success on the merits. CGA asserts five causes of action, each for declaratory and injunctive relief against enforcement of the Ordinance, based on: (1) NLRA preemption, (2) the Equal Protection Clause of the U.S. Constitution, (3) the 1 UCFW 324 sponsored the Ordinance’s passing, and the parties have stipulated for UCFW 324 to intervene as a Defendant in this action, notwithstanding the present motion for preliminary injunction between CGA and the City. (Id. ¶ 16; see Order Granting Mot. to Intervene, ECF No. 36.) Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 4 of 17 Page ID #:950 7.E.e Packet Pg. 825 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Equal Protection Clause of the California Constitution, (4) the Contracts Clause of the U.S. Constitution, and (5) the Contracts Clause of the California Constitution, respectively. (See Compl.) A. NLRA Preemption (First Cause of Action) First, the Court considers whether CGA has established a likelihood of success on its preemption claim, whereby it alleges the Ordinance is preempted by the National Labor Relations Act, 29 U.S.C. §§ 151–69 (“NLRA”). (See Compl. ¶¶ 22–30.) “The NLRA—the federal architecture that governs relations between labor and management, for example, union organizing, collective bargaining, and conduct of labor disputes—has no express preemption provision.” Am. Hotel & Lodging Ass’n v. City of Los Angeles, 834 F.3d 958, 963 (9th Cir. 2016) [hereinafter AHLA] (citing 29 U.S.C. §§ 151–69; Chamber of Commerce v. Brown, 554 U.S. 60, 65 (2008)). “Nonetheless, the Supreme Court has recognized two implicit preemption mandates: Garmon preemption and Machinists preemption.” Id. (citing Brown, 554 U.S. at 65). In this case, CGA relies solely on a theory of Machinists preemption, which “prohibits states from restricting a ‘weapon of self-help,’ such as a strike or lock-out.” AHLA, 834 F.3d at 963 (quoting Lodge 76, Int’l Ass’n of Machinists v. Wis. Emp’t Rels. Comm’n, 427 U.S. 132, 146 (1976) [Machinists]). The policy underlying the Machinists preemption is that “Congress left these self-help tools unregulated to allow tactical bargaining decisions ‘to be controlled by the free play of economic forces.’” Id. (quoting Machinists, 427 U.S. at 140). Generally, “the NLRA is concerned with ensuring an equitable bargaining process, not with the substantive terms that may emerge from such bargaining.” Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 20 (1987) (emphasis added) (citing Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 754 (1985)). “Thus, the mere fact that a state statute pertains to matters over which the parties are free to bargain cannot support a claim of pre-emption . . . .” Id. at 21 (citing Malone v. White Motor Corp., 435 U.S. 497, 504–05 (1978)) (rejecting preemption argument for statute requiring a Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 5 of 17 Page ID #:951 7.E.e Packet Pg. 826 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 severance payment for employees who lacked express severance contracts); see also Metro. Life Ins., 471 U.S. at 754 (rejecting preemption argument for law requiring minimum mental health care benefits under insurance policies and employee healthcare plans); AHLA, 834 F.3d at 963–66 (rejecting preemption argument for ordinance setting higher minimum wage and paid leave requirements for hotel workers). Indeed, this “general principle that governments can pass minimum labor standards pursuant to their police power without running afoul” of the NLRA is well established. Am. Hotel & Lodging Ass’n v. City of Los Angeles, 119 F. Supp. 3d 1177, 1187 (C.D. Cal. 2015), aff’d, AHLA, 834 F.3d at 958. However, “in extreme cases, substantive requirements could be so restrictive as to virtually dictate the results of the collective bargaining and self-organizing process,” in which case the Machinists preemption may apply. Id. (emphasis added) (internal quotation marks and brackets omitted) (quoting Chamber of Com. of U.S. v. Bragdon, 64 F.3d 497, 501 (9th Cir. 1995)). “The question then becomes the extent of the substantive requirements that a state may impose on the bargaining process.” Bragdon, 64 F.3d at 501–02 (finding ordinance preempted where it “affect[ed] the bargaining process in a much more invasive and detailed fashion than the isolated statutory provisions of general application approved in Metropolitan Life and Fort Halifax”). In other words, “state action that intrudes on the mechanics of collective bargaining is preempted, but state action that sets the stage for such bargaining is not.” AHLA, 834 F.3d at 964–65 (holding minimum labor standards not preempted where they “alter[ed] the backdrop of negotiations, not the mechanics of collective bargaining”). Here, CGA argues that the Ordinance unlawfully alters the mechanics of collective bargaining, notwithstanding the fact that minimum labor standards are generally not preempted by the NLRA. As articulated by CGA: [T]he Ordinance requires a very specific increase ($4/hour) in the baseline hourly wage, while outlawing any other modification that could reduce the employee’s compensation or earning potential in any way. . . . [T]his provision effectively ties the employers’ hands, rendering it impossible for Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 6 of 17 Page ID #:952 7.E.e Packet Pg. 827 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 employers to bargain with whatever tools she has available. It also implies employers must accept whatever business consequences may flow from an immediate 20–30% increase in labor costs, as reductions in hours, shifts, or workforce are illegal. (Appl. 7; see also Compl. ¶ 15.) In opposition, the City maintains that “[t]he Ordinance is [merely] a substantive labor standard benefiting union and non-union grocery workers as individuals.” (Suppl. Opp’n 23 (emphasis removed).) The City also points out that the Ordinance “does not prevent an employer from taking any action (e.g., termination, reduction in hours) as long as it is not a response to the Ordinance.” (Id. at 12 (second emphasis added).) Problematically, though, the City’s briefs simply do not address the prohibition’s scope regarding actions that are taken as a result of the Ordinance. (Suppl. Opp’n 23–28 (assuming without discussion that the Ordinance “does not conflict in any way with the NLRA”).) This poses somewhat of a barrier to resolution, as the issue of preemption ultimately turns on what it means to “[r]educe a grocery worker’s compensation” or “[l]imit a grocery worker’s earning capacity,” as prohibited by the Ordinance. (See Ordinance § 5.91.060(A).) If the Ordinance really does prohibit any collective bargaining by grocers to mitigate increased labor costs that result from the Ordinance, then CGA’s position is fairly compelling. For although numerous substantive labor standards have been found not preempted by the NLRA, those cases would all be distinguishable from the present action. In cases like Metropolitan Life, Fort Halifax, and AHLA, the laws in question were upheld largely because they merely provided a “backdrop” for negotiation. See Metro. Life Ins., 471 U.S. at 757; Ford Halifax, 482 U.S. at 21; AHLA, 834 F.3d at 965. The laws at issue in those cases altered the starting points for negotiations but left the parties free to negotiate with those new starting points in mind. CGA argues that the Ordinance is different in that it prohibits using the mandated premium pay as a backdrop to negotiation because employers cannot reduce compensation or earning potential, in any way, to account for the mandatory $4/hour bonus pay. Indeed, if CGA’s Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 7 of 17 Page ID #:953 7.E.e Packet Pg. 828 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 interpretation of the Ordinance is correct, it would seem that this Ordinance “affects the bargaining process in a much more invasive and detailed fashion than the isolated statutory provisions of general application approved in Metropolitan Life and Fort Halifax.” See Bragdon, 64 F.3d at 502. Critically, however, CGA has not established a likelihood that its interpretation is, in fact, correct. If the drafters of the Ordinance meant to prohibit employers from offsetting labor costs by lowering any form of compensation “in any way” as CGA suggests, they could have said so in the Ordinance. They did not. Instead, the Ordinance prohibits (1) reducing a worker’s wages to offset that worker’s premium pay, and (2) reducing a worker’s hours to offset the increase in that worker’s effective hourly pay. (See Ordinance § 5.91.060(A).) Even if the Ordinance does mean something beyond what it says, CGA simply has not shown a likelihood that this is so. Indeed, the only evidence offered by CGA to support its interpretation is not convincing. CGA merely submits self-serving declaration testimony that at least one of its members “no longer has the ability to [1] reject UCFW’s premium pay proposal for [its] Long Beach store associates or [2] bargain a reduction in costs elsewhere in their CBA.” (Decl. of