HomeMy WebLinkAbout2021-02-10 e-packet@6:00Wednesday, February 10, 2021
6:00 PM
City of South San Francisco
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, CA
TELECONFERENCE MEETING
Special City Council
Special Meeting Agenda
February 10, 2021Special City Council Special Meeting Agenda
TELECONFERENCE MEETING NOTICE
THIS MEETING WILL BE CONDUCTED PURSUANT TO THE PROVISIONS OF THE
GOVERNOR’S EXECUTIVE ORDERS N-29-20 AND N-63-20 ALLOWING FOR DEVIATION
OF TELECONFERENCE RULES REQUIRED BY THE BROWN ACT & PURSUANT TO THE
ORDER OF THE HEALTH OFFICER OF SAN MATEO COUNTY DATED MARCH 31, 2020 AS
THIS MEETING IS NECESSARY SO THAT THE CITY CAN CONDUCT NECESSARY
BUSINESS AND IS PERMITTED UNDER THE ORDER AS AN ESSENTIAL
GOVERNMENTAL FUNCTION.
The purpose of conducting the meeting as described in this notice is to provide the safest environment for staff
and the public while allowing for public participation.
Councilmembers Coleman, Flores and Nicolas, Vice Mayor Nagales and Mayor Addiego and essential City
staff will participate via Teleconference.
PURSUANT TO RALPH M. BROWN ACT, GOVERNMENT CODE SECTION 54953, ALL VOTES
SHALL BE BY ROLL CALL DUE TO COUNCIL MEMBERS PARTICIPATING BY
TELECONFERENCE.
MEMBERS OF THE PUBLIC MAY VIEW A VIDEO BROADCAST OF THE MEETING BY:
Internet: https://www.ssf.net/government/city-council/video-streaming-city-and-council-meetings/city-council
Local cable channel: Astound, Channel 26 or Comcast, Channel 27
Participants are asked to register via the Zoom platform to receive the meeting link. Your email
address will not be disclosed to the public. Please note that dialing in will only allow you to listen in on
the meeting.
To make a public comment during the Zoom meeting follow the instructions listed under Remote
Public Comments.
Please click on the ZOOM link below to register for the session:
https://ssf-net.zoom.us/webinar/register/WN_vVaGcCu-RjWg6XJPXEIsmA
After registering, you will receive a confirmation email containing information about joining the
meeting.
Page 2 City of South San Francisco Printed on 4/21/2021
February 10, 2021Special City Council Special Meeting Agenda
Call to Order.
Roll Call.
Agenda Review.
Remote Public Comments - comments are limited to items on the Special Meeting
Agenda.
1.
Submit Public Comments in Advance via GoogleDocs:
Members of the public are encouraged to submit public comments in writing in advance of the meeting via
GoogleDocs by 4:00 p.m. on the meeting date. Comments received by the deadline will be forwarded to the
City Council and read into the record by the City Clerk.
Comments received after 4:00 p.m. will not be read during the meeting but will be entered into the record for
the meeting. Approximately 300 words total can be read in three minutes.
Link to GoogleDoc public comments can be found here:
https://forms.gle/q4f1DabotxAd3zfb7
No more than three minutes will be allocated to read each email comment, and oral comments will also be
limited to no more than three minutes.
If there appears to be a large number of speakers, speaking time may be reduced subject to the Mayor ’s
discretion to limit the total amount of time for public comments (Gov. Code sec. 54954.3.(b)(1).). Comments
that are not in compliance with the City Council's rules of decorum may be summarized for the record if they are
in writing or muted if they are made during the meeting.
State law prevents Council from taking action on any matter not on the agenda; your comments may be referred
to staff for follow up.
Page 3 City of South San Francisco Printed on 4/21/2021
February 10, 2021Special City Council Special Meeting Agenda
Comments During Remote Meeting:
Members of the public who wish to provide comment during the meeting may do so by using the “Raise Hand”
feature:
• To raise your hand on a PC or Mac desktop/laptop, click the button labeled "Raise Hand” at the bottom of
the window on the right side of the screen. Lower your hand by clicking the same button, now labeled “Lower
Hand.”
• To raise your hand on a mobile device, tap “Raise Hand” at the bottom left corner of the screen. The hand
icon will turn blue, and the text below it will switch to say "Lower Hand" while your hand is raised. To lower
your hand, click on “Lower Hand.”
• To raise your hand when participating by telephone, press *9.
Once your hand is raised, please wait to be acknowledged by the City Clerk, or designee, who will call on
speakers. When called upon, speakers will be unmuted. After the allotted time, speakers will be placed on
mute.
PRESENTATIONS
Oath of Office to be administered by Assemblymember Kevin Mullin and incoming
remarks from Councilmember Flores. (Mark Addiego, Mayor)
2.
Presentation on HIP Housing services provided to South San Francisco residents and
an overview of the program by Leila Perreras, Board Member. (Kristian Romasanta,
Community Development Coordinator)
3.
Presentation on COVID-19 testing, vaccines, and more. (Dr. John Skerry, KP.org)4.
Update on Public Safety Vaccines. (Police Chief Azzopardi, and Fire Chief
Magallanes)
5.
ADMINISTRATIVE BUSINESS
Report regarding an urgency ordinance requiring large grocery stores in South San
Francisco to pay employees an additional four dollars ($4.00) per hour in “hazard
pay” during the coronavirus (COVID-19) pandemic (Alex Greenwood, Director of
Economic & Community Development, and Sky Woodruff, City Attorney)
6.
Urgency Ordinance amending Title 8 of the South San Francisco Municipal Code to
add Chapter 8.77 “COVID-19 Hazard Pay” to require large grocery stores in the City
to pay employees an additional four dollars ($4.00) per hour in hazard pay during the
coronavirus (COVID-19) pandemic
6a.
Adjournment.
Page 4 City of South San Francisco Printed on 4/21/2021
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:21-84 Agenda Date:2/10/2021
Version:1 Item #:1.
Remote Public Comments - comments are limited to items on the Special Meeting Agenda.
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From:Denton Murphy
To:All at City Clerk"s Office
Subject:Public Comment for Item 6 / 6A at 6PM Special Counsel Meeting
Date:Wednesday, February 10, 2021 5:02:32 PM
To Whom It May Concern,
I'd like to have the following comment read at tonight's council meeting for item 6 / 6A, I
understand this is coming after the 4PM deadline, I was hoping you could make an exception
if possible:
I strongly urge the City Council to support this measure. Large grocery monopolists like
Safeway have demonstrated they cannot be trusted to keep in mind the welfare of their
essential employees on their own. It takes the hard work of unions like the UFCW and public
servants such as yourselves to ensure they work in the public interest.
The absolutely astounding profits these grocery chains have posted during the pandemic have
not been invested in their companies. Instead, in all their wisdom, they've decided to spend
money pumping their stock price up through things like stock buybacks. Safeway spent 1.6B
this way recently. While that may benefit folks Jeff Bezos, Warren Buffet, and Elon Musk, it
does the ordinary citizens of South San Francisco not one lick of good.
Additionally, I'd urge the city to expand this measure to cover more than just grocery stores.
Walgreens, another monopolist that has no qualms spending their gushing pandemic profits on
stock buybacks, also has employees who deserve this hazard pay just as much as our grocery
store workers. This measure could also extend to large food retail combines like Costco as
well.
Billionaire owners and corporate executives have consistently demonstrated they will not look
after their employees unless forced to. I urge the council to do their duty to the working
citizens of South City. Pass this measure and then consider expanding hazard pay to all our
essential workers. Thank you.
Respectfully,
Denton Murphy
Sign Hill
Government Code Section 54957.5
SB 343
Agenda: 2/10/2021 SP CC
Item: 6
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:21-75 Agenda Date:2/10/2021
Version:1 Item #:2.
Oath of Office to be administered by Assemblymember Kevin Mullin and incoming remarks from
Councilmember Flores.(Mark Addiego, Mayor)
City of South San Francisco Printed on 2/5/2021Page 1 of 1
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City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:21-76 Agenda Date:2/10/2021
Version:1 Item #:3.
Presentation on HIP Housing services provided to South San Francisco residents and an overview of
the program by Leila Perreras, Board Member.(Kristian Romasanta, Community Development
Coordinator)
City of South San Francisco Printed on 2/5/2021Page 1 of 1
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Presented by:
Leila Perreras
SSF Resident & HIP Housing Board Member
Government Code Section 54957.5
SB 343
Agenda: 2/10/2021 SP CC
Item # 3
About HIP Housing
Our mission
Who we are
Our programs
Home Sharing
Self Sufficiency
Properties
Feel-Good Story
HIP Housing & SSF
•Received $12,000 grant for
Home Sharing
•Receiving support since 1995
•169 persons from SSF contacted
HIP
•114 residents & 26 employees
applied
•25 residents/employees placed
•66 residents remained
•2 families participated in SSP
•700+ persons resided in HIP
properties owned/managed
•SSF commercial property with 15
units
www.hiphousing.org
[email protected]
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:21-99 Agenda Date:2/10/2021
Version:1 Item #:4.
Presentation on COVID-19 testing, vaccines, and more. (Dr. John Skerry, KP.org)
City of South San Francisco Printed on 2/5/2021Page 1 of 1
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City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:21-103 Agenda Date:2/10/2021
Version:1 Item #:5.
Update on Public Safety Vaccines.(Police Chief Azzopardi, and Fire Chief Magallanes)
City of South San Francisco Printed on 2/5/2021Page 1 of 1
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City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:21-95 Agenda Date:2/10/2021
Version:1 Item #:6.
Report regarding an urgency ordinance requiring large grocery stores in South San Francisco to pay employees
an additional four dollars ($4.00)per hour in “hazard pay”during the coronavirus (COVID-19)pandemic (Alex
Greenwood, Director of Economic & Community Development, and Sky Woodruff, City Attorney)
RECOMMENDATION
At the request of City Council,staff drafted a proposed ordinance mandating “hazard pay”for grocery workers
within the City.Should Council desire to adopt a hazard pay ordinance,staff recommends adopting the
proposed ordinance as an urgency ordinance.Because the proposed ordinance is an urgency ordinance,a four-
fifths vote of the City Council is required for adoption.Alternatively,staff recommends Council consider the
proposed ordinance after a scheduled February 19,2021 hearing in a pending lawsuit against a similar Long
Beach ordinance,as the outcome of the hearing may alert staff to any legal issues that the courts see with this
type of ordinance.
