Update, 4/08/2021, 1 p.m.:

Fresno City Council President Luis Chavez pulled his bill that would mandate “hero pay” for grocery and drug store workers at the start of Thursday’s meeting.

He said that “there are some last minute amendments that didn’t get distributed on time.”

He intends to hear the item at the April 22 council meeting.

Original story:

Grocery stores must pay a $3 an hour bonus or offer healthcare to employees under a plan to be voted by the Fresno City Council on Thursday.

Council President Luis Chavez is providing a revised version of his bill that received a 6-1 vote on March 4. The bill requires most grocery stores to offer a hazard pay premium for 120 days. It also gives stores an alternative — provide “a basic level of healthcare protection.”

Chavez wants employers to take care of workers who contract COVID, especially “long-termers.”

“What I want to do is make sure that we came back to what the intent was for this ordinance, which was to take care of employees, particularly ones that that get sick,” Chavez said.

Chavez repeated a line he has used often since introducing the bill.

“I’m pro-business and also for employees. They’re not mutually exclusive,” Chavez said.

Industries Oppose Measure

Business associations, including the California Grocers Association, oppose the Fresno bill, as well as others across the state.

The California Retailers Association has formed a coalition, that includes local groups such as the Fresno Chamber of Commerce, Fresno Farm Bureau, and the Central Valley Business Federation.

Rachel Michelin, president and CEO of the retailers association, says her members have invested millions in safety protocols.

“They’re adding on a specifically targeted pay increase for a limited amount of time that they’re saying is related to safety, but yet it’s not going to protect anyone from getting COVID,” Michelin said. “When you keep adding on in the name of COVID, it really, at the end, affects consumers and it affects our access to these safe services through the grocery stores or through these retail pharmacies.”

The industry says premium pay would add $400 to the annual grocery bill for a typical household. Chavez has his doubts about that figure.

“They’re arguing that when they’re profitable, prices go up and then when they’re, quote-unquote, not profitable, prices go up, too? So it just doesn’t seem like a train of thought there,” Chavez said.

Chavez said city sales tax returns show grocery stores have increased sales, up to 30% during the pandemic.

Grocery Store Group Says Workers Are Protected

The grocers association also weighed in against the proposal on Monday, saying that employees have been well cared for during the pandemic.

“The California Grocers Association is opposed to Fresno’s extra pay mandate for grocery workers since it will have unintended consequences on not only grocers, but on their workers and their customers,” said Nate Rose, senior director of communications for the group. 

“Grocery store workers are frontline heroes, and that’s why grocers have already undertaken a massive effort to provide extra pay and bonuses and extra days off to workers, along with other provisions to keep customers safe. This extra pay ordinance will not make workers any safer.”

Meanwhile, Michelin wonders why cities, like Fresno, are targeting grocery stores.

“If this is truly about safety and quote-unquote what they call ‘hero pay,’ why does it not apply to law enforcement? Why does it not apply to first-responders?” Michelin asked.

During the March 4 debate, other Fresno councilmembers wanted hero pay to be extended to such groups as first-responders and factory workers. The revised bill, though, only includes grocery and drug store employees.

Major Chains, Drug Stores Covered

Chavez estimates that the legislation would affect 95 grocery and drug stores in the city. Up to 80% already provide either premium pay or healthcare benefits, he said.

The new rules apply to grocery stores and drug stores that have more than 500 employees nationwide (up from 300 from the original version). The city defines a grocery store as either 15,000 square feet or 10% of retail space dedicated to typical grocery items.

It would not apply to stores that are franchises — such as Smart and Final and Grocery Outlet — unless the individual franchisee has 500 or more employees.

“This was really designed for the big companies — that ended up taking money from the government — that never closed and then were not so open in taking care of their employees,” Chavez said.

Stores that already pay a hazard premium would not have to pay more under the Fresno ordinance. If the premium is less than $3 an hour, the stores would be required to make up the difference.

Chavez Not Worried About Closures

Fresno would be the latest local government to mandate hazard premium pay. In response to similar requirements in southern California, Kroger, Inc. announced the closure of five stores.

Chavez’s bill prohibits retaliation against employees for “exercising rights.” That may not apply to shutting down a store outright.

“We haven’t gotten to that point. But I think with the conversations that I had with the Grocers Association and the retail folks, that will likely not happen,” Chavez said. “That’s one of the things that I was trying to avoid. We don’t want to hurt employees and cause unintended consequences to this.”

There are three Kroger-owned store in Fresno under the Foods Co. brand name.

Kroger said it has provided a $2 an hour premium pay plus other bonuses.

“Foods Co. is already committed to long-term wage increases,” spokesman John Votava said in an email. “While extra pay for grocery workers won’t make them any safer, the vaccine will. Foods Co. is offering a $100 payment to associates who get vaccinated, as we are committed to be part of the solution and safeguard the health and safety of our communities.”

Michelin, with the California Retailers Association, said employee hours are likely to be cut.

“The grocery stores can’t afford (increased pay). So, we have a lot of disgruntled employees who are upset because they’re not getting the number of hours because there are not enough resources to cover all of this,” Michelin said.

Healthcare Alternative

Under Chavez’s plan, grocery stores may provide health coverage — as an alternative to the hazard pay — with no premiums. The bill also requires specifics for reimbursement accounts, deductibles, and out-of-pocket maximums. Employees would receive six sick days a year (14 if COVID-19 related).

Michelin says workers at many of the larger chains are represented by unions.

“I think this is going to hurt some of your smaller, maybe more regional or ethnic grocery stores,” she said.