Leroy D. Westmoreland ¶ 8, ECF No. 18-2 (emphasis added).) As to the first part, the Court has already explained why the inability to reject a particular union demand is insufficient to establish preemption. (See supra, at 5–6; see also, e.g., Fort Halifax, 482 U.S. at 20 (rejecting argument that a state law “intrude[d] on the bargaining activities of the parties because the prospect of a statutory obligation undercuts an employer’s ability to withstand a union’s demand for severance pay”). As for the remainder, emphasized in the quote above, this self-serving and entirely conclusory testimony does not, on its own, establish the likelihood that the Ordinance truly has this effect. Moreover, even if section 5.91.060 could be interpreted as restricting all facets of a collective bargaining agreement, thereby resulting in preemption, CGA fails to explain why that particular application of section 5.91.060 could not be severed, thereby Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 8 of 17 Page ID #:954 7.E.e Packet Pg. 829 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 leaving the remainder of the Ordinance intact. The Ordinance includes a clear severability provision. (See Ordinance § 5.91.150.) “If any clause, sentence, paragraph, subdivision, section, subsection, or portion . . . , or the application thereof . . . is held to be invalid, it shall not affect the validity of the remainder of this Ordinance, or the validity of its application to other persons or circumstances.” (Id. (emphases added).) Thus, even if section 5.91.060 could be applied in a manner that is preempted by the NLRA, only that application of section 5.91.060 would be invalid. By the Ordinance’s own terms, that preemption “shall not affect . . . the validity of [section 5.91.060’s] application to other persons or circumstances.” (Id.) The Ordinance would still require a $4 premium pay for grocery workers, and it would still prohibit reducing a grocery worker’s base compensation or total hours as a result of the Ordinance. In short, CGA asserts a theory of preemption that would perhaps be plausible, if the Ordinance was drafted differently. However, CGA fails to establish a likelihood that this Ordinance is, in fact, so preempted. Thus, CGA fails to show a likelihood of success on its first cause of action. B. Equal Protection (Second and Third Causes of Action) Next, the Court considers whether CGA establishes a likelihood of success on its second and third claims, which are asserted under the Equal Protection Clauses of the U.S. and California Constitutions. (See Compl. ¶¶ 31–40.) The Court focuses primarily on the federal standard, as “[t]he equal protection analysis under the California Constitution is substantially similar to analysis under the federal Equal Protection Clause.” RUI One Corp. v. City of Berkeley, 371 F.3d 1137, 1154 (9th Cir. 2004). “The Equal Protection Clause directs that ‘all persons similarly circumstanced shall be treated alike.’” Plyler v. Doe, 457 U.S. 202, 216 (1982) (quoting F.S. Royster Guano Co. v. Virginia, 253 U.S. 412, 415 (1920)). “But so too, the Constitution does not require things which are different in fact or opinion to be treated in law as though they were the same.” Id. (internal quotation marks and brackets omitted) (quoting Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 9 of 17 Page ID #:955 7.E.e Packet Pg. 830 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Tigner v. Texas, 310 U.S. 141, 147 (1940)). “Laws alleged to violate the equal protection clause are generally subject to one of three levels of ‘scrutiny’ by courts: strict scrutiny, intermediate scrutiny, or rational basis review.” Tucson Woman’s Clinic v. Eden, 379 F.3d 531, 543 (9th Cir. 2004). Strict scrutiny applies to laws that “discriminate against a suspect class, such as a racial group, or when they discriminate based on any classification but impact a fundamental right, such as the right to vote.” Id. (citations omitted). Intermediate scrutiny applies to laws that “discriminate based on certain other suspect classifications, such as gender.” Id. “All other laws are subject to rational basis review.” Id. (citing Fitzgerald v. Racing Ass’n, 539 U.S. 103, 106–07 (2003)). Applying this standard to wage laws that target certain classifications of individuals, “[s]ocial and economic legislation . . . that does not employ suspect classifications or impinge on fundamental rights must be upheld against equal protection attack when the legislative means are rationally related to a legitimate governmental purpose.” Hodel v. Indiana, 452 U.S. 314, 331 (1981); accord Long Beach City Emps. Ass’n v. City of Long Beach, 41 Cal. 3d 937, 948 (1986). But when a state or locality’s classifications “disadvantage a ‘suspect class’” or “impinge upon the exercise of a ‘fundamental right,’” “it is appropriate to enforce the mandate of equal protection by requiring the State to demonstrate that its classification has been precisely tailored to serve a compelling governmental interest.” Plyler, 457 U.S. at 216–17. Here, CGA contends the Ordinance’s classification is subject to strict scrutiny because the Ordinance impinges on a fundamental right otherwise guaranteed by the Contract Clause. (Appl. 8–10.) CGA also argues the classification would fail under a rational basis review. (Id. at 11.) In response, the City represents, “[M]ore decisions than can be cited . . . have, without difficulty, concluded that economic and employment related regulations like the Ordinance involve no fundamental right or suspect class and so are analyzed under the deferential rational basis test.” (Id. (citing, among others, Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 10 of 17 Page ID #:956 7.E.e Packet Pg. 831 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Int’l Franchise Ass’n, Inc. v. City of Seattle, 803 F.3d 389, 407 (9th Cir. 2015); RUI One Corp, 371 F.3d at 1154).) While it is true that myriad cases have applied the rational basis standard when analyzing equal protection challenges against economic legislation, CGA accurately notes that none appear to have squarely addressed the issue presented here. Indeed, whether strict scrutiny applies to a classification that allegedly violates the Equal Protection Clause, because the underlying law allegedly violates the Contract Clause, appears to be a novel question. Although it seems implausible that this position is truly unprecedented, neither party cites any authority showing otherwise, nor has the Court uncovered any such case. Regardless, in this case, CGA fails to convincingly establish why the Ordinance’s classification should be subject to strict scrutiny. The Court reaches this determination for a number of reasons. To begin with, the parties do not dispute that “[t]he power to regulate wages and employment conditions lies clearly within a state’s or a municipality’s police power.” RUI One Corp., 371 F.3d at 1150 (quoting Metro. Life Ins., 424 U.S. at 356 (“States possess broad authority under their police powers to regulate the employment relationship to protect workers within the State.”)). When that is the case, “[t]he standard for evaluating ordinances claimed to be violative of due process or equal protection is whether a rational basis exists for the police power exercised or classification established by the ordinance.” Autotronic Sys., Inc. v. City of Coeur D’Alene, 527 F.2d 106, 108 (9th Cir. 1975) (emphasis added). Furthermore, alleged Contract Clause violations committed in the exercise of a municipality’s police power are subject to analysis under their own separate framework, which does not automatically assume that strict scrutiny applies. See Energy Rsrvs. Grp., Inc. v. Kan. Power & Light Co., 459 U.S. 400, 411 (1983) (citing Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 245 (1978)) (“The severity of the impairment is said to increase the level of scrutiny to which the legislation will be subjected.”). Rather, where an exercise of the police power is found to “operate[] as a substantial Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 11 of 17 Page ID #:957 7.E.e Packet Pg. 832 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 impairment of a contractual relationship,” the law itself is only subject to strict scrutiny when the nature of the impairment is the most severe. Id. Yet CGA suggests that anytime the same law identifies any classification of individuals, the classification should be subject to strict scrutiny. The Court seriously hesitates to apply such incongruent standards. Finally, the mere fact that the Contract Clause appears in the Constitution does not render it a “fundamental right” for equal protection purposes. It is well-established that “[a]lthough the language of the Contract Clause is facially absolute, its prohibition must be accommodated to the inherent police power of the State ‘to safeguard the vital interests of its people.’” Id. at 410 (quoting Home Bldg. & Loan Ass’n v. Blaisdell, 290 U.S. 398, 434 (1934) (“The question is . . . whether the legislation is addressed to a legitimate end and the