BACKGROUND
A.Hazard Pay Ordinances in California
At least a dozen local jurisdictions in California are currently considering a version of a “hazard pay”ordinance
that would provide extra hourly pay to certain types of retail workers during the COVID-19 pandemic in
recognition of the heightened health risks associated with their work.The ordinances are prospective and
would not apply retroactively.Jurisdictions considering these measures include Los Angeles County,Santa
Clara County,San Francisco,the City of Los Angeles,San Jose,Santa Monica,West Hollywood,Pomona,
Santa Ana, Berkeley, and San Leandro.
The ordinances considered by these jurisdictions all take a similar approach.They require large stores to pay
all non-managerial workers an additional hourly wage during the COVID-19 pandemic;smaller,mom-and-pop
stores are excluded.Within this framework,however,the proposals being considered vary between cities in
how they are tailored in terms of:(1)the specified rate of pay,(2)what types of retail stores are covered,(3)the
specific size or other threshold requirements that determine which retailers are covered,and (4)how long the
hazard pay is required.
As of the date of this staff report, three cities have adopted hazard pay through urgency ordinances:
·On Jan. 19, Long Beach adopted a hazard pay rate of $4 per hour;
·On Jan.27,Montebello (a city in eastern Los Angeles County with a population of
approximately 70,000 people) adopted a hazard pay rate of $4 per hour;
·On Feb. 2, Oakland adopted a hazard pay rate of $5 per hour.
The proposed ordinance is drafted as an urgency measure,reflecting Council’s initial direction to take action on
this matter quickly,if it chooses to proceed.The recitals contained in the ordinance establish the basis for the
urgency,including citing studies reflecting the dangers faced by the workers who would be eligible for the
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urgency,including citing studies reflecting the dangers faced by the workers who would be eligible for the
hazard pay and how the additional compensation would further the immediate preservation of the public health
and safety.
B.Active Litigation
The California Grocers Association has sued all of the cities that have adopted a hazard pay ordinance.The
lawsuits are substantively identical.Each claims that the hazard pay ordinance is invalid because it is
preempted by the National Labor Relations Act (for allegedly interfering with collective bargaining)and
because it is unconstitutional (for allegedly violating equal protection and contracts clauses of the United States
constitution). The City Attorney’s Office is still reviewing the strength of these claims.
In each of these cases,the Grocers Association seeks to enjoin the ordinance from taking effect.In Long
Beach,the group requested a temporary restraining order,which was denied by the court.A hearing is set for
February 19,2021 in Los Angeles federal court on the grocers’motion for a preliminary injunction,which will
determine whether the grocers’are likely to prevail on their claims.No hearings have been set in the Oakland
or Montebello cases.
The grocers have also threatened to sue other jurisdictions that adopt similar ordinances.
C.Arguments made by supporters
Supporters of hazard pay ordinances,including the United Food and Commercial Workers,note that grocery
and other front-line retail workers are essential workers in the COVID-19 pandemic.These workers bear a
heightened risk infection,given that many work in enclosed settings where they are required to make close
contact with large numbers of members of the public.Even with mask mandates in effect,this has led to a
number of outbreaks in grocery stores and other retail outlets across the state.Workers shouldering this risk are
low-wage workers, who are primarily women and people of color, and their families.
Supporters have argued that,while health risks have risen for front-line workers,many of their employers have
seen substantial increases in sales and profits during the pandemic.According to a November 2020 Brookings
Institution report,for instance,13 of the largest retailers in the country saw their profits rise 40 percent in 2020
over the previous year.This includes Kroger (Ralphs/Food 4 Less)and Albertsons (Safeway/Lucky),which
both saw profits more than double in the first two quarters of 2020 compared with the same period in 2019.
Front-line workers saw little of those increased profits,according to the study;while all of the retailers studied
had provided temporary hazard pay at the start of the pandemic (typically $2 per hour),this extra pay had
largely ended by June 2020.Thus,over the course of the pandemic in 2020,a worker at a Kroger or Albertsons
store saw an average pay increase of $0.87 or $0.83 per hour, respectively.
D.Responses from affected retailers
Staff has begun outreach to potentially affected local businesses to solicit their feedback on a potential hazard
pay ordinance,including:Safeway,Grocery Outlet,Seafood City,Smart &Final,Costco,and others.Staff will
update the City Council with responses received.
Across the state,however,the Grocers Association has vocally opposed these ordinances.It has argued that
retailers on whole have invested in safety measures,incentive pay,and improved health benefits for workers
since the pandemic began.It has also argued that consumers will bear the brunt of the mandated pay increase,
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since the pandemic began.It has also argued that consumers will bear the brunt of the mandated pay increase,
with the impact felt most by low-income families and those struggling since the pandemic began.For instance,
in a letter to Oakland and San Jose city councils co-signed with a number of other trade groups,the Association
argued that a $5 per hour hazard pay mandate would lead to an average increase in food costs of $400 per year
for a family of four.
The association has also warned that pay increases will lead to store closures or employers cutting shifts and
reducing hours.This week,for instance,Kroger announced it was closing two stores in Long Beach-a Food 4
Less and a Ralphs-because of the city’s ordinance.(The stores had been underperforming,a Kroger
spokesperson told the Los Angeles Times.)
As the Grocers Association has noted,some retailers have continued to provide-and have increased-incentive
pay during the epidemic.For instance,Trader Joe’s has provided all hourly,non-managerial workers $2 per
hour in “thank you”pay throughout the pandemic.It announced on Feb.2 that it will increase this extra pay to
$4 per hour in response to new hazard pay ordinances in California and Washington.(According to a message
from the CEOs,workers will forgo their usual $0.65-$0.75 annual,permanent raises in 2021,and will receive
the extra pay until they “generally . . . are eligible for vaccinations as ‘grocery workers.’”)
E.Potentially Impacted Businesses
Based on an initial review of Business License data,staff estimates there are 18 to 20 grocery store
establishments in the city.This includes larger establishments such as Safeway,Costco,Trader Joe’s,Pacific
Supermarket,Grocery Outlet,and Smart &Final;and it also includes smaller groceries such as La Tapatia,
School House Grocery,Seafood City,and Mike &Ken’s Grocery.The City’s business license program does not
have a specific category for groceries,so these establishments are included in several different business
categories,such as “Retail General Merchandise.”In addition,the 18-20 grocery stores noted above would not
include several types of businesses that can sometimes offer services very similar to groceries,such as retail
bakeries, convenience stores, liquor stores, or wholesale produce markets with a retail component.
As discussed below,the proposed ordinance could be constructed to exclude businesses with less than 500
employees nationwide.With such a provision,the ordinance would potentially apply to about eight or nine
establishments.
PROPOSED ORDINANCE
At the request of Council, staff has drafted a proposed ordinance using the Oakland ordinance as a base.
·Rate of Hazard Pay.The proposed rate of pay is $4 per hour,in addition to workers’existing hourly
base salary.This matches the rate adopted in Long Beach and Montebello;it is $1 lower than the
Oakland’s pay and $1 more than the proposed rate in San Jose.
·Types of retailers covered.The proposed ordinance applies only to grocery stores,which are defined as
stores that “primarily sell household foodstuffs for offsite consumption.”It is unclear whether Costco
meets this definition.The proposed ordinance does not follow Montebello’s approach (also being
considered by Los Angeles County) to include drug stores, as well.
·Threshold for grocery stores subject to the ordinance.The proposed ordinance is limited to grocery
stores that (1)are over 15,000 square feet in size and located within the geographic limits of the city,
and (2)employ 500 or more employees nationwide,regardless of where those employees are employed,
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and (2)employ 500 or more employees nationwide,regardless of where those employees are employed,
or is a franchisee associated with a store that employs more than 500 employees in the aggregate.
·Enforcement.Enforcement of the proposed ordinance mirrors the City’s minimum wage ordinance,
adopted in 2019 and codified in chapter 8.71 of the South San Francisco Municipal Code.This includes
a private right of action.(By contrast,the Oakland ordinance includes specific provisions related to
enforcement by that city’s workplace and employment standards department.)
·Duration of ordinance.The duration of the proposed ordinance is tied to the City’s status under the
state health order.It would require covered employers to pay hazard pay for any period in which the
City is within a widespread (purple),substantial (red)or moderate (orange)risk level (or its equivalent),
and until the City’s risk level returns to minimal (yellow).
FISCAL IMPACT
The potential fiscal impact to the City is unknown.The proposed ordinance does not create any substantive
obligations on the City,and staff does not anticipate any additional City staff time or resources are necessary.
There would be currently un-estimated litigation costs associated with defending a likely challenge to the
ordinance.
RELATIONSHIP TO STRATEGIC PLAN
This effort potentially aligns with Priority #2 which is focused on enhancing quality of life.
CONCLUSION
Should the City Council desire to adopt a hazard pay ordinance for grocery workers within the City,staff
recommends City Council adopt the proposed ordinance as an urgency ordinance.In the alternative,staff
recommends the City Council consider the proposed ordinance after the scheduled February 19th hearing in the
Long Beach lawsuit.
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South City
125 Hickey Blvd. South San Francisco, CA 94080
[email protected] 650.550.1100 Fax 650.550.1105
Dear South San Francisco City Council,
We are the independent operators of South City Grocery Outlet located at 125 Hickey Boulevard, South San Francisco. Dave, our
daughters and son-in-law have proudly served our local community for nine years. We are writing in regards to the proposed
$4/Hour Hazard Pay Ordinance South City is considering.
The health and safety of our employees and customers are our top priority and concern. Throughout this pandemic, we have
implemented safety and cleaning protocols in our store, working night and day and spending significant dollars for cleaning and
sanitation in order to safeguard our employees and shoppers, stay open and serve our community. Throughout this pandemic, we
have paid extra attention to the personal welfare of our employees by supporting days off, leaves, paying appreciation pay, giving
free groceries to both our employees and customers. All we are doing has blessed us with only minimal cases in the early month
when this began.
South City Grocery Outlet is a local, independently-owned discount grocery store. We are a small employer with less than 50
employees. While we operate under a license from Grocery Outlet, Inc. permitting us to use the Grocery Outlet brand, we are a
completely separate entity. Grocery Outlet Inc. has no financial or other ownership interest in us. No other business or person,
besides Dave and I, own our business. We in turn, have absolutely no other ownership or financial interest in any other business.
If this ordinance were to apply to us, it would increase our labor cost by $21,840 per month. That increase would also then increase
our payroll taxes, workman’s compensation costs, overtime and Paid Time Off. We could not afford to stay in business. All this at a
time when we are fighting for our lives to compete with online shopping. South City has already lost many small brink and mortar
stores. We don’t want to be part of that statistic. Additionally, we fear an ordinance like this will ultimately incentivize potentially ill
people to come to work exposing others.
