Seyfarth Synopsis: During the COVID-19 pandemic, California grocery, drug store, and other front-line workers have continued to sell essential products, stock shelves, clean buildings, and otherwise keep our economy moving. Several cities and counties have taken action—often in hap-hazard ways—to force the employers of these workers to provide them with premium pay, commonly called “hazard pay” or “hero pay.” Within the last week alone, ordinances took effect in six jurisdictions, including San Jose, San Francisco, and Irvine.

The Broad Landscape

Roughly 47 cities and counties in California have considered ordinances providing additional pay to grocery and drug store employees, as well as some other essential workers, such as maintenance workers and security guards. So far, roughly 25 have enacted hazard pay ordinances. That number is anticipated to grow, with ordinances in American Canyon, Coachella, Daly City, Irvine, San Francisco, and San Jose most recently going into effect.

Hazard pay is not something that politicians ask taxpayers to fund. Rather, the pay is in the form of an immediate (and sometimes retroactive) hourly wage increase ($3, $4, or $5) that local governments impose on local businesses. The California Grocers Association has launched legal challenges to the hazard pay ordinances, arguing that they violate the affected employers’ right to equal protection and that they are preempted by the National Labor Relations Act.

Hazard Pay Ordinances Currently In Effect

As of March 29, 2021, the following cities or counties have hazard pay ordinances in place, requiring additional wages ranging from $3 to $5, effective as of the dates shown:

Hazard Pay Ordinances That Have Passed But Are Not In Effect

As of March 29, 2021, the following cities or counties have adopted ordinances that will become effective on the dates indicated:

The Basics

Common elements among the ordinances include the scope of coverage (which employers are covered), the amount of required hazard pay, and the duration of the ordinance. Additional provisions often prohibit retaliation, provide credits for employer-initiated hazard pay, require employers to post notice of the ordinance at the workplace, and require certain record-keeping standards.

Who and What is Covered

The City of Los Angeles’s Premium Hazard Pay for On-Site Grocery and Drug Retail Workers Ordinance has served as a template for other local jurisdictions (with some exceptions noted below). The Los Angeles ordinance has these key terms:

“Premium Hazard Pay.” Los Angeles premium pay ($5 per hour) is in addition to all other forms of compensation (from hourly wages to bonuses) and reimbursement.

“Employer.” A Los Angeles covered “employer” is

  • a grocery, drug, or retail store, with more than 300 employees nationwide and more than 10 employees on-site at a Los Angeles store that
  • either primarily sells grocery items (including both food and household goods) or sells various prescription and nonprescription medicines, along with other sundries or is a retail store with over 85,000 square feet of retail space, 10% of which is dedicated to either groceries or drug retail.

“Employee.” A Los Angeles covered “employee” is any individual who, during a particular week,

  • performs at least two hours of work for a covered employer within the city and
  • is entitled to the California minimum wage.

Depending on the ordinance, salaried managerial workers may or may not be entitled to hazard pay. For example, exempt managers are ineligible for hazard pay in Los Angeles. Likewise, Daly City expressly excludes managers, supervisors, and confidential labor relations employees from receiving this premium pay. But San Francisco employees, both hourly and salaried, are entitled to hazard pay to the extent that they earn less than $35 per hour (whether paid hourly or by an equivalent salary, based on a 40-hour workweek).

Other Common Requirements

Anti-retaliation: Most hazard pay ordinances state that employers cannot discharge employees, reduce their compensation, or otherwise discriminate against them for asserting their rights under the ordinances.

Credit for previous employer-initiated hazard pay: The ordinances typically allow employers who are voluntarily providing hazard pay to offset the amount already being paid against the mandated additional pay. The credit typically must be clearly identified on wage statements.

Enforcement: Most ordinances empower not only local enforcement officials but also employees to sue the employer for violations of the ordinance.

Notice: The ordinances usually require employers to post a notice in a conspicuous spot at the workplace, to provide a copy of the notice to employees, or both. San Francisco provides the requisite poster for employers online, and Irvine promises to do so soon. In locales that do not provide a sample, employers must create the notices.

Sunset: Most ordinances are set to expire 90 or 120 days after the ordinance takes effect. But some cities, such as South San Francisco, have linked the effective dates of the ordinance to California’s Blueprint for a Safer Economy: once a pre-designated reopening tier applies, the ordinance sunsets.

Individual Quirks

While most hazard pay ordinances are similar, a few have special quirks. For example:

  • South San Francisco requires employers to pay employees up to four hours for time spent obtaining a COVID-19 vaccine. (California has passed a statewide 2021 COVID-19 SPSL law, effective March 29, 2021, which also covers paid leave for vaccinations and which we blogged about here.) South San Francisco’s ordinance (effective February 25, 2021) also makes hazard pay retroactive to February 11, 2021.
  • San Francisco imposes a cap on the mandated hazard pay. Covered San Francisco grocery and drug store employers must pay all employees an additional $5 per hour, up to a maximum of $35 per hour. So an employee who already earns $33 per hour is entitled to hazard pay of only $2 per hour. San Francisco more narrowly defines Covered Employers than does Los Angeles, requiring only eligible grocery and drug stores with at least 500 employees nationwide and at least 20 employees in San Francisco to provide hazard pay. But the San Francisco ordinance also covers third-party janitorial and security contractors whose employees work in covered grocery and pharmacy retail stores, regardless of how many employees the contractor has. So if a small security contractor services a large grocery store, then the security contractor must comply with the ordinance.

Keep an Eye Out

These ordinances pass at the local level, often with little advance notice and with little statewide or national fanfare. And each jurisdiction often has its own idea of what obligations should fall on the grocery, drug, and retail stores operating in the area. We anticipate the number of localities with these laws to grow, confronting larger employers operating in multiple California locations with a bewildering patchwork of local obligations.

Workplace Solutions

If you have applicable operations in any of the above mentioned localities, please reach out to Seyfarth’s Workplace Solutions Team with questions about the applicability of hazard/hero pay ordinances to your company.

 

Edited by Coby Turner