measures taken are reasonable and appropriate to that end.”)). Because “it is to be accepted as a commonplace that the Contract Clause does not operate to obliterate the police power of the States,” Allied Structural Steel, 438 U.S. at 241, the Court rejects CGA’s argument that the Ordinance’s classification must be analyzed under strict scrutiny simply because the clause is found in the Constitution. See generally Raycom Nat’l, Inc. v. Campbell, 361 F. Supp. 2d 679, 686–87 (N.D. Ohio) (“Because th[e] right of access is limited and not absolute, the court concludes that it is not explicitly or implicitly guaranteed by the Constitution and thus not a fundamental right.”). Applying, therefore, a rational basis review, the classification set forth in the Ordinance must be afforded “a strong presumption of validity, and those attacking the rationality of the legislative classification have the burden to negative every conceivable basis which might support it.” F.C.C. v. Beach Commc’ns, Inc., 508 U.S. 307, 314–15 (1993) (internal quotation marks and citations omitted). Here, the classification at issue includes employers with at least 300 employees nationwide and at least fifteen employees per grocery store in Long Beach, whose stores devote at least 70% of their business to retailing food products (i.e., groceries). (Ordinance § 5.91.020.) In other Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 12 of 17 Page ID #:958 7.E.e Packet Pg. 833 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 words, the Ordinance targets large grocery stores, and CGA insists this classification does not have “any relationship” to any of the Ordinance’s stated purposes. (Appl. 11.) The City advances a theory that large grocery stores have reaped significant profits during the pandemic while their employees’ wages have remained more or less the same, despite the increased risk of exposure to COVID-19 that grocery workers face. (See Suppl. Opp’n 7.) To support this theory, the City submits various news articles reporting on this exact phenomenon, as well as press releases issued by one of CGA’s own members regarding its Second Quarter 2020 and Third Quarter 2020 results. (Decl. of Daniel L. Richards (“Richards Decl.”) ¶¶ 18–21, ECF No. 21; see id. Exs. Q–T, ECF Nos. 21-17, 21-18, 21-19, 21-20.) Notably, those press releases issued by CGA’s member (a large grocery store) indicate that “sales grew” by 13.9% in the second quarter and 11.3% in the third quarter of 2020. (See id. Exs. S, T.) These facts present a conceivable, rational basis for the classification in question. See Int’l Franchise Ass’n, 803 F.3d at 407 (“It is legitimate and rational for the City to set a minimum wage based on economic factors, such as the ability of employers to pay those wages.”). CGA’s efforts to debunk this possible rationale fall short. CGA submits its own evidence to suggest that grocery stores have struggled financially since the Ordinance was passed. (See Decl. of Brad Williams (“Williams Decl.”) ¶ 7, Ex. C, ECF No. 26-2.) Even accepting this as true, it does not make the lawmakers’ decision any less rational because at the time the Ordinance was enacted, this fact did not exist. CGA also argues that “[t]he most recently released [data] . . . suggests that California retail workers have only a mildly elevated mortality risk relative to the general population.” (Reply 19 n.4 (emphasis added) (citing Decl. of William F. Tarantino ¶¶ 2–3, Exs. A–B, ECF No. 26-7).) This is not convincing either, as a mildly elevated mortality risk is still an elevated mortality risk, and the City could have rationally decided to compensate grocery workers for taking on such risk by showing up for work. Moreover, “a legislative choice is not subject to courtroom fact-finding and may be based on rational Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 13 of 17 Page ID #:959 7.E.e Packet Pg. 834 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 speculation unsupported by evidence or empirical data.” RUI One Corp., 371 F.3d at 1155 (quoting Beach Commc’ns, 508 U.S. at 315). Indeed, “it is entirely irrelevant for constitutional purposes whether the conceived reason for the challenged distinction actually motivated the legislature.” Id. Finally, to the extent that CGA complains of lawmakers’ decision to target large grocery stores as opposed to all grocery stores or all essential retail businesses, (see Appl. 7, 12–13; Reply 15–17), “[s]uch legislative decisions are ‘virtually unreviewable, since the legislature must be allowed leeway to approach a perceived problem incrementally,’” RUI One Corp., 371 F.3d at 1155 (quoting Beach Commc’ns, 508 U.S. at 316 (“The legislature may select one phase of one field and apply a remedy there, neglecting the others.”)). “Whether the legislation is wise or unwise as a matter of policy is a question with which [the Court is] not concerned.” Blaisdell, 290 U.S. at 447–48. Rather, the Court’s “role is at an end once [it] can say that the view chosen by the City council is not irrational.” Autotronic Sys., 527 F.2d at 108. Here, the Court finds a rational basis does exist for the Ordinance’s classification. Thus, CGA fails to show a likelihood of success on its Equal Protection Clause claims. C. Contracts Clause (Fourth and Fifth Causes of Action) Finally, the Court considers whether CGA has established a likelihood of success on its Contract Clause claims. (See Compl. ¶¶ 41–47.) Again, the Court focuses on the federal standard, as “[t]he California Supreme Court uses the federal Contract Clause analysis for determining whether a statute violates the parallel provision of the California Constitution.” Campanelli v. Allstate Life Ins. Co., 322 F.3d 1086, 1097 (9th Cir. 2003) (citing Calfarm Ins. Co. v. Deukmejian, 48 Cal. 3d 805 (1989)). As already mentioned, the Contract Clause “does not prevent the [city] from exercising such powers as are vested in it for the promotion of the common weal, or are necessary for the general good of the public, though contracts previously entered into between individuals may thereby be affected.” Allied Structural Steel, 438 U.S. at 241 Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 14 of 17 Page ID #:960 7.E.e Packet Pg. 835 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (quoting Manigault v. Springs, 199 U.S. 478, 480 (1905)). The Supreme Court has also noted, though, that “[i]f the Contract Clause is to retain any meaning at all . . . it must be understood to impose some limits upon the power of a [city] to abridge existing contractual relationships, even in the exercise of its otherwise legitimate police power.” Id. (quoting U.S. Trust Co. of N.Y. v. New Jersey, 431 U.S. 1, 22 (1977) (“Legislation adjusting the rights and responsibilities of contracting parties must be upon reasonable conditions and of a character appropriate to the public purpose justifying its adoption.”). Thus, the Supreme Court has established a three-step test for determining whether the Contract Clause has been violated by an otherwise valid exercise of police power. First, “[t]he threshold inquiry is ‘whether the [city] law has, in fact, operated as a substantial impairment of a contractual relationship.” Energy Rsrvs. Grp., 459 U.S. at 411 (quoting Allied Structural Steel, 438 U.S. at 244). “The severity of the impairment is said to increase the level of scrutiny to which the legislation will be subjected.” Id. (citing Allied Structural Steel, 438 U.S. at 245). “Total destruction of contractual expectations is not necessary for a finding of substantial impairment.” Id. (citing U.S. Trust Co., 431 U.S. at 26–27). “On the other hand, [city] regulation that restricts a party to gains it reasonably expected from a contract does not necessarily constitute a substantial impairment.” Id. (citing U.S. Trust Co., 431 U.S. at 31). Furthermore, when applicable, courts must “consider whether the industry the complaining party has entered has been regulated in the past.” Id. (citing Allied Structural Steel, 438 U.S. at 242 n.13). Second, “[i]f the [city] regulation constitutes a substantial impairment, the [city], in justification, must have a significant and legitimate public purpose behind the regulation, such as the remedying of a broad and general social or economic problem.” Id. (internal citations omitted). Although it may, “the public purpose need not be addressed to an emergency or temporary situation.” Id. The principle underlying this step is to “guarantee[] that the [city] is exercising its police power, rather than providing a benefit to special interests.” Id. Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 15 of 17 Page ID #:961 7.E.e Packet Pg. 836 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Third, “[o]nce a legitimate public purpose has been identified, the next inquiry is whether the adjustment of the rights and responsibilities of contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislation’s adoption.” Id. (internal quotation marks and brackets omitted). “Unless the [city] itself is a contracting party, as is customary in reviewing economic and social regulation, courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure.” Id. (internal quotation marks, citations, and alterations omitted) (quoting U.S. Trust Co., 431 U.S. at 22–23). Here, CGA fails to establish a likelihood of success on its Contract Clause claims. To start, CGA fails to identify any terms of the allegedly impaired contracts. The Court cannot determine whether the Ordinance “substantially impairs” the contractual relationships between CGA’s members and their workers without knowing the nature of those relationships. Similarly, the Court cannot determine what level of scrutiny to apply in analyzing the Ordinance if it cannot determine the severity of the alleged impairment. Moreover, CGA does not assert a likelihood of success on its Contract Clause claims. Instead, CGA tries to shoehorn a Contract Clause analysis into its Equal Protection Clause analysis. (See Appl. 7–13 (discussing Contract Clause issues but limiting conclusion to likelihood of success on Equal Protection claims); Reply 8–17 (same).) By mashing the two analyses together, CGA distorts the Equal Protection Clause framework in an attempt to impose strict scrutiny on the Ordinance in the Contract Clause context. (See Part IV(B), supra.) However, these are two separate inquiries, and CGA fails to establish a likelihood of success on either. Even if, arguendo, the Ordinance does substantially impair the contractual relationships between CGA’s members and the City, CGA fails to establish a likelihood that the Ordinance would not survive the second and third steps of the analysis. In fact, CGA skips the second step altogether regarding the existence of a legitimate purpose, instead arguing only that the identifiable purposes are not advanced by the Ordinance. Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 16 of 17 Page ID #:962 7.E.e Packet Pg. 837 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (See Appl. 11–12.) With respect to the third step, CGA argues that the Ordinance “does not protect or promote public health” because “a wage bump does not mitigate the risks of exposure to a virus.” (Id. at 11.) Indeed, this is a fair point, and the Court is inclined to agree. That does CGA little good, however, because CGA utterly fails to address why the Ordinance is not an appropriate means for achieving its other stated purposes (e.g., fairly compensating grocery workers for the hazards they encounter as essential workers). The Court’s decision today is limited. It does not purport to reach whether the Ordinance violates the Contract Clause. Perhaps an argument could be made that it does. What matters for now is that CGA has not shown a likelihood that this is the case. V. CONCLUSION In summary, CGA fails to establish a likelihood of success on any of its claims. Thus, the Court need not consider the remaining Winter factors. CGA’s motion for a preliminary injunction is DENIED. (ECF No. 18.) IT IS SO ORDERED. February 25, 2021 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE Case 2:21-cv-00524-ODW-AS Document 41 Filed 02/25/21 Page 17 of 17 Page ID #:963 7.E.e Packet Pg. 838 Attachment: E - CGA v. LBC - Order Denying PI (4472 : Urgency Ordinance - Hero Pay) March 5, 2021 Re: Council Agenda Item 7E - Hero Pay Dear Mayor Himmelrich, Mayor Pro Tempore McCowan, and members of the Santa Monica City Council: We are writing in SUPPORT of Item 7E on your March 9 agenda regarding hero pay for those employed in large grocery stores and pharmacies in Santa Monica. During the pandemic, these brave workers risk their lives every day to make sure we have the food, medications, and essential products we need. The very nature of their jobs means that they risk exposure to COVID throughout their work day, and risk bringing the deadly virus home to their families. The County of Los Angeles, the City of Los Angeles, and other cities throughout the country have adopted ordinances similar to the one you are considering. Santa Monica Forward urges the City Council to adopt this emergency ordinance at its March 9 meeting. Sincerely, Abby Arnold ​ ​ Carl Hansen abby@abbyarnold.com cjh268@cornell.edu Co-chair, Santa Monica Forward Co-chair, Santa Monica Forward Item 7.E 03/09/21 1 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 839 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) President Jon Katz VP Political Action Domi Piturro VP Membership Michael Soloff VP Programs
 Janine Bush VP Communications Ra na Kirkla nd Treasurer
 Ed Hunsaker Secretary
 Amy Bishop Dunbar At-Large
 Barbi Appelquist Peter Bradley
 Derek Devermont Patricia Hoffman
 Dolores Sloan
 March 5, 2021 Santa Monica City Council 1685 Main St #3205 Santa Monica, CA 90401 Mayor Himmelrich, Mayor Pro Tem McCowan, and Councilmembers: The Santa Monica Democratic Club has long had a commitment to standing with labor to support the rights of workers to fair and decent wages and benefits and to safe conditions at the workplace. As the global COVID-19 pandemic enters its second year, even as the availability of vaccines enables us to glimpse a return to normal in the coming months, we stand by local grocery and pharmacy workers who risk their health on the frontline to keep our families fed and healthy. In keeping with this commitment, we urge the City Manager and City Attorney to promptly implement by emergency order the City Council’s existing direction for ‘hero pay’ in Santa Monica, paralleling what the County Supervisors passed for unincorporated Los Angeles County with their vote on February 23rd, which was matched for the City of Los Angeles by the vote of its City Council on March 3rd. Thank you for taking this action in the interest of the well-being of these essential frontline workers and and health and safety of the community at large during this unprecedented, protracted public health emergency. Sincerely, Jon Katz President, Santa Monica Democratic Club On behalf of its Membership Item 7.E 03/09/21 2 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 840 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 1 Vernice Hankins From:Jason Islas <jason.islas@gmail.com> Sent:Saturday, March 6, 2021 2:35 PM To:councilmtgitems Cc:Councilmember Kevin McKeown; Phil Brock; Gleam Davis; Christine Parra; Kristin McCowan; Oscar de la Torre; Denise Anderson-Warren; Sue Himmelrich Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    Dear Mayor Himmelrich and City Council,    I'm writing in support of Item 7E. I fully support the adoption of an emergency ordinance authorizing "hero pay" for  essential workers in grocery stores and pharmacies. The City of Los Angeles, the County, West Hollywood, and Long  Beach, among many others throughout the country have adopted similar measures requiring large grocery and  pharmacy chains to pay their workers more to recognize the risk and stressful nature of the vital work they are doing  during this pandemic.    Thank you for considering this item and I hope that you will support paying these essential workers what they deserve.      Jason Islas  Pico Neighborhood resident  (310) 977‐0645  jasonislas.com  LinkedIn  Twitter  Item 7.E 03/09/21 4 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 841 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 2 Vernice Hankins From:DiaryofTieira Ryder <tie.ryder@gmail.com> Sent:Saturday, March 6, 2021 2:23 PM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    Please support hero pay for our workers. It’s a year into the pandemic and they should’ve been making hazard pay the  entire length of the pandemic until it ended. The minimum we should do for workers is provide them an additional hero  pay for a period of time.     Best  Tieira     Item 7.E 03/09/21 5 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 842 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) March 5, 2021 Re: Council Agenda Item 7E - Hero Pay Dear Mayor Himmelrich, Mayor Pro Tempore McCowan, and members of the Santa Monica City Council: We are writing in SUPPORT of Item 7E on your March 9 agenda regarding hero pay for those employed in large grocery stores and pharmacies in Santa Monica. During the pandemic, these brave workers risk their lives every day to make sure we have the food, medications, and essential products we need. The very nature of their jobs means that they risk exposure to COVID throughout their work day, and risk bringing the deadly virus home to their families. The County of Los Angeles, the City of Los Angeles, and other cities throughout the country have adopted ordinances similar to the one you are considering. Santa Monica Forward urges the City Council to adopt this emergency ordinance at its March 9 meeting. Sincerely, Abby Arnold ​ ​ Carl Hansen abby@abbyarnold.com cjh268@cornell.edu Co-chair, Santa Monica Forward Co-chair, Santa Monica Forward Item 7.E 03/09/21 6 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 843 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 1 Vernice Hankins From:Laurene von Klan <chicagoriver@hotmail.com> Sent:Saturday, March 6, 2021 2:36 PM To:councilmtgitems Subject:Item 7E Support Hero Pay - YES! Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    I live in Santa Monica and my son was until recently a grocery store worker.  The stress and risks inherent in the job  merit hero pay.    I support moving forward with this item.    Laurene von Klan  Santa Monica   Item 7.E 03/09/21 7 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 844 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 2 Vernice Hankins From:Bryan Miranda <bryan.miranda@hotmail.com> Sent:Saturday, March 6, 2021 2:36 PM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    Full support of the hero pay thing.... but really would like to know the plan to address, eradicate, whatever ya gotta do  about the homeless people on my doorstep. Thanks. #concernedsantamonican   Item 7.E 03/09/21 8 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 845 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 3 Vernice Hankins From:Scott Rigsby <sr@industrypartners.com> Sent:Saturday, March 6, 2021 2:38 PM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    How do you pay for all the ideas when you are pushing businesses and business revenue out of Santa Monica. A  moratorium on no new commercial  development is mind boggling. Council member only try to appease the rent control  voters and need to wake up.  Item 7.E 03/09/21 9 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 846 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 4 Vernice Hankins From:Lizeth Bejarano <lizethbejarano@yahoo.com> Sent:Saturday, March 6, 2021 3:16 PM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    I support Hero pay. If these essential workers weren’t  risking their lives every day during this pandemic, we wouldn’t  have food on our table.     Thank you,    Lizeth Bejarano  90404  Item 7.E 03/09/21 10 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 847 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 5 Vernice Hankins From:nancykless <nancykless@verizon.net> Sent:Saturday, March 6, 2021 3:21 PM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    I support "hero pay" for essential workers.        Sent via the Samsung Galaxy S8, an AT&T 5G Evolution capable smartphone    Item 7.E 03/09/21 11 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 848 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 6 Vernice Hankins From:Lollie Ragana <lragana.lr@gmail.com> Sent:Saturday, March 6, 2021 3:31 PM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    Please give grocery store and pharmacy workers an additional $5./hour "hero pay." They worked when most of us didn't  want to leave our houses and deserve the respect of this additional income.      ‐‐   Lollie Ragana    Until one has loved an animal a part of one's soul remains unawakened.                                                                                               ‐‐ Anatole France  Item 7.E 03/09/21 12 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 849 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 7 Vernice Hankins From:Sean Youssefi <sean.youssefi@gmail.com> Sent:Saturday, March 6, 2021 3:46 PM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    I support Hero Pay! Please approve.    Item 7.E 03/09/21 13 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 850 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 8 Vernice Hankins From:Sara Gersen <sara.gersen@gmail.com> Sent:Saturday, March 6, 2021 4:18 PM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    I am a Santa Monica resident and voter, urging your support for item 7E.  Our essential workers deserve a living wage  that reflects the extra hazards they face each day at work.  If they weren't taking these risks, life for every resident in  this city would be disrupted more than it already has been by the pandemic.      Thank you for your consideration,    Sara Gersen  Item 7.E 03/09/21 14 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 851 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 9 Vernice Hankins From:Laila Taslimi <untitledno.1school@gmail.com> Sent:Saturday, March 6, 2021 9:11 PM To:councilmtgitems Subject:Support for Hazard Pay (March 09 Agenda Item 7E) Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    Esteemed City Council Members, I'm writing to you today because as a fellow essential worker (operating an onsite early education center in Santa Monica) I understand and sympathize with the risk our brave grocery store and pharmacy workers take each day they come to work. While we have gone to great lengths to implement health screening safety protocols and have had disproportionately few COVID-19 cases at our early care and education sites (county-wide), our grocery store and pharmacy workers have been working at sites open to the general public with minimal mitigations possible. Their sector has been at high risk of infection for one year, and hopefully that risk will lessen by the end of summer. For this reason I am in favor of our City taking action to approve an emergency ordinance that will require financially sound larger chain stores to provide temporary hazard pay to these "local heroes." I have always been happy to be part of a city that aspires to be exemplary in its instituting of just policy, and in particular policies that promote equity. This "hero pay" ordinance is a step in that direction. Thank you for your efforts toward a more just community. Sincerely, Laila Taslimi   ‐‐   Item 7.E 03/09/21 15 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 852 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 10 Laila Taslimi  www.untitledno1.org  Untitled No. 1 School  501(c)(3) Public Charity - Use this Amazon Smile link when you shop      Regard each person as a mine rich in gems of inestimable value.   Education can, alone, cause it to reveal its treasures, and enable mankind to benefit therefrom.  Item 7.E 03/09/21 16 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 853 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 11 Vernice Hankins From:Peggy Barrett <pbpeggybear@gmail.com> Sent:Saturday, March 6, 2021 9:18 PM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    Please support hero pay for all grocery worker’s.    Sent from my iPhone  Item 7.E 03/09/21 17 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 854 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 12 Vernice Hankins From:Ralph Mechur <ralph@rmechurarchitects.com> Sent:Saturday, March 6, 2021 11:04 PM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    Dear Mayour and Council,    Please support the Hero’s Pay Ordinance. Workers have been risking their and their family’s health to keep markets  open for our convenience. The additional $5 per day is a small portion of the revenues of the grocery chains to pay.    Thank you,    Ralph Mechur  Ralph Mechur Architects  3400 Airport Avenue, Suite 5  Santa Monica, CA  90405  t: 310‐398‐2940  c: 310‐721‐1254        Item 7.E 03/09/21 18 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 855 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 13 Vernice Hankins From:William Chase <will.chase.az@gmail.com> Sent:Sunday, March 7, 2021 8:06 AM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    Hello,     I urge you to vote against "Item 7E Support Hero Pay". This increased financial burden will only eliminate jobs. Also  based on the current financial recovery, it's not needed. By the end of May everyone in the US who wants a vaccine will  have been able to get one which rendered "Item 7E Support Hero Pay" unnecessary.     William Chase  Item 7.E 03/09/21 19 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 856 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 14 Vernice Hankins From:Carter Rubin <carter.rubin@gmail.com> Sent:Sunday, March 7, 2021 10:23 AM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    Please register my support for item 7E!      ‐‐   Carter Cheadle Rubin  310.200.1088  carterrubin.com  To help prprivacy, Mprevented download from the In To help prprivacy, Mprevented download from the In To help prprivacy, Mprevented download from the In To help prprivacy, Mprevented download from the In   Item 7.E 03/09/21 20 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 857 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 1 Vernice Hankins From:Steve Baeck <steve.baeck@gmail.com> Sent:Sunday, March 7, 2021 5:04 PM To:councilmtgitems Subject:Item 7E Support Hero Pay Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    Please authorize this emergency ordinance. I marvel at what these workers do every day while many of us are safe  inside our homes.    