The city council must remember there are many small, independent grocery stores in South City that the community relies on for
their groceries. Not all are large companies with the financial means to absorb the $4/Hour hazard pay hike. I believe Costco and
Target aren’t even classified as grocery stores so they would be exempt. Many small grocers are probably struggling with the
$15.24/Hour wage increase. While only a few earn that in our store, it has resulted in increases for everyone. We have been able
and willing to do that. This $4/Hour ordinance will break us and many other small grocers.
Please consider the plight of the independent grocer and clarify in the final language of this ordinance that it does not apply to small
employer grocery businesses, owned by an independent operator of a single location.
Sincerely,
Michelle and Dave Radcliffe
Government Code Section 54957.5
SB 343
Agenda: 2/10/2021 SP CC
Item # 6
CALIFORNIA GROCERS ASSOCIATION | 1005 12th Street, Suite 200, Sacramento, CA 95814
P: (916) 448-3545 | F: (916) 448-2793 | www.cagrocers.com
February 8, 2020
The Honorable Mark Addiego
Mayor, City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
RE: Grocery Worker Premium Pay
Dear Mayor Addiego,
On behalf of South San Francisco grocers, I write to ask the Council to not move forward with the proposed grocery
worker premium pay ordinance until meeting with the grocery industry to understand the community and economic
impacts. Without the city’s willingness to engage the grocery industry, we must oppose the ordinance for both policy and
legal reasons.
We agree that grocery workers serve a vital and essential role during the pandemic. They have worked tirelessly to keep
stores open for consumers, allowing our communities to have uninterrupted access to food and medications. To protect
our employees, grocery stores were among the first to implement numerous safety protocols, including providing PPE and
masks, performing wellness checks, enhancing sanitation and cleaning, limiting store capacity, and instituting social
distance requirements, among other actions.
On top of increased safety measures, grocery employees have also received unprecedented amounts of supplemental
paid leave to care for themselves and their families in addition to already existing leave benefits. Grocers have also
provided employees additional pay and benefits throughout the pandemic in various forms, including hourly and bonus
pay averaging an extra $2 to $3 along with significant discounts and complimentary groceries. All of these safety efforts
and additional benefits clearly demonstrate grocers’ dedication and appreciation for their employees.
Unfortunately, the Grocery Worker Premium Pay ordinance would mandate grocery stores provide additional pay beyond
what is economically feasible, which would severely impact store viability and result in increased prices for groceries,
limited operating hours, reduced hours for workers, fewer workers per store, and most concerning, possible store
closures. These negative impacts from the ordinance would be felt most acutely by independent grocers, ethnic format
stores, and stores serving low-income neighborhoods. The City of Long Beach, who recently passed a similar ordinance ,
has already suffered the permanent loss of several full-service grocery stores as direct result.
Based on the ordinance and supporting documentation it is clear that Council is relying on flawed and inaccurate data, as
well as a significant lack of information specific to the grocery industry or to grocers in Irvine to make its decision. The
study referenced supporting documentation lumps a few traditional grocery companies, with most not operating in South
San Francisco, in with several of the largest non-grocery retailers in existence. This study’s broad view completely ignores
the continued low profit margins and significant operational costs traditional grocers have incurred in response to the
pandemic, including the hiring of tens of thousands of new employees. In order to help address in more detail the
negative consequences of this ordinance we are submitting “Consumer and Community Impacts of Hazard Pay Mandates”
for your review. We believe a full understanding of the impacts is required before moving forward.
Specific to ordinance language, there are numerous policy and legal issues which unnecessarily single out the grocery
industry and create significant burdens. The ordinance fails to recognize the current efforts grocers are making to support
their employees and requires grocers add significant costs on to existing employee benefit programs.
Government Code Section 54957.5
SB 343
Agenda: 2/10/2021 SP CC
Item # 6
CALIFORNIA GROCERS ASSOCIATION | 1005 12th Street, Suite 200, Sacramento, CA 95814
P: (916) 448-3545 | F: (916) 448-2793 | www.cagrocers.com
February 8, 2021
PAGE 2
Furthermore, passing this ordinance improperly inserts the city into employee-employer contractual relationships. The
ordinance also ignores other essential workers, including city employees, that have similar interaction with the public.
Taken in whole, this ordinance is clearly intended to impact only specific stores within a single industry and fails to
recognize the contributions of all essential workers. Based on language specifics, this ordinance misses a genuine effort to
promote the health, safety and welfare of the public.
Emergency passage of the ordinance also ignores any reasonable effort for compliance by impacted stores, as several
grocery stores will be operating at the time of passage. By implementing the ordinance immediately there is literally no
time to communicate to employees, post notices, adjust payroll processes, and other necessary steps as required by
California law. Coupled with the varied enforcement mechanisms and significant remedies outlined, the passage of this
ordinance would put stores into immediate jeopardy. This scenario is yet another negative consequence resulting from
the lack of outreach to grocers and the grocery industry to understand real world impacts.
There is also significant concern with the open-ended nature of the mandate with its expiration based on the state color-
tiered system based on San Mateo County COVID-19 status. Without any reliability grocers are unable to gauge potential
impacts due to the variable nature of the pandemic. Without a date certain grocer would be forced to assume the most
amount of impact to their operations and make judgements accordingly.
Grocery workers have demonstrated exemplary effort to keep grocery stores open for South San Francisco. This why the
grocery industry has provided significant safety measures and historic levels of benefits that include additional pay and
bonuses. Unfortunately, this ordinance is a significant overreach of policy and jurisdictional control. This will result in
negative consequences for workers and consumers that will only be compounded by the pandemic.
We respectfully implore the Council to not move forward with the grocery worker pay ordinance at this time. We
encourage you to understand the impact of this ordinance on workers and the community by accepting our invitation to
work cooperatively with South San Francisco grocers. If Council must bring the ordinance forward for a vote at this time
we ask you to oppose its passage. CGA is submitting additional information from our legal counsel for your consideration.
Thank you for your consideration and we look forward to being able to combat the pandemic in partnership with the City
of South San Francisco.
Sincerely,
Tim James
California Grocers Association
CC: Members, South San Francisco City Council
Mr. Mike Futrell, City Manager, City of South San Francisco
Ms. Rosa Govea, City Clerk, City of South San Francisco
sf-4425783
Writer’s Direct Contact
+1 (415) 268.6358
[email protected]
425 MARKET STREET
SAN FRANCISCO
CALIFORNIA 94105-2482
TELEPHONE: 415.268.7000
FACSIMILE: 415.268.7522
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February 9, 2021
Via Email
The Honorable Mark Addiego
City Council
400 Grand Ave.
South San Francisco, California 94080
Re: Hazard Pay for Grocery Workers Ordinance
Dear Council Members:
We write on behalf of our client, the California Grocers Association (the “CGA”), regarding
the proposed Urgency Ordinance amending Title 8 of the South San Francisco Municipal
Code to add Chapter 8.77 “COVID-19 Hazard Pay” to require large grocery stores in the
City to pay employees an additional four dollars ($4.00) per hour in hazard pay during the
coronavirus (COVID-19) pandemic (the “Ordinance”), that singles out an specific group of
grocery stores (i.e., those over 15,000 square feet operated by companies with 500+
employees) and requires them to implement mandatory pay increases. The City Council’s
rushed consideration of this Ordinance would, if passed, lead to the enactment of an
unlawful, interest-group driven ordinance that ignores large groups of essential retail
workers. It will compel employers to spend less on worker and public health protections in
order to avoid losses that could lead to closures. In addition, the Ordinance, in its proposed
form, interferes with the collective-bargaining process protected by the National Labor
Relations Act (the “NLRA”), and unduly targets certain grocers in violation of their
constitutional equal protection rights. We respectfully request that the City Council reject
the Ordinance as these defects are incurable.
The Ordinance fails to address any issue affecting frontline workers’ health and safety.
The purpose of the Ordinance is purportedly the “preservation of the public peace, health or
safety” during the Covid-19 pandemic. (Ordinance, § 2.) The Ordinance is devoid of any
requirements related to the health and safety of frontline workers or the general public and
instead imposes costly burdens on certain grocers by requiring them to provide an additional
“four dollars ($4.00) per hour for all hours worked at a Large Grocery Store” (“Premium
Pay”). (§§ 8.77.040.A). A wage increase does not play any role in mitigating the risks of
exposure to COVID-19, nor is there any suggestion that there is any risk of interruption to
the food supply absent an increase in wages. If anything, the Ordinance could increase those
Government Code Section 54957.5
SB 343
Agenda: 2/10/2021 SP CC
Item # 6
Hon. Mark Addiego
February 9, 2021
Page Two
sf-4425783
risks, as it may divert funds that otherwise would have been available for grocers to continue
their investments in public health measures recognized to be effective: enhancing sanitation
and cleaning protocols, limiting store capacity, expanding online orders and curbside pickup
service, and increasing spacing and social distancing requirements.
The Ordinance also inexplicably chooses winners and losers among frontline workers in
mandating Premium Pay. The Ordinance defines “Large Grocery Store” as a “retail or
wholesale store that is over 15,000 square feet in size, that is located within the geographic
limits of the City, and that sells primarily household foodstuffs for offsite consumption.” (§
8.77.030.L.) Other retail and health care workers are ignored, despite the fact that those
same workers have been reporting to work since March. The Ordinance grants Premium Pay
for select, employees of the large grocers while ignoring frontline employees of larger,
generic retailers that also sell a substantial amount of groceries, and other frontline workers
in South San Francisco that face identical, if not greater, risks.
The Ordinance is unlawful. By mandating Premium Pay, the Ordinance would improperly
insert the City of South San Francisco into the middle of the collective bargaining process
protected by the National Labor Relations Act. The Ordinance suggests that the certain
grocery workers require this “relief” on an emergency basis, as “grocery workers-should they
and members of their family become infected-risk being unable to work and earn an income,
and an inability to pay for housing, childcare and healthcare costs.” (Recitals; see also §2).
South San Francisco employers and workers in many industries have been faced with these
issues since March 2020. They are in no way “immediate.” More importantly, grocers have
continued to operate, providing food and household items to protect public health and safety.
In light of the widespread decrease in economic activity, there is also no reason to believe
that grocery workers are at any particular risk of leaving their jobs, but even if there were
such a risk, grocers would have every incentive to increase the workers’ compensation or
otherwise bargain with them to improve retention. The Ordinance would interfere with this
process that Congress intended to be left to be controlled by the free-play of economic
forces. Machinists v. Wisconsin Employment Relations Comm’n, 427 U.S. 132 (1976). Such
ordinances have been found to be preempted by the NLRA.
