Kroger will shutter two "underperforming" Quality Food Centers in Seattle on April 24 in response to a new mandate by the city council requiring an extra $4 per hour in hazard pay for frontline grocery workers.
"Unfortunately, Seattle City Council didn’t consider that grocery stores – even in a pandemic – operate on razor-thin profit margins in a very competitive landscape," the company said in a statement. "When you factor in the increased costs of operating during COVID-19, coupled with consistent financial losses at these two locations, and this new extra pay mandate, it becomes impossible to operate a financially sustainable business."
QFC said that it is providing the mandated extra pay to all associates, including those in the two locations scheduled to close as well as its other 13 Seattle locations, and that it will meet with each impacted associate, comply with any contractual commitments, and consider any transfer requests.
In addition, Kroger said that it offers competitive wages, comprehensive health care and a reliable pension to employees, with an average hourly wage of $20 per hour for Seattle QFC locations and total compensation above $25 per hour, including health care and pension benefits.
Seattle is one of a handful of cities that has adopted the hazard pay law, which applies to companies with more than 500 workers and stores larger than 10,000 feet. Kroger previously announced it would close two locations in Southern California as a result of the same mandate.
The company argues that the city council's "misguided mandate targets one industry and not only oversteps our collective bargaining rights, but it altogether exempts several non-union competitors."
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"City Council and the Mayor refuse to answer why their proposal does nothing to raise wages for the City’s own frontline workers, who are serving with the same dignity and determination as our own associates," Kroger added. "Unfortunately, the irreparable harm that will come to workers and our Seattle community is a direct result of the City’s attempt to pick winners and losers among essential businesses and workers.”
The city is also facing pushback from the Northwest Grocery Association and the Washington Food Industry Association, which have also denounced the mandate in a recently filed lawsuit.
A spokesperson for the mayor's office told FOX Business that Kroger is "a huge conglomerate that has made billions in profits during COVID because its frontline workers continued to show up every day, despite the risk to themselves."
"It is unfortunate that Kroger chose to accelerate the closure of these stores - at least one of which they had already planned to close - and then blamed it on the need to pay the very workers who brought them these huge revenues," the spokesperson added.
A representative for the Seattle City Council did not immediately return FOX Business' request for comment.
Kroger's move has also received harsh criticism from the United Food and Commerical Workers International Union, which argues that the company is "once again trying to intimidate local and national elected leaders."
"