Steve Baeck  2203 Oak Street Apartment C  Santa Monica, CA 90405    steve.baeck@gmail.com  Item 7.E 03/09/21 21 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 858 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 1 Vernice Hankins From:Sion Roy <sionroy2002@gmail.com> Sent:Monday, March 8, 2021 11:58 AM To:councilmtgitems Subject:Agenda item 7(e) for Tuesday's meeting EXTERNAL    Dear Santa Monica City Councilmembers,    Thank you for your support for this ordinance (agenda item 7(e)) that will bring much needed support to our local  grocery and pharmacy workers here in Santa Monica‐ an ordinance that mirrors the one already passed in LA County, LA  City, and West Hollywood, among other cities. The COVID19 pandemic has wreaked havoc on our county and our city  during this past year in so many different ways, and our essential workers have borne the brunt of the immense  economic impact. The $5/hour in hero pay for 120 days will make a significant impact for these workers who work at  large grocery and pharmacy chains without being too large a burden on large companies.    Thank you for your support of our workers!    Best,  Shy    Sion Roy MD, FACC, FSCCT  Harbor UCLA  Cardiology  Director, Inpatient Cardiac CT  Associate Cardiology Fellowship Program Director  Assistant Professor of Medicine     Chair, CALPAC (California Medical Association PAC)  Immediate Past President, Los Angeles County Medical Association  Trustee, Santa Monica College  Trustee, California Medical Association  Item 7.E 03/09/21 22 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 859 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) UFCW LOCAL 770 P.O. BOX 770 Hollywood, CA 90078 (213) 487-7070 or/o (800) UFCW 770 8:00 a.m. – 5:00 p.m. Monday – Friday LOS ANGELES MAIN OFFICE 630 Shatto Place Los Angeles, CA 90005 BRANCH OFFICES Arroyo Grande Bakersfield Camarillo Harbor City Huntington Park Santa Barbara Santa Clarita March 8, 2021 Santa Monica City Council and City Attorney 1685 Main Street, Room 209 Santa Monica, California 90401 RE: Employer Credit Dear Councilmembers, UFCW Locals 770 and 1442 (“Unions”), the regional grocery and pharmacy workers unions that represent workers in Santa Monica and beyond write to thank the council for its support of grocery workers in Santa Monica, and to clarify the record regarding the Employer Credit provision. We were spurred to write in response to Trader Joe’s letter dated January 25, 2021, in which it suggests that it provides $6.60 extra to its employees as a result of the pandemic. To start, it is worth noting that we cannot verify the itemized record that it provides. However, by its own accounting, the store admits to paying only an extra $2/ hour in hero pay as defined by the proposed Ordinance. See Exhibit D to Council Agenda at pg. 1, para. 3. The Unions agree that any employer paying hero pay as defined by the Ordinance should qualify for the Employer Credit outlined in section 4.65.5.050. However, the Unions want to make the record clear. Neither the Los Angeles City Ordinance, the Los Angeles County Ordinance, nor the proposed Santa Monica Ordinance would provide a covered employer with credit for the type of compensation itemized by Trader Joe’s in its letter, which includes paid leave, cash bonuses, retirement, other unspecified benefits, medical coverage, and even its 10% worker discount. The County Ordinance, as well as the language proposed by Santa Monica in Section 4.65.5.050, clearly prohibits credit for these types of benefits. It provides that “[n]o employer shall be credited prospectively for past payments. No Employer shall be credited for any hourly premiums already owed to Employees, such as, but not limited to Holiday Premiums.” The definition of “hero pay” further mandates that companies will only receive credit for compensation in the form of an hourly wage designed to reward employees for risking their lives during the pandemic. It reads, “‘hero pay’ means the additional wage Employers are required to pay Employees for work performed at Stores due to the risks associated with COVID-19 pursuant to Section 4.65.5.040(a), in addition to an Employee’s Base Wage or Holiday Premium Pay, whichever is applicable at the time of hours worked. The Hero Pay rate shall not include compensation already owed to Employees, Holiday Premium rates, gratuities, service charge distributions, or other bonuses.” Section 4.65.5.020 (h), emphasis added. The definition is clear—hero pay can only receive credit when in the form of hourly wages, and it is not intended to include other types of benefits or past compensation. Item 7.E 03/09/21 23 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 860 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) Our purpose in writing is only to correct the record, and to aid the County in enforcement of hero pay ordinances. The Unions supported the hero pay Ordinances in Los Angeles City and County, including the relevant Employer Credit provisions, with the express understanding that only an hourly wage paid for work performed during the pandemic would be eligible for credit. Indeed, at the time Trader Joe’s was lobbying the City and County for credit provisions, it was claiming that it already provided an additional $4.50 to its workers. See Attachment A- Trader Joe’s Letter to LA County. At the time that the County Ordinance passed, the Unions were not aware that the Company was including the benefits and past wages itemized in its most recent letter to Santa Monica in its hero pay calculations (and it is likely that LA City and County were also unaware). In fact, if you read the letter to Los Angeles County, it appears that Trader Joe’s has conveniently increased its projected benefits to more than $5.00 since the Employer Credit provisions have been codified. We assume that other employers will try to take this same approach to avoid their obligations under the Ordinance if not corrected on the record. Thank you for your continued leadership and support of workers in Santa Monica. Sincerely, John M. Grant President, UFCW Local 770 Michael Straeter President, UFCW Local 1442 JMG:MS:jc Santa Monica City Council and City Attorney March 8, 2021 Page 2 of 2 Item 7.E 03/09/21 24 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 861 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 1 Vernice Hankins From:zimtar <zimtar@aol.com> Sent:Monday, March 8, 2021 12:29 AM To:councilmtgitems Subject:Support item 7c Follow Up Flag:Follow up Flag Status:Flagged EXTERNAL    Michael Tarbet here supporting hero pay for our grocery and pharmacy workers. You should do it for people delivering  such products as well. I know I wouldn’t go near such establishments and am so happy to receive food and drugs picked  up and delivered safely. Thank you.       Sent from the all new AOL app for iOS  Item 7.E 03/09/21 27 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 862 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) December 23, 2020 Dear Council Members Cedillo, Krekorian, Blumenfield, Raman, Koretz, Martinez, Rodriguez, Harris-Dawson, Price, Ridley-Thomas, Bonin, Lee, O’Farrell, de León, and Buscaino: I write in regard to the upcoming Los Angeles City Council decision about whether to enact a temporary premium pay measure for grocery workers. We understand that this proposal is driven by an impression that grocery store workers are exposed to a much higher risk of contracting COVID-19 than the general public, while grocery companies have done little to reward their employees for their work during the pandemic. We are proud to say that this is not true at Trader Joe’s. We have invested in a comprehensive safety program that has ensured our Crew Members are not at high risk for contracting COVID-19 when they come to work, and we have voluntarily and continuously rewarded their work during this unprecedented time with “thank you” pay and enhanced benefits totaling over $4.50 per hour. We hope that the information in this letter will help you understand why a “one size fits all” approach to increasing pay at Los Angeles grocery stores is not necessary, and current compensation and/or COVID-19 safety performance should be factored into your consideration. Increased Compensation: The base compensation we pay our Crew Members is well above market, and well above the $15 per hour minimum wage in the City of Los Angeles. The regular hourly rate of pay at our 21 Los Angeles city stores currently averages $21 per hour, with some Crew Members earning over $41 per hour. Beginning in March, we voluntarily added $2 per hour to all Crew Members’ pay to thank them for their work. Unlike every other grocery company of which we are aware, Trader Joe’s has paid this premium continuously throughout the pandemic. Trader Joe’s is committed to continuing to pay “thank you” pay as long as this crisis is causing our communities to shelter in place, and creating the need for our Crew Members to show up every day at our essential business. To date, Trader Joe’s has incurred over $5 million in additional payroll expense to provide this benefit to our Los Angeles store Crew Members. Item 7.E 03/09/21 28 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 863 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) In addition to these industry-leading wages, Trader Joe’s provides generous benefits including a 401K program where we contribute an extra 10 percent of annual compensation to the plan. No employee contribution is required in order to receive this retirement plan contribution. We offer generous health insurance coverage, and