For example, in Chamber of Commerce of U.S. v. Bragdon, the Ninth Circuit Court of
Appeals held as preempted an ordinance mandating employers to pay a predetermined wage
scale to employees on certain private industrial construction projects. 64 F.3d 497 (9th Cir.
1995). The ordinance’s purported goals included “promot[ing] safety and higher quality of
construction in large industrial projects” and “maintain[ing] and improv[ing] the standard of
living of construction workers, and thereby improv[ing] the economy as a whole.” Id. at
503. The Ninth Circuit recognized that this ordinance “differ[ed] from the [a locality’s]
usual exercise of police power, which normally seeks to assure that a minimum wage is paid
to all employees within the county to avoid unduly imposing on public services such as
Hon. Mark Addiego
February 9, 2021
Page Three
sf-4425783
welfare or health services.” Id. at 503. Instead, the ordinance was an “economic weapon”
meant to influence the terms of the employers’ and their workers’ contract. Id. at 501-04.
The Ninth Circuit explained that the ordinance would “redirect efforts of employees not to
bargain with employers, but instead, to seek to set specialized minimum wage and benefit
packages with political bodies,” thereby substituting a “free-play of economic forces that was
intended by the NLRA” with a “free-play of political forces.” Id. at 504.
The same is true of this Ordinance. While the City has the power to enact ordinances to
further the health and safety of its citizens, it is prohibited from interfering directly in
employers’ and their employees’ bargaining process by arbitrarily forcing certain grocers to
provide Premium Pay that is both unrelated to minimum labor standards, or the health and
safety of the workers and the general public.
The Ordinance also violates the U.S. Constitution and California Constitution’s Equal
Protection Clauses (the “Equal Protection Clauses”). The Equal Protection Clauses provide
for “equal protections of the laws.” U.S. Const. amend. XIV, § 1; Cal. Const. art I, § 7(a).
This guarantee is “essentially a direction that all persons similarly situated should be treated
alike” and “secure[s] every person within the State’s jurisdiction against intentional and
arbitrary discrimination, whether occasioned by express terms of a statute or by its improper
execution through duly constituted agents.” City of Cleburne v. Cleburne Living Center, 473
U.S. 432, 439 (1985); Village of Willowbrook v. Olech, 528 U.S. 562, 564 (2000). No law
may draw classifications that do not “rationally further a legitimate state interest.”
Nordlinger v. Hahn, 505 U.S. 1, 10 (1992). By requiring that any classification “bear a
rational relationship to an independent and legitimate legislative end, [courts] ensure that
classifications are not drawn for the purpose of disadvantaging the group burdened by law.”
Romer v. Evans, 517 U.S. 620, 633 (1996).
As discussed above, the Ordinance here unfairly targets traditional grocery companies and
arbitrarily subjects certain 500-employee grocers to the Premium Pay mandate while sparing
other generic retailers who also employ frontline workers and who also sell groceries. See
Fowler Packing Co., Inc. v. Lanier, 844 F.3d 809, 815 (9th Cir. 2016) (“[L]egislatures may
not draw lines for the purpose of arbitrarily excluding individuals,” even to “protect” those
favored groups’ “expectations.”); Hays v. Wood, 25 Cal. 3d 772, 786-87 (1979) (“[N]othing
opens the door to arbitrary action so effectively as to allow [state] officials to pick and
choose only a few to whom they will apply legislation and thus to escape the political
retribution that might be visited upon them if larger numbers were affected.”). Moreover,
absent from the Ordinance is any requirement that would actually address its stated purpose
of promoting the public’s health and safety. Put simply, there is a disconnect between the
Ordinance’s reach and its stated purpose, making it unlawful and violating the equal
protection rights of CGA’s members.
Hon. Mark Addiego
February 9, 2021
Page Four
sf-4425783
CGA disagrees with the Council’s characterization of the Ordinance as an “urgency
ordinance.” There is nothing in the Ordinance that is required for “immediate preservation of
the public peace, health and safety.” (§ 2.) Even if an emergency ordinance passes, there is
no requirement that an emergency ordinance become effective immediately on passage. As
this Council has done many times before, an emergency ordinance can become effective at a
set date in the future.
Finally, CGA objects to the Ordinance’s obligations being tied to the State’s ever-changing
reopening framework. That framework can be unpredictable due to changes in the spread of
the virus, as well as the State’s fluid approach to the tier system, and the Ordinance itself
recognizes that we are a “long way” from the minimal tier where hazard pay obligations
would be lifted. In light of emerging vaccination programs for essential workers, stores’
increasing ability to protect patrons and workers from infection using distancing, curbside
pickup, and other measures, the Ordinance’s use of the county-wide tier system as the sole
measure for the duration of hazard pay is not appropriate. We strongly encourage the City to
set an alternate deadline for expiration of hazard pay ordinance (i.e., 90 days) so that it can
be revisited by the Council in light of the rapidly changing pandemic conditions.
For all of the reasons discussed above, we respectfully request that the City Council reject
the Ordinance.
Sincerely,
William F. Tarantino
cc: Honorable Members of the South San Francisco City Council
Ms. Buenaflor Nicolas
Mr. Eddie Flores
Mr. Mark Nagales
Mr. James Coleman
Consumer and Community Impacts of
Hazard Pay Mandates
January 2021
Prepared for:
California Grocers Association
Prepared by:
Brad Williams, Chief Economist
Michael C. Genest, Founder and Chairman
Capitol Matrix Consulting
Government Code Section 54957.5
SB 343
Agenda: 2/10/2021 SP CC
Item # 6
Consumer and Community Impacts of Hazard Pay Mandates
ii
About the Authors
The authors are partners with Capitol Matrix Consulting (CMC), a firm that provides consulting
services on a wide range of economic, taxation, and state-and-local government budget issues.
Together, they have over 80 years of combined experience in economic and public policy analysis.
Mike Genest founded Capitol Matrix Consulting (originally Genest Consulting) in 2010 after concluding
a 32-year career in state government, which culminated as Director of the California Department of
Finance (DOF) under Governor Arnold Schwarzenegger. Prior to his four-year stint as the Governor’s
chief fiscal policy advisor, Mr. Genest held top analytical and leadership positions in both the executive
and legislative branches of government. These included Undersecretary of the Health and Human
Services Agency, Staff Director of the Senate Republican Fiscal Office, Chief of Administration of the
California Department of Corrections and Rehabilitation, and Director of the Social Services section of
California’s Legislative Analyst’s Office.
Brad Williams joined Capitol Matrix Consulting in 2011, after having served in various positions
in state government for 33 years. Mr. Williams served for over a decade as the chief economist for
the Legislative Analyst’s Office, where he was considered one of the state's top experts on the tax
system, the California economy, and government revenues. He was recognized by the Wall Street
Journal as the most accurate forecaster of the California economy in the 1990s, and has authored
numerous studies related to taxation and the economic impacts of policy proposals. Immediately
prior to joining CMC, Mr. Williams served as a consultant to the Assembly Appropriations
Committee, where he advised leadership of the majority party on proposed legislation relating to
taxation, local government, labor, and banking.
Consumer and Community Impacts of Hazard Pay Mandates
iii
Table of Contents
EXECUTIVE SUMMARY ........................................................................................................................ 4
INTRODUCTION ....................................................................................................................................................... 6
BACKGROUND — GROCERY IS A LOW-MARGIN, HIGH-LABOR COST BUSINESS ................................ 6
COVID-19 TEMPORARILY BOOSTED PROFITS ........................................................................................................................ 6
BUT THE INCREASES ARE SUBSIDING ........................................................................................................................................ 7
MANY STORES INCUR LOSSES IN NORMAL YEARS ................................................................................................................... 8
MANDATED WAGE INCREASES WOULD PUSH MOST STORES INTO DEFICITS ...................................................................... 8
POTENTIAL IMPACTS ON CONSUMERS, WORKERS AND COMMUNITIES ............................................. 8
HIGHER COSTS PASSED ALONG TO CONSUMERS ...................................................................................................................... 9
HIGHER COSTS ARE OFFSET BY JOB AND HOURS WORKED REDUCTIONS ............................................................................ 9
SOME COMMUNITIES WOULD LIKELY BECOME FOOD DESSERTS ........................................................................................ 10
CONCLUSION ......................................................................................................................................................... 11
Consumer and Community Impacts of Hazard Pay Mandates
4
Executive Summary
Hazard-pay mandates passed in the City of Long Beach and under consideration in the City of Los
Angeles and in other local jurisdictions would raise pay for grocery workers by as much as $5.00 per
hour. Since the average pay for grocery workers in California is currently about $18.00 per hour, a
$5.00 increase would raise store labor costs by 28 percent, and have major negative impacts on
grocery stores, their employees and their customers. Specifically:
• Average profit margins in the grocery industry were 1.4% in 2019, with a significant number
of stores operating with net losses. While profits increased temporarily to 2.2% during early
to mid 2020, quarterly data indicates that profit margins were subsiding to historical levels as
2020 drew to a close.
• Wage-related labor expenses account for about 16 percent of total sales in the grocery
industry. As a result, a 28 percent increase in wages would boost overall costs 4.5 percent
under the City of Los Angeles proposal of $5.00 per hour. This increase would be twice the size
of the 2020 industry profit margin and three times historical grocery profit margins.
• In order to survive such an increase, grocers would need to raise prices to consumers and/or
find substantial offsetting cuts to their controllable operating expenses, which would mean
workforce reductions. As an illustration of the potential magnitude of each of these impacts,
we considered two extremes:
1) All of the higher wage costs (assuming the $5.00/hour proposal) are passed through to
consumers in the form of higher retail prices:
• This would result in a $400 per year increase in grocery costs for a typical family of
four, an increase of 4.5 percent.
• If implemented in the City of Los Angeles, its residents would pay $450 million more
for groceries over a year.
• The increase would hit low- and moderate-income families hard, particularly those
struggling with job losses and income reductions due to COVID-19.
• If implemented statewide, additional grocery costs would be $4.5 billion per year in
California.
2) Retail prices to consumers are not raised and all the additional costs are offset through a
reduction in store expenses:
• Given that labor costs are by far the largest controllable expense for stores, it is
highly likely that the wage mandates will translate into fewer store hours, fewer
employee hours, and fewer jobs.
Ø For a store with 50 full-time equivalent employees, it would take a reduction of
11 employees to offset the increased wage costs, or a 22% decrease in staff.
Ø If the mandate were imposed statewide at $5.00 per hour, the job loss would be
66,000 workers.
Consumer and Community Impacts of Hazard Pay Mandates
5
Ø If imposed in the City of Los Angeles, the job loss would be 7,000 workers.
