Kroger closes 2 Southern California stores over $4 per hour 'hero pay' ordinance
Kroger says stores were 'underperforming'
Retail chain Kroger closed two California stores Saturday after Long Beach City approved a coronavirus "hero pay" ordinance.
Hero pay ordinances bump pay for workers in retail stores and pharmacies with 300 or more workers due to the hazards of the COVID-19 pandemic. In Long Beach, eligible workers have seen a $4 per hour increase in their wages.
Democratic Mayor Robert Garcia approved the ordinance in January. Other cities in California have taken similar measures, with Los Angeles approving "hero pay" in March at $5 an hour.
Local leaders and union workers applauded the move, but the measure did not pass entirely with fanfare: The California Grocers Association immediately filed for an injunction on the pay hike, but a federal judge denied the effort.
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U.S. District Judge Otis D. Wright II concluded that an injunction would be "an extraordinary remedy" for the association’s complaints, the Long Beach Post reported.
In response, Kroger started to close stores in cities where "hero pay" ordinances exist. The retail chain first announced intentions to close two Long Beach locations in February, stirring protests from workers and union members.
Kroger claimed the stores were "underperforming" and that employees were given the chance to transfer to other locations, FOX Los Angeles reported.
Garcia countered by citing a report by The Brooking Institute that noted Kroger had doubled its profits and spent "nearly a billion dollars in 2020 to buy back its own stock shares."
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The mayor has threatened to sue Kroger over the Long Beach closures, though it's not clear on what grounds he would do so.
FOX Business reached out to Garcia’s office for comment, which is pending.
A spokesperson for Kroger told FOX Business in February that the Long Beach City Council's "misguided action" in passing the ordinance had overstepped "the traditional bargaining process" and "only applies to some, but not all, grocery workers in the city."
The company plans to close three Los Angeles locations on May 12, citing "hero pay" as the leading factor for its decision.
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"The mandate will add an additional $20 million in operating costs over the next 120 days, making it financially unsustainable to continue operating the three underperforming locations," Kroger said in a statement.
"Despite our efforts to overcome the challenges we were already facing at these locations, the extra pay mandate makes it impossible to run a financially sustainable business …," the statement said.
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"Hero pay" ordinances appear set for approval in more California cities despite the controversies, with Malibu and Whittier set to vote on the measures.
FOX Business' Julia Musto contributed to this report.