fair and considerate paid sick leave programs that are among the best of any retailer in America. We removed our eligibility requirements to allow all Crew Members to maintain their pre-existing health insurance coverage through December 31, 2020, and made it easier to qualify for coverage in 2021. In our Los Angeles stores, this allowed 112 Crew Members who otherwise would not have qualified for our health insurance to maintain coverage, at a cost to Trader Joe’s of over $433,000. We also have paid nearly $900,000 in extra paid time off to our Los Angeles Crew Members through November 30. This includes additional sick pay and “pay as scheduled” when stores were closed for extra cleaning. We also have continued to pay increases for Crew Members that “meet expectations” every six months on top of our “thank you” premium. There has been no change in this process which generates approximately a 7% annual increase for the nearly 86% of Crew Members that qualify for the raise. During the pandemic, we also doubled the Crew Member discount for those purchasing products from Trader Joe’s to 20%. This benefit has been utilized and appreciated by our Crew Members in Los Angeles, at a cost of approximately $680,000 to date. The effect of all of these voluntary measures—which we undertook without any governmental mandate—has been to substantially increase our Crew Members’ compensation in 2020, to more than $4.50 per hour above their average 2019 compensation. Store, Crew Member, and Customer Safety: Trader Joe’s stores are not typical grocery operations. We run small (under 15,000 square feet) stores that focus on in-person shopping—due to the small size of our stores and parking lots, we are not able to accommodate curbside pickup, ecommerce, or delivery. Instead, we choose to focus on offering our customers personal service and great value. From the inception of the pandemic through November 30, our 21 Los Angeles stores— with a total of approximately 2,300 Crew Members—have reported low weekly COVID- 19 case rates, typically below 1 case per 1,000 Crew Members. To our knowledge, none of these Crew Members has been hospitalized, and 94% have already recovered and returned to work. Item 7.E 03/09/21 29 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 864 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) While we have experienced temporary increases in the periods following Fourth of July and the Thanksgiving holiday, those anomalies reflect increases in community spread in the same periods. We closely review the circumstances of each positive, and our internal review indicates that positives are likely caused by close contacts occurring outside of work, rather than activity within our stores. However, in every case, we have performed additional analysis to further limit the potential for any in-store transmission. Details regarding our extensive pandemic safety measures, which meet or exceed all guidelines, including those specific to Los Angeles—and to which we attribute these positive results—are enclosed with this letter. The net impact of these measures has been to reduce our customer traffic, necessitating near-constant lines outside our stores, and to increase our expenses substantially. We willingly invested in these measures to protect our Crew Members and customers, because it is the right thing to do. As we look forward to our Crew Members receiving the COVID-19 vaccine in the near term, as front-line workers prioritized by CDC, we also look forward to a near-term future in which our Crew Members’ and customers’ lives and our store operations can return to something more like normal. In the meantime, as always, we will continue to do the right thing for our Crew Members and communities—by putting their health and safety first. We would ask that you consider Trader Joe’s experience when evaluating the proposed legislation, as any additional mandated pay may negatively impact our ability to maintain current store hours and pricing for our Los Angeles customers. If we can be of any further assistance with regard to this important issue, please contact me at the phone number above or via email at jbasalone@traderjoes.com. Sincerely, Jon Basalone President of Stores Enclosure Item 7.E 03/09/21 30 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 865 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 12/23/2020 Announcements | Trader Joe's https://www.traderjoes.com/announcement/coronavirus-update-how-trader-joes-is-caring-for-crew-members-and-customers 1/5 Customer Updates Special Trading Hours Store Openings Recalls Sustainability View All CATEGORIES Customer Updates Coronavirus Update: How Trader Joe’sis Caring for Crew Members andCustomers December 07, 2020 [Original posted 3.11.2020]   To Our Valued Customers: As the coronavirus COVID-19 affects our communities, our work as your neighborhood grocery store continues. We are vigilant; heeding all federal, state and local health advisories; and where it makes sense, adjusting efforts to safeguard the health and safety of our Crew Members and customers, as always guided by integrity and focused on doing what is right. To date, these efforts include: Facebook Twitter 4Pinterest Email Announcements Item 7.E 03/09/21 31 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 866 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 12/23/2020 Announcements | Trader Joe's https://www.traderjoes.com/announcement/coronavirus-update-how-trader-joes-is-caring-for-crew-members-and-customers 2/5 Customers Use of Face Coverings: We require customers wear a face covering that meets the standards of applicable health authorities while shopping in our stores. Unless otherwise directed by local rule or law, this does not apply to young children and those with medical conditions who are not able to wear face coverings. In California, during the current Regional Stay Home Order, due to limited capacity, we will require all customers wear a face covering that meets the standards of applicable health authorities while shopping in our stores, without exceptions. Customers with disabilities who are unable to wear a face covering will be offered reasonable accommodations (please ask at your store for more information). Personal Protective Equipment for Crew Members: As the situation evolves, we continue to look to the CDC as well as state and local health ofcials for guidance on best health and safety practices. We provide all Crew Members with gloves, should they choose to use them, and emphasize that they do not replace proper hand hygiene, which is one of the most effective protections from COVID-19. In line with current recommendations from health authorities, we have also provided our Crew Members with face masks and are urging that they use them for their protection and the protection of those around them.  Crew Member Wellness Checks:  All of our stores are conducting Crew Member Wellness Checks with all Crew Members prior to the start of each shift.  The Wellness Checks screen for potential exposure to COVID-19 and for symptoms consistent with a COVID-19 infection.  Wellness Checks are an extra precaution we are taking to reduce the possibility of any Crew Members inadvertently exposing their fellow crew or our customers to illness.   Revising Store Hours for All Trader Joe’s Locations:  In addition to reducing store hours and closing all locations at 9:00pm to support our Crew Members in taking care of one another and our customers, we have continued to evaluate our response to support customers who are most vulnerable to COVID-19. Unless otherwise directed by local rule or law, on Wednesdays and Sundays, during the rst hour of operation (either 8AM-9AM or 9AM-10AM depending on the store), Trader Joe's stores prioritize service for our senior customers over the age of 60 and customers with disabilities who may need additional assistance while shopping. To nd the hours for your store, please visit our locations page.  Prioritizing Good Hygiene Practices:  We are providing continuous reminders about good hygiene practices and supporting our Crew Members with necessary resources. For instance, ensuring every Crew Member at the registers has the opportunity to regularly wash their hands. Increasing & Enhanced Routine Cleanings:  In line with our longstanding commitment to provide a safe and clean shopping environment, stores have increased the frequency of cleanings, paying close attention to high touch areas such as restrooms, register areas, grocery carts and hand baskets. In addition, we have implemented a daily in-depth cleaning in our stores that the CDC Item 7.E 03/09/21 32 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 867 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 12/23/2020 Announcements | Trader Joe's https://www.traderjoes.com/announcement/coronavirus-update-how-trader-joes-is-caring-for-crew-members-and-customers 3/5 recommends anytime someone who is  positive for COVID-19 is suspected to have recently been in a place of business. Rather than wait until we learn of a suspected case, we have chosen to make this enhanced cleaning and disinfecting an everyday process as an extra precaution. Additional Paid-for Sick Time to All Crew Members:  Crew Members have been asked to exercise increased precautions to safeguard their health and the health of their community, including staying home if they have any symptoms of illness or do not feel well. To better support each Crew Member in making community-minded decisions, since March 2nd we have been providing up to two weeks of additional paid sick time to Crew Members who have any symptoms of illness. Thank You Pay for All Crew Members:  In recognition of the outstanding, inspiring work being done by our Crew Members, as they continue to take care of our customers and our communities, a $2/hour additional “thank you” wage is being applied for every hour worked. Moreover, during this time, we have offered Crew Members a few additional ways to qualify for and maintain health insurance.  