Ø And in the City of Long Beach, the job impact of its $4.00 per hour mandate
would be 775 jobs.
Ø Stores could alternatively avoid job reductions by cutting hours worked by 22
percent.
• For the significant share of stores already operating with net losses, a massive
government-mandated wage increase would likely result in store closures, thereby
expanding the number of “food deserts” (i.e. communities with no fresh-food options).
Consumer and Community Impacts of Hazard Pay Mandates
6
Introduction
The Long Beach City Council has passed an ordinance that mandates grocers to provide a $4.00 per
hour pay increase – “hazard pay” – to grocery workers. The mandate expires in 120 days. Two
members of the Los Angeles City have introduced a similar measure for a $5.00 per hour increase
for companies that employ more than 300 workers nationwide. Grocery workers in California
currently earn about $18.00 per hour.1 Therefore, the Los Angeles proposal would increase average
hourly pay to $23.00 per hour, an increase of 28 percent. Several other cities in California have
discussed $5.00/hour proposals similar to Los Angeles.
This report focuses on the impact of hazard pay mandates on grocery store profitability and on the
sustainability of an industry with traditionally low profit margins. It also assesses the potential
impact of the proposed wage increases on consumers, especially lower-income consumers (a cohort
already hit hard by the COVID lockdowns and business closures).
Background — Grocery is a Low-Margin, High-Labor Cost Business
The grocery business is a high-volume, low-margin industry. According to an annual database of
public companies maintained by Professor Damodaran of New York University (NYU),2 net profit
margins as a percent of sales in the grocery industry are among the lowest of any major sector of the
economy. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) averaged 4.6
percent of sales in 2019, and the net profit margin (which accounts for other unavoidable expenses
such as rent and depreciation) was just 1.4 percent during the year. This compares to the non-
financial, economy-wide average of 16.6 percent for EBITDA and 6.4 percent for the net profit
margin. The NYU estimate for public companies in the grocery industry is similar to the 1.1 percent
margin reported by the Independent Grocers Association for the same year.3
COVID-19 temporarily boosted profits
In the beginning of the COVID-19 pandemic, sales and profit margins spiked as people stocked up on
household items and shifted spending from eating establishments to food at home. According to data
compiled by NYU, net profit margins in the grocery industry increased to 2.2 percent in early to mid
2020.4 Although representing a substantial year-to-year increase in profits, the 2.2 percent margin
remains quite small relative to most other industries. This implies that even with the historically high
rates of profits in 2020, there is little financial room to absorb a major wage increase.
1 $18.00 per hour is consistent with the responses we received to our informal survey. It is also consistent with published
contract agreements we reviewed. See, for example, the “Retail Food, Meat, Bakery, Candy and General Merchandise
Agreement, March 4, 2019 - March 6, 2022 between UFCW Union Locals 135, 324, 770,1167,1428,1442 & 8 - GS and Ralphs
Grocery Company.” In this contract, hourly pay rates starting March 2, 2021 for food clerks range from $14.40 per hour (for
first 1,000 hours) up to $22.00 per hour (for workers with more than 9,800 hours), The department head is paid $23.00 per
hour. Meat cutter pay rates range from $14.20 (for the first six months) to $23.28 per hour (for those with more than 2 years
on the job). The department manager is paid $24.78 per hour. https://ufcw770.org/wp-content/uploads/2020/08/Ralphs-
Contract-2020.pdf
2 Source: Professor Aswath Damodaran, Stern School of Business, New York University.
http://pages.stern.nyu.edu/~adamodar/
3 Source: “2020 Independent Grocer Financial Survey.” Sponsored by the National Grocer’s Association and FMS Solutions
Holding, LLC
4 Supra 2.
Consumer and Community Impacts of Hazard Pay Mandates
7
But the increases are subsiding
Moreover, quarterly data indicates that the sales and profit increases experienced in early 2020
were transitory and were settling back toward pre-COVID trends as 2020 drew to a close. This
quarterly trend is evident in quarterly financial reports filed by California’s two largest publicly
traded companies in the grocery business: The Kroger Company (which includes Ralphs, Food for
Less, and Fred Meyers, among others) and Albertsons (which includes Safeway, Albertsons, and
Vons, among others). Figure 1 shows that the average profit margin for these two companies was
3.6 percent of sales in the Spring of 2020, declining to 1.9 percent by the fourth quarter of the year.5
Monthly sales data contained in the 2020 Independent Grocer’s Financial Survey showed a similar
pattern, with year-over-year sales peaking at 68 percent in mid-March 2020, but then subsiding to
12 percent as of the first three weeks of June (the latest period covered by the survey).6
Figure 1
Combined Net Profit Margins During 2020
Albertsons and The Kroger Companies
While grocers continued to benefit from higher food and related sales during the second half of
2020, they also faced higher wholesale costs for food and housing supplies, as well as considerable
new COVID-19 related expenses. These include expenses for paid leave and overtime needed to
cover shifts of workers affected by COVID-19, both those that contracted the virus and (primarily)
those that were exposed and needed to quarantine. Other COVID-19 costs include those for intense
in-store cleaning, masks for employees, new plastic barriers at check-outs and service counters, and
additional staffing and capital costs for scaling up of e-commerce, curbside and home delivery.
5 In their SEC 10-Q quarterly report for the four-month period ending in June 2020, Albertsons reported that consolidated
sales were up 21.4 percent from the same period of 2019 and before-tax profits were 3.5 percent of total sales. In the
three-month period ending in mid-September, the company reported year-over-year sales growth of 11.2 percent and
before-tax profits equal to 2.5 percent of sales. In their 10-Q report filed for the three-month period ending in early
December, Albertsons showed year-over-year sales growth of 9.3 percent, and profits as a percent of sales of just 1.0
percent. Data for the Kroger Company indicates that year-over-year sales growth subsided from 11.5 percent for the three-
month period ending in May 2020 to 8.2 percent for the three-month period ending in August, and further to 6.3 percent
for the three-month period ending in November. Profits as a percent of sales fell from 3.8 percent to 3.5 percent, and
further to 2.8 percent during the same three quarterly periods. (Source: EDGAR Company Filings, U.S. Securities and
Exchange Commission. https://www.sec.gov/edgar/searchedgar/ companysearch.html.
6 Supra 3
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Spring 2020 Summer 2020 Fall 2020Net Profit Margin Before Tax
Consumer and Community Impacts of Hazard Pay Mandates
8
Many stores incur losses in normal years
The 1- to 2-percent net profit levels cited above reflect industry averages. There is considerable
variation around these averages among individual stores, with some doing better and some doing
worse. As one indication of this variation, the 2020 Independent Grocer Financial Survey found that,
while the nationwide average profit before tax for all stores was 1.1 percent of sales in 2019, about
35 percent of the respondents reported negative net profits during the year.7 This national result is
consistent with feedback we received from California grocers, which reported that even in profitable
years, anywhere from one-sixth to one-third of their stores show negative earnings. While chain
operations can subsidize some store losses with earnings from other stores, a major mandated wage
increase would eliminate earnings for even the most profitable stores, making cross- subsidies within
supermarket chains much less feasible. As discussed below, the consequence would likely be a closure
of some unprofitable stores.
Mandated wage increases would push most stores into deficits
The grocery business is very labor intensive. Labor is the industry’s second largest cost, trailing only
the wholesale cost of the food and other items they sell. According to a benchmark study by Baker-
Tilly, labor expenses account for 13.2 percent of gross sales of grocers nationally.8 The Independent
Grocer Survey, cited above, found that labor costs account for 15 percent of sales nationally and 18.4
percent for independent grocers in the Western region of the U.S.9
Respondents to our survey of California grocers reported that labor costs equate to 14 percent to 18
percent of sales revenues. For purposes of this analysis, we are assuming that the wage base
potentially affected by the mandated hourly pay increase is about 16 percent of annual sales.10
A mandatory $4-$5 per hour increase, applied to an average $18.00 per hour wage base, would
increase labor costs by between 22 percent and 28 percent. This would, in turn, raise the share of
sales devoted to labor costs from the current average of 16 percent up to between 19 percent and
20.5 percent of annual sales. The up-to-4.5 percent increase would be double the 2020 profit
margin reported by the industry, and three times the historical margins in the grocery industry.
Potential Impacts on Consumers, Workers and Communities
In order to survive such an increase, grocers would need to raise prices to consumers and/or find
substantial offsetting cuts to their operating expenses. As an illustration of the potential magnitude of
each of these impacts, we considered two extremes: (1) all of the higher wage costs are passed
through to consumers in the form of higher retail prices; and (2) prices are not passed forward and all
the additional costs are offset through a reduction of jobs or hours worked.
7 Supra 3
8 White Paper, “Grocery Benchmarks Report”, November 5, 2019, Baker Tilly Virchow Krause LLP.
9 Supra 3
10 This recognizes that not all labor costs would be affected by the hazard pay proposal. Grocers report that both in-store and
warehouse staff would receive the increase, as would supervisors and managers, although some executive and
administrative staff may not. In addition, costs for health coverage would probably not be affected, at least not immediately,
but payroll taxes and some other benefit costs would be.
Consumer and Community Impacts of Hazard Pay Mandates
9
Higher costs passed along to consumers
Aggregate impacts. If a $5.00 per hour wage increase were imposed statewide and all of the
increase were passed along to customers in the form of higher product prices, Californians would
face a rise in food costs of $4.5 billion annually. If imposed locally, the City of Los Angeles’s $5 per
hour proposal would raise costs to its residents by $450 million annually, and the $4.00 per hour
increase in Long Beach would raise grocery costs to its residents by about $40 million annually.11
Impact on household budgets. The wage increase would add about $400 to the annual cost of food
and housing supplies for the typical family of four in California.12 While such an increase may be
absorbable in higher income households, it would hit low- and moderate-income households
especially hard. The impact would be particularly harsh for those who have experienced losses of
income and jobs due to the pandemic, or for those living on a fixed retirement income including
many seniors. For these households, the additional grocery-related expenses will make it much
more difficult to cover costs for other necessities such as rent, transportation, utilities, and
healthcare.
According to the BLS Consumer Expenditure Survey, California households with annual incomes of
up to $45,000 already spend virtually all of their income on necessities, such as food, housing,
healthcare, transportation and clothing.13 For many of these households, a $33 per month increase
in food costs would push them into a deficit.
These increases would add to the severe economic losses that many Californians have experienced
as a result of government-mandated shutdowns in response to COVID-19. According to a recent
survey by the Public Policy Institute of California, 44 percent of households with incomes under
$20,000 per year and 40 percent with incomes between $20,000 and $40,000 have reduced meals or
cut back on food to save money.14 Clearly, imposing a $4.5 billion increase in grocery prices would
make matters worse, especially for these lower-income Californians.
Higher costs are offset by job and hours-worked reductions
If grocers were not able to pass along the higher costs resulting from the additional $5/hour wage
requirement, they would be forced to cut other costs to avoid incurring financial losses.15 Given
11 Our estimates start with national U.S. Census Bureau estimates from the Annual Retail Trade Survey for 2018 (the most
current data available), which indicates that nationwide sales by grocers (excluding convenience stores) was $634 billion
in 2018. We then apportioned this national data to California as well as the cities of Los Angeles and Long Beach based on
relative populations and per-household expenditure data from the Consumer Expenditure Survey. We then updated the
2018 estimate to 2021 based on actual increases in grocery-related spending between 2018 and 2020, as reported by the
U.S. Department of Commerce, and a projection of modest growth in 2021. Our estimate is consistent with the industry
estimate of $82.9 billion for 2019 that was by IBISWorld, as adjusted for industry growth in 2020 and 2021. (See
IBISWORLD Industry Report, Supermarkets & Grocery Stores in California, Tanvi Kumar, February 2019.)
12 Capitol Matrix Consulting estimate based on U.S. Bureau of Labor Statistics, Consumer Expenditure Report, 2019.
https:// www.bls.gov/opub/reports/consumer-expenditures/2019/home.htm
13 U.S. Bureau of Labor Statistics, Consumer Expenditure Survey, State-Level Expenditure Tables by Income.
https://www.bls.gov/cex/csxresearchtables.htm#stateincome.
14 “Californians and Their Well-Being”, a survey by the Public Policy Institute of California. December 2020.
https://www.ppic.org/publication/ppic-statewide-survey-californians-and-their-economic-well-being-december-2020/
15 Circumstances where stores would not be able to pass forward high costs include communities where customers are
financially squeezed by pandemic-related losses in jobs or wages, or where the increased is imposed locally and customers
are able to avoid higher prices by shifting purchases to cross-border stores.
Consumer and Community Impacts of Hazard Pay Mandates
10
that labor costs are by far the largest controllable expense for stores, it is highly likely that the
wage mandates will translate into fewer store hours, fewer employee hours, and fewer jobs. For a
store with 50 full-time equivalent employees, it would take a reduction of 11 employees to offset
the increased wages, which is about a 22 percent decrease in staff/hours.
Aggregate impacts. As an illustration, if the full California grocery industry were to respond to a
statewide $5.00 wage mandate by reducing its workforce, we estimate that up to 66,000 industry
jobs would be eliminated. This is about 22 percent of the 306,000 workers in the grocery industry in
the second quarter of 2020 (the most recent quarter for which we have detailed job totals).16 If the
mandate were imposed locally in the City of Los Angeles, the impact would be about 7,000 workers,
and in the City of Long Beach (at $4.00 per hour), the impact would be about 775 jobs. Stores could
alternatively avoid job reductions by cutting hours worked by 22 percent across-the-board.
Under these circumstances, some workers receiving the wage increases would be better off, but many
others would be worse off because of reduced hours or layoffs. Customers would also be worse off
because of reduced store hours, and fewer food choices and services.
Without any external constraints imposed by the local ordinances, it is likely some combination of
higher prices and job and hour reductions would occur. Stores within some jurisdictions imposing
the mandatory wage increase might be able to raise retail prices sufficiently to cover a significant
portion of the mandated wage increase, thereby shifting the burden onto customers. However, the
degree to which this would occur would vary from jurisdiction to jurisdiction, depending on the
price-sensitivity of their customers and (if the mandate is imposed locally) the availability of
shopping alternatives in neighboring communities that have not imposed the wage mandate.
Of course, if the local ordinances contain provisions prohibiting stores from cutting hours, then
stores would be forced to pass costs on to consumers in the form of higher prices, or to close stores
in those jurisdictions.
Some communities would become food deserts
Many of the up-to one third of stores already incurring losses may find it impossible to raise prices or
achieve savings that are sufficient to offset the higher wage costs. For these stores, the only option
would be store closure. Indeed, a consistent theme of feedback we received from California grocer
representatives is that it would be extremely difficult, if not impossible, to justify continued operation
of a significant portion of their stores following a government-mandated 28-percent increase in
wages. This would leave some communities with fewer fresh food options.
According to the Propel LA: “The United States Department of Agriculture (USDA) defines a food
desert as ‘a low-income census tract where either a substantial number or share of residents has
low access to a supermarket or large grocery store.’ There are a large number of census tracts in Los
Angeles County, including Antelope Valley and San Fernando Valley, that are considered to be food
deserts. The population of food deserts is predominantly Hispanic or Latino, followed by Black and
White, respectively.”17 The map also shows several food deserts in and around the City of Long
Beach. The hazard pay proposal would exacerbate this problem.
16 Employment Development Department. Labor Market Information Division. Quarterly Census of Employment and Wages.
https://www.labormarketinfo.edd.ca.gov/qcew/cew-select.asp
17 “Food deserts in LA, an Interactive Map.” Propel LA, https://www.propel.la/portfolio-item/food-deserts-in-los-angeles-
county/
Consumer and Community Impacts of Hazard Pay Mandates
11
Closing even one supermarket in many neighborhoods would result in residents having to commute
significantly farther to find fresh and healthy food at reasonable prices. Tulane University studied
the impact of food deserts and concluded that while the majority of items at smaller stores are
priced higher than at supermarkets, price is a consideration in deciding where to purchase staple
foods, and transportation from a food desert to a supermarket ranges from $5 to $7 per trip.18
Thus, mandating hazard pay would likely impose significant hardships on some communities,
especially in lower-income areas. The loss of a grocery store means both fewer jobs for members of
the community and higher costs for all residents in the community, who must pay higher local prices
or incur additional time and expense to shop.
Conclusion
Hazard pay initiatives like those passed in the City of Long Beach, and proposed in the City of Los
Angeles and in other local jurisdictions, would have far-reaching and negative consequences for
businesses, employees and customers of grocery stores in the jurisdictions where levied. They
would impose an up-to-28 percent increase in labor costs on an industry that is labor-intensive and
operates on very thin profit margins. The increases would be more than double the average profit
margins for the grocery industry in 2020, and triple the margins occurring in normal years, and thus
would inevitably result in either retail price increases or major employment cutbacks by grocery
stores, or a combination of both. If the increased costs were passed forward to consumers, a typical
family of four in California would face increased food costs of $400 per year. This would intensify
financial pressures already being felt by millions of low- and moderate-income families, many of
whom are already cutting back on basic necessities like food due to COVID-19-related losses in jobs
and income. Establishments not able to recoup the costs by raising prices would be forced to reduce
store hours and associated jobs and hours worked by employees. For a significant number of stores
that are already struggling, the only option may be to shutter the store. This would be a “lose-lose”
for the community. It would mean fewer jobs with benefits, less local access to reasonably-priced
food, and more time and expense spent by customers that would have to travel greater distance to
find grocery shopping alternatives.
18 “Food Deserts in America (Infographic),” Tulane University, School of Social Work, May 10, 2018.
https://socialwork.tulane.edu/blog/food-deserts-in-america
Government Code Section 54957.5
SB 343
Agenda: 2/10/2021 SP CC
Item # 6
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Government Code Section 54957.5
SB 343
Agenda: 2/10/2021 SP CC
Item 1
California Retailers Association
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Dear Members of the South San Francisco City Council:
On behalf of the California Retailers Association (CRA), we respectfully urge the Council to refrain from passing a mandated a wage increase,
especially in the absence of a complete economic impact analysis on the effects such a mandate would have on essential businesses, and
subsequently, our local communities.
The California Retailers Association is the only statewide trade association representing all segments of the retail industry including general
merchandise, depar tment stores, mass merchandisers, fast food restaurants, convenience stores, supermarkets and grocery stores, chain drug,
and specialty retail such as auto, vision, jewelry, hardware and home stores. CRA works on behalf of California’s retail industry, which currently
operates over 164,200 stores and employs around 2,776,000 people—nearly one fifth of California’s total employment.
A mandated pay increase beyond what retail employers can tolerate without raising prices or cutting workforce hours will hur t both consumers
and our hardworking employees. This is the last thing our members want to do in the middle of the COVID-19 pandemic and economic crisis. A
number of our members are already offering substantial increases in hourly pay and employee bonuses in recognition of the essential work these
employees are providing. An inflexible, one-size-fits-all approach risks increasing the cost of food, grocery, and retail pharmacy drugs and will
dispropor tionately impact those in our communities who are already bearing the brunt of this pandemic. All of this comes on top of the recent
minimum wage increase. This is why we would request an economic study before the Council mandates a substantial pay increase.
We request that this motion be amended to include an economic study prior to any consideration of an increase in pay.
Thank you.
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Patricia M Bajada
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Dear Mayor & council have great concern over $4 'hazard pay' for large grocery stores in South City. Are you aware that in longbeach Ca this
'Hazard pay' was passed and Krogers (Ralphs food/Food for less) are closing two stores because of it. We cannot afford Safeway on Chestnut to
possibly be closed by Safeway if this passes. Im sure they wont hesitate to close this small store. We lost a larger Safeway on El Camino and
promised a New one that has never materialized. Ideally 'Hazard pay' is a great idea..but Safeway is about making money. Concerned they will
shut down the smaller store because of it ..Something to consider...
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Marcela
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Hi, I'm in full support of hazard pay for major grocery stores workers. It's about time we suppor t them. I also ask we extend this to other business
such as drug stores and other major food retailers or restaurants. It's time to show workers our monetary support instead of just calling them
brave. I would also like to see this extended for child care providers and preschools.
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Kimberly Hui
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Give grocery workers the hazard pay. Grocery workers have been working since the pandemic star ted. That is almost a year of continuing to work
in person, risking their lives each day to the evolving COVID-19 virus, risking their families lives, all to provide food, a sense of normalcy, AND A
SAFE ENVIRONMENT to the general public. Their work is impor tant and enables us all to live comfor tably. Although smaller grocery stores feel
threatened, they need to reevaluate their priorities. Their front line workers are allowing their businesses to stay open. Grocery stores have not
been forced to close during the pandemic or lock downs, like restaurants. In an ideal world, grocery store workers would get higher wages and
more respect for their work. I have family members that work in grocery stores. It's scary to think that with each day they are risking their lives to
put food on the table for their families. This city council meeting is happening vir tually. Think about the protections we are afforded as privileged
people. "Hazard pay" is the least we can do as a society to acknowledge the dangers. Reread the Union's letter by Dan Larson. We need to put
people over profits.