We want Crew Members to have the opportunity to take extended time off without repercussions to their benets.    Supporting Social Distancing: Understanding one of the most common ways this virus spreads is between people who are in close contact with one another, our stores have taken measures to ensure our customers and Crew Members maintain appropriate distance to avoid close contact. We are limiting the number of people in our stores; monitoring and marking the distance between customers waiting in line outside and at checkout; having every other register open (and alternating open registers for regular cleanings); not allowing customers to bag their own groceries at our registers;  and paying careful attention to what is happening throughout the store, continuing to remind and encourage our customers and Crew Members to practice social distancing.  Plexiglass Barriers:  To further support social distancing efforts and prevent the potential spread of the virus, we have installed temporary plexiglass barriers at all of our check stands.  Continued Communication: We are closely monitoring the situation, and regularly providing all of our stores and Crew Members with the most up-to-date safety guidance, as recommended by the CDC and other health ofcials. Addressing Possible Exposure to The Virus In Our Stores:  We believe in being transparent in addressing issues, and we value information and clear communication. With this in mind, we have temporarily closed some stores related to COVID-19 concerns, including for additional precautionary cleaning and sanitization. We have made sure all Crew Members at the respective locations have been informed and understand the steps to take to best safeguard their own health and the health of their community. For any unplanned store closure, Trader Joe’s pays all Crew Members for their scheduled shifts. Item 7.E 03/09/21 33 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 868 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 12/23/2020 Announcements | Trader Joe's https://www.traderjoes.com/announcement/coronavirus-update-how-trader-joes-is-caring-for-crew-members-and-customers 4/5 Keeping Our Stores Stocked with Great Values & Maintaining The Best Everyday Prices: We understand that during this extraordinary time, providing for the essential needs of our customers is as vital as ever. We’ve been working closely with our partners throughout the supply chain to ensure that our stores remain well stocked with the products our customers need and want, as always ensuring we are maintaining great values – providing the best quality products for outstanding prices.  Our commitment to value means that we are always conscientious about making any price change––being quick to pass along savings to our customers by reducing our prices when our costs go down; and when our costs inch-up, making every effort not to raise our retail prices. If an increase in price is necessitated due to rising costs, and it means that a product is no longer a value, we will stop carrying it.  Offering great values is a cornerstone of how we do business at Trader Joe’s, and our commitment to this practice is as strong today as it has ever been. Neighborhood Shares Donations: It’s been our long-running policy to donate 100% of products that go unsold but are safe for consumption. In this time of crisis, we have continued this important everyday effort to support people in need in our communities. We face this unprecedented challenge together as a community, and we are deeply grateful to all our Crew Members, customers, and vendor partners, each of who continues to play a vital role in our effort as your neighborhood grocery store.  – Trader Joe’s Contact Us FAQs Locations by State Sitemap QUESTIONS Gluten Free Kosher Vegan DIETARY LISTS Terms of Use Privacy Policy Transparency in Supply Chains Act LEGAL STUFF TJ'S E-NEWSLETTER SIGNUP Want more product stories, funky recipe ideas and a first look at the Fearless Flyer? Sign up to receive the Trader Joe's E‑newsletter: Email A Zip C Submit Item 7.E 03/09/21 34 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 869 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) March 8, 2021 Santa Monica City Council 1685 Main Street Santa Monica, CA 90401 RE: 3/9/21 Item 7-E Support Dear Mayor Himmelrich and Councilmembers: SMRR urges the SM City Council to support our local grocery and pharmacy workers by approving the proposed emergency ordinance authorizing hazard pay (also known as “hero pay”) for large grocery and pharmacy chains located in Santa Monica. Grocery and pharmacy workers are exposing themselves to extreme risk every day during the COVID-19 health emergency when they report to their jobs in Santa Monica, yet grocery and pharmacy workers have received little compensation for acting as first responders. Please keep in mind that The Brookings Institute has been reporting on the high profits of the grocery industry during the pandemic: https://www.brookings.edu/essay/windfall-profits-and-deadly-risks/. The proposed ordinance is on par with ordinances that have already been passed in Los Angeles County, Los Angeles City, West Hollywood, and many other cities in California and nationally. The proposed ordinance will: · Provide $5/ hour in hero pay; · Be temporary: It will only be in effect for 120 days; · Only impact large chains: Only those grocery and pharmacy chains oho are publicly traded or with 300 employees nationwide, not our local small businesses; · Provide credit for existing hero pay policies: Stores with existing hero pay policies get credit against the $5. E.g., if a store already pays $4 extra per hour, it is only required to pay an additional $1 per hour. Thank you for supporting our local grocery and pharmacy workers who perform essential work in Santa Monica each day during the pandemic. Sincerely, Denny Zane Mike Soloff Co-Chair, Santa Monicans for Renters’ Rights Co-Chair, Santa Monicans for Renters’ Rights Item 7.E 03/09/21 35 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 870 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) Item 7.E 03/09/21 36 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 871 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 1 Vernice Hankins From:Rev. Jim Conn <urbconn@aol.com> Sent:Tuesday, March 9, 2021 11:23 AM To:councilmtgitems Subject:Support Item 7-E Hazard Pay EXTERNAL    Dear Mayor and Members of the Council... I am writing to add my voice supporting hazard pay for front line workers. These low-wage workers risk their health and their lives working to provide basic needs of people in our city. They deserve additional financial support for their work during this pandemic. We should follow the City and County of Los Angeles in this matter. JIM Rev. Jim Conn 230 Pacific St #108 Santa Monica, CA 90405 310/392-5056 Associations: CLUE - A Founding Member: www.cluejustice.org Climate Action Santa Monica - Advisory Board Asset Based Community Development: www.abcdinstitute.org/ United Methodist Minister - Retired: www.calpacUMC.org Former Council Member and Mayor of Santa Monica Item 7.E 03/09/21 37 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 872 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay) 1 Vernice Hankins From:Curtis <curtisraynor@yahoo.com> Sent:Tuesday, March 9, 2021 11:25 AM To:councilmtgitems Cc:Christine Parra; Sue Himmelrich; Phil Brock; Councilmember Kevin McKeown; Kristin McCowan; Oscar de la Torre; Gleam Davis Subject:Thank You For Supporting Hazard Pay for SM Essential Retail Workers... EXTERNAL    Dear Councilmembers,    I want to commend you for your support of workers at our large grocery and drug stores who incur greater risk while  providing essential services to our whole community.    The ordinance requiring temporary hazard pay to these workers is a just recognition of our gratitude to those on these  essential front lines.    Thank you, again, for your wisdom and caring.    Curtis Raynor  Santa Monica Quaker Meeting  CLUE Santa Monica/Westside Committee  Item 7.E 03/09/21 38 of 38 Item 7.E 03/09/21 7.E.f Packet Pg. 873 Attachment: Written Comments (4472 : Urgency Ordinance - Hero Pay)