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Russell Y Lee
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Hi, thank you for putting the vote for a hazard pay ordinance on the agenda today. As many cities across the country have adopted some form of
mandated hazard pay, this is a step in the right direction to ensure those who have to continue to work, out of financial necessity, are properly
compensated for putting their lives on the line so that the rest of us have our needs met.
I'd like to encourage the council to look beyond this mandate for employees at large grocery store chains, and consider the other essential
workers who keep our city going. Similar to large grocery stores, warehouse stores, such as Costco, have employees who provide and serve the
community while also putting their lives, and their family's lives, on the line every time they go to work. Childcare workers face similar risks when
they watch our kids so parents can attend work without distraction.
There is a lot of room for discussion to expand hazard pay to all essential workers who keep the day functioning, so please consider adopting
ordinances to encompass all vulnerable workers who we consider "essential".
Thank you,
Russell
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Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:21-96 Agenda Date:2/10/2021
Version:1 Item #:6a.
Urgency Ordinance amending Title 8 of the South San Francisco Municipal Code to add Chapter 8.77 “COVID
-19 Hazard Pay”to require large grocery stores in the City to pay employees an additional four dollars ($4.00)
per hour in hazard pay during the coronavirus (COVID-19) pandemic
WHEREAS,on March 19,2020,the California State Public Health Officer,designated specific sectors and
their workers,including grocery stores,as Essential Critical Infrastructure Workers (“essential workers”)to
ensure the “continuity of functions critical to public health and safety,as well as economic and national
security”; and
WHEREAS,since the beginning of the COVID-19 pandemic,grocery workers in the City of South San
Francisco have continued to report to work and serve their communities,despite the ongoing hazards and
danger of being exposed to and infected by the novel coronavirus,helping to ensure individuals throughout the
City of South San Francisco have had access to the food they need during this pandemic; and
WHEREAS,essential grocery workers are not highly paid and cannot choose to work from home-they must
come to work to do their jobs,which involve heightened risk of exposure and infection of COVID-19 through
substantial interaction with customers on an ongoing basis and indoors where there is less air circulation; and
WHEREAS,according to an October 29,2020 study published in the journal Occupational and Environmental
Medicine,a comprehensive test of workers at one grocery store resulted in 20 percent of grocery workers
testing positive for COVID-19, even though three of four workers were asymptomatic; and
WHEREAS,according to an August 2020 article in The Washington Post,at least 130 U.S.grocery workers
had died from COVID-19, and more than 8,200 have tested positive for the virus; and
WHEREAS,according to a January 2021 article in The Washington Post,the United Food and Commercial
Workers estimates 109 of its members have died to from COVID-19 and more than 20,000 have tested positive;
and
WHEREAS,despite the efforts of grocery stores to take precautions and keep customers and employees safe,
including requiring masks,social distancing,and sanitizing cash registers,food conveyor belts,and shopping
carts,there have been highly publicized outbreaks of COVID-19 among grocery store employees in the San
Francisco Bay Area, and the health threats that these grocery workers face cannot be overstated; and
WHEREAS,Latinos comprise about 40 percent of California’s population but 55 percent of positive cases,
according to state data as of February 4,2021,and according to health experts,one of the main reasons Latinos
are especially vulnerable to COVID-19 is because many work in jobs deemed “essential,”that require them to
leave home and interact with the public, many in the retail food industry, which includes grocery stores; and
WHEREAS,on August 28,2020,the State released the “Blueprint for a Safer Economy”that assigns counties
into color-coded tiers based on a county’s case rate and test positivity rate,and that permits operations ofCity of South San Francisco Printed on 2/12/2021Page 1 of 8
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into color-coded tiers based on a county’s case rate and test positivity rate,and that permits operations of
certain businesses and activities based on a county’s tier;
WHEREAS,Governor Gavin Newsom issued an emergency regional stay at home order on December 3,2020,
as a result of the critically low availability Intensive Care Unit (“ICU”) beds; and
WHEREAS,on January 17,2021,the California Department of Public Health reported another COVID-19
variant that had grown more common across the state since December,with worrisome signs that this variant
may be highly transmissible; and
WHEREAS,despite the rescinding of the statewide December 3,2020 emergency order,the State is believed to
be in the height of the pandemic with a stay at home order in many regions of the state,including the Bay Area
region,where ICU capacity is 18.1 percent,and region are a long way from minimal risk where there would be
one (1) daily new case per 100,000 or less than two (2) percent positivity; and
WHEREAS,based on the case rate and positivity rate,San Mateo county is currently listed in the “purple”and
most elevated risk tier under the State blueprint, representing “widespread” risk throughout the county; and
WHEREAS,grocery stores are the primary points of distribution for food and other daily necessities for the
residents of the City of South San Francisco and are therefore essential to the vitality of our community;
WHEREAS,the City of South San Francisco recognizes that grocery workers must be justly compensated for
the clear and present dangers of doing their jobs during the pandemic, and
increases in wages result in more money being spent to stimulate our local economy; and
WHEREAS,grocery workers-should they and members of their family become infected-risk being unable to
work and earn an income, and an inability to pay for housing, childcare and healthcare costs; and
WHEREAS,the United States’largest grocery retail companies have earned record profits during the
pandemic,and this increase in profit has not transferred to workers,according to a Brookings Institution
analysis published in November 2020; and
WHEREAS,the City of South San Francisco has adopted ordinances to address COVID-19-related impacts,
including eviction protections for tenants; and
WHEREAS,the City of South San Francisco has in the past adopted ordinance affecting the wages and
conditions of employment locally; and
WHEREAS,there are several large grocery chains operating in South San Francisco that employ workers in
South San Francisco,and have at least 500 employees nationwide,with workers who are facing the hazards of
COVID-19 in the workplace every day; and
WHEREAS,in December 2020 and January 2021,a growing list of cities across California,including San
Francisco,Oakland,Los Angeles,Long Beach,San Jose,Berkeley,West Hollywood,Santa Monica,and San
Leandro began announcing legislation for hazard pay for essential grocery workers during the pandemic,
including during the period where counties are in the Purple,Red,or Orange level of Community Transmission
for COVID-19 under State Health orders; and
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File #:21-96 Agenda Date:2/10/2021
Version:1 Item #:6a.
WHEREAS,the City Council desires to amend Title 8 of the City of South San Francisco Municipal Code to
adopt Chapter 8.77 “COVID-19 Hazard Pay”to require large grocery stores in the City to pay employees an
additional four dollars ($4.00) per hour in hazard pay during the coronavirus (COVID-19) pandemic; and
WHEREAS,California Government Code Section 36937 authorizes the City Council to introduce and adopt an
ordinance it declares to be necessary as an emergency measure to preserve the public peace,health,and safety
at one and the same meeting if passed by at least four-fifths affirmative votes; and
WHEREAS,this Ordinance is a temporary pay ordinance intended to compensate certain essential workers at
high risk of COVID-19 infection within the workplace during the COVID-19 pandemic outbreak,and thus to
serve the public peace, health, safety, and public welfare; and
NOW,THEREFORE,THE CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO DOES HEREBY
ORDAIN AS FOLLOWS.
SECTION 1.Findings
The City Council finds that the foregoing recitals are true and correct and are incorporated into the Ordinance
by this reference.
SECTION 2.Urgent Need
The City Council of the City of South San Francisco hereby finds that there is a current and immediate threat to
the public health,safety and/or welfare and a need for immediate preservation of the public peace,health,or
safety that warrants this urgency measure,which finding is based upon the facts stated in the Recitals above,
and in the staff report presented to the City Council on February 10,2021,as well any oral and written
testimony at the February 10, 2020 City Council meeting.
This Ordinance and the hazard pay requirement that is established thereunder is declared by the City Council to
be an urgency measure necessary for the immediate preservation of the public peace,health or safety.The facts
constituting such urgency are all of those certain facts set forth and referenced in this Ordinance and the
entirety of the record before the City Council.
SECTION 3.Amendments to the Municipal Code
Chapter 8.77 (“COVID-19 Hazard Pay”)is hereby added to Title 8 of the South San Francisco Municipal Code
to read as follows:
8.77.010.Title.
This chapter shall be known as the “Grocery Worker Hazard Pay Emergency Ordinance.”
8.77.020.Authority.
This chapter is adopted pursuant to the powers vested in the City of South San Francisco under the laws of the
State of California,including,but not limited to,the police powers vested in the City pursuant to Article XI,
Section 7 of the California Constitution and California Labor Code section 1205.
8.77.030.Definitions.
The definitions set forth in this Section shall govern the construction and meaning of the terms used in thisCity of South San Francisco Printed on 2/12/2021Page 3 of 8
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The definitions set forth in this Section shall govern the construction and meaning of the terms used in this
Chapter:
A.“Base Wage”means the hourly wage paid to Covered Employees as of the effective date of this
Chapter less Hazard Pay owed under this Ordinance or any other premium hourly rate already paid to
compensate Covered Employees for working during the pandemic (referred to herein as “employer-initiated
hazard pay”).
B.“City” means the City of South San Francisco.
C.“Covered Employee”means any individual who 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,and
who works in a Large Grocery Store on either a full-time or part-time basis.
D.“Covered Employer”means any Person who (a)directly or indirectly or through an agent or any
other Person owns or operates a Large Grocery Store and employs or exercises control over the wages,hours or
working conditions of any Covered Employee;and (b)employs 500 or more employees nationwide regardless
of where those employees are employed,or is a Franchisee associated with a Franchisor or a network of
Franchises with Franchisees that employ more than 500 employees in the aggregate,regardless of where those
employees are employed.To determine the number of employees employed by a Large Grocery Store,the
calculation shall be based upon:
a.The actual number of employees who worked for compensation during the two workweeks preceding
the effective date of this chapter; and
b. All employees who worked for compensation shall be counted, including but not limited to:
i. Employees who are not covered by this chapter;
ii. Employees who worked within the geographic limits of the City;
iii. Employees who worked outside the geographic limits of the City; and
iv.Employees who worked in full-time employment,part-time employment,joint employment,
temporary employment,or through the services of a temporary services or staffing agency or
similar entity.
E.“Employer-Initiated Hazard Pay”means a premium hourly rate to compensate Covered
Employees for the hardships and/or risks associated with working during the COVID-19 pandemic.If a
Covered Employer pays such Employer-Initiated Hazard pay on a flat rate basis,the premium hourly rate is
derived by dividing the flat rate payment for a workweek by the number of hours worked in the workweek.
F.“Franchise” means a written agreement by which:
1.A Person is granted the right to engage in the business of offering,selling,or distributing goods or
services under a marketing plan prescribed or suggested in substantial part by the grantor or its
affiliates; and
2.The operation of the business is substantially associated with a trademark,service mark,tradename,
advertising,or other commercial symbol;designating,owned by,or licensed by the grantor or its
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affiliate; and
3. The Person pays, agrees to pay, or is required to pay, directly or indirectly, a Franchise fee.
G.“Franchisee” means a Person to whom a Franchise is offered or granted.
H.“Franchisor” means a Person who grants a franchise to another Person.
I.“Hazard Pay”means an additional $4.00 per hour wage bonus in addition to each Covered
Employee’s Base Wage or Holiday Premium wage for each hour worked within the City.
J.“Holiday Premium”means the hourly wage paid to Covered Employees for performing work
during a holiday or holiday season.
K.“Hours Worked”means the time during which a Covered Employee is subject to the control of a
Covered Employer, including all the time the employee is suffered or permitted to work, and on-call.
L.“Large Grocery Store”means a retail or wholesale store that is over 15,000 square feet in size,
that is located within the geographic limits of the City,and that sells primarily household foodstuffs for offsite
consumption,including the sale of fresh produce,meats,poultry,fish,deli products,dairy products,canned
foods,dry foods,beverages,baked foods,or prepared foods.Other household supplies or other products shall
be secondary to the primary purpose of food sales.
M.“Person”means any individual,corporation,partnership,limited partnership,limited liability
partnership,limited liability company,business trust,estate,trust,association,joint venture,agency,
instrumentality, or any other legal or commercial entity, whether domestic or foreign.
N.“Retaliatory Action”means any adverse action taken by an employer that negatively and
significantly affects the terms and conditions of employment,including but not limited to termination,
demotion,suspension,harassment,threats,unequal discipline,reduction in pay (including Base Wage or
Holiday Premium Wages) or work hours, or refusal to hire or promote.
8.77.040.Payment of Hazard Pay to Covered Employees.
A.Hazard Pay.Covered Employers shall pay Covered Employees a wage of no less than the
premium hourly rate set under the authority of this Chapter.The premium hourly rate for each Covered
Employee shall be four dollars ($4.00)per hour for all hours worked at a Large Grocery Store,in addition to
the Covered Employee’s Base Wage or Holiday Premium,whichever is applicable at the time of hours worked.
The Hazard Pay rate shall not include compensation already owed to Covered Employees,Holiday Premium
rates, gratuities, service charge distributions, or other bonuses.
B.Credits.Covered Employers providing employer-initiated hazard pay will be credited for doing
so in accordance with Section 8.77.050.
C.Duration of Hazard Pay.Covered Employers shall pay Hazard Pay to all Covered Employees
for any pay period during which the City of South San Francisco is within a “Widespread”(purple),
“Substantial”(red),or “Moderate”(orange)risk level,or its equivalent,under an operative public health order
issued by the State of California and until such time as the City’s risk level returns to “Minimal”(yellow)or its
equivalent under an operative state health order.
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8.77.050.Credit for Employer-Initiated Hazard Pay.
A.Employer-Initiated Hazard Pay shall be credited against the four dollars ($4.00)per hour for the
hourly amount paid to each Covered Employee (e.g.,a Covered Employer offering two dollars ($2.00)per hour
in Employer-Initiated Hazard Pay owes an additional two dollars ($2.00)per hour in Hazard Pay per this
chapter.)
B.To receive credit for paying a Covered Employee Employer-Initiated Hazard Pay,a Covered
Employer must demonstrate that,as of the effective date of this chapter and in any subsequent covered
workweeks, the Covered Employer paid such Employer-Initiated Hazard Pay to the Covered Employee.
C.No Covered Employer shall be credited prospectively for any past payments.No Covered
Employer shall be credited for any hourly premiums already owed to Covered Employees,such as but not
limited to,Holiday Premiums.Nothing herein shall be interpreted to prohibit any employer from paying more
than four dollars ($4.00) per hour in Hazard Pay.
8.77.060. Waiver
The provisions of this chapter may not be waived by agreement between an individual Covered Employee
and a Covered Employer.All the provisions of this Chapter,or any part thereof,may be waived in a bona fide
collective bargaining agreement,but only if the waiver is explicitly set forth in such agreement in clear and
unambiguous terms.
8.77.070. Prohibitions.
A.It shall be unlawful for a Covered Employer or any other Person to interfere with,restrain or
deny the existence of, or the attempt to exercise, any rights protected under this chapter.
B.Employers shall not take Retaliatory Action or discriminate against any employee or former
employee because the individual has exercised rights protected under this chapter.Such rights include,but are
not limited to,the right to request Hazard Pay pursuant to this chapter;the right to file a complaint with the city
or inform any person about an employer’s alleged violation of this chapter;the right to participate in an
investigation,hearing or proceeding or cooperate with or assist the city in its investigations of alleged
violations of this chapter,and the right to inform any person of their rights under this chapter.Protections of
this chapter shall apply to any employee who mistakenly,but in good faith,alleges noncompliance with this
chapter.Taking adverse action against an employee within 90 days of the employee's exercise of rights
protected under this chapter shall raise a rebuttable presumption of having done so in retaliation for the exercise
of such rights.
8.77.080.Enforcement
A.Enforcement by the City.A violation of this chapter by a Covered Employer may be remedied
by any means available to remedy a violation of this code.
B.Private Right of Action.A Covered Employee claiming harm from a violation of this chapter
may bring an action against the Covered Employer in court to enforce the provisions of this chapter and shall
be entitled to all remedies available to correct any violation of this chapter,including,but not limited to,back
pay,reinstatement,injunctive relief,or civil penalties as provided herein.A Covered Employee who is a
prevailing party in an action to enforce this chapter is entitled to an award of reasonable attorney’s fees,witness
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fees and costs.
C.Remedies. The remedies for violation of this chapter include, but are not limited to:
1.Reinstatement,the payment of back wages unlawfully withheld,and payment of an
additional sum as a civil penalty in the amount of fifty dollars to each employee whose rights under this chapter
were violated for each day or portion thereof that the violation occurred or continued,and fines imposed
pursuant to other provisions of state law.
2.Interest on all due and unpaid wages at the rate of interest specified in subdivision (b)of
Section 3289 of the California Civil Code,as amended by state law,which shall accrue from the date that the
wages were due and payable as provided in Part 1 (commencing with Section 200)of Division 2 of the
California Labor Code, as amended by state law, to the date the wages are paid in full.
3.Reimbursement of the city’s administrative costs of enforcement and reasonable attorneys’
fees,if the city undertakes enforcement action.The remedies,penalties and procedures provided under this
chapter are cumulative and are not intended to be exclusive of any other available remedies,penalties and
procedures established by law which may be pursued to address violations of this chapter.
8.77.090. Retention of Records.
Each Covered Employer shall maintain for at least three years for each Covered Employee,a record of his
or her or their name,hours worked and pay rate.Each Covered Employer shall provide each Covered
Employee with a copy of the records relating to such employee upon the employee’s reasonable request.
8.77.100.Conflict.
Nothing in this article shall be interpreted or applied to create any power or duty in conflict with any
federal or state law. The term “Conflict,” means a conflict that is preemptive under federal or state law.
8.77.110.Notice.
A.The city shall,as expeditiously as possible,publish and make available on its website a notice suitable
for Covered Employers to inform employees of their rights under this emergency chapter.Such notice shall be
translated into Spanish, Chinese, and Tagalog.
B.Every Covered Employer shall,within three days after the city has published and made available the
notice described in subsection A of this section,provide the notice to employees in a manner calculated to reach
all employees,including,but not limited to,posting in a conspicuous place at the workplace;via electronic
communication;or posting in a conspicuous place in a Covered Employer's web-based or app-based platform.
The Covered Employer’s notification shall be provided in all languages spoken by more than ten percent (10%)
of Covered Employees.
C.Every Covered Employer shall,within three days after the City has published and made available the
notice described in subsection A of this section or at the time of hire,whichever is later,provide each Covered
Employee the Covered Employer and owner or manager’s name;address;telephone number;and whether it is
part of a franchise associated with a franchisor or network of franchises.If the information the Covered
Employer provided to the Covered Employee changes,the Covered Employer shall provide the updated
information in writing within ten days of the change.
D.Every Covered Employer shall provide notice to employees when the Risk Level in the City either
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D.Every Covered Employer shall provide notice to employees when the Risk Level in the City either
moves from Widespread (purple),Substantial (red)or Moderate (orange)to Minimal (yellow),or from Minimal
(yellow)to Widespread (purple),Substantial (red)or Moderate (orange)under a State of California Health
Order.Notice shall be given in a manner calculated to reach all employees,including,but not limited to,
posting in a conspicuous place at the workplace;via electronic communication;or posting in a conspicuous
place in a Covered Employer's web-based or app-based platform.The Covered Employer's notification shall be
provided in all languages spoken by more than ten percent (10%) of Employees
8.77.110.No Preemption of Higher Standards.
The purpose of this Chapter is to ensure minimum labor standards.This Chapter does not preempt or
prevent the establishment of superior employment standards (including higher wages)or the expansion of
coverage by ordinance, resolution, contract, or any other action of the city.
SECTION 4.Emergency Grocery Worker Hazard Pay Sunset
Section 3 of this Ordinance shall remain in effect during any period the City of South San Francisco is within a
Widespread (purple),Substantial (red)or Moderate (orange)Risk Level and shall become ineffective during
any period when the Risk Level in the City of South San Francisco returns to Minimal (yellow)under State of
California Health Orders.
SECTION 5.Severability
If any provision or part of this ordinance,or the application thereof to any person or circumstance,is held
invalid or unenforceable by a court of competent jurisdiction,the remainder of the ordinance and the
application of such provision or part to other persons or circumstances shall not be affected thereby.
SECTION 6.Compliance with the California Environmental Quality Act
The City Council hereby finds approval of this ordinance is exempt from the California Environmental Quality
Act (Public Resources Code §§21000 et seq.,“CEQA,”and 14 Cal.Code Reg.§§15000 et seq.,“CEQA
Guidelines”) under Section 15061(b)(3) of the CEQA guidelines.
SECTION 7.Publication and Effective Date
As set forth in the recitals and findings above,this Ordinance is necessary for preserving the public peace,
health,safety and welfare,and is adopted on an urgency basis.Pursuant to the provisions of Government Code
section 36937(b), this Ordinance is effective immediately.
The City Clerk shall post in the Clerk’s Office a certified copy of the full text of this Ordinance along with the
names of those City Council members voting for and against this Ordinance or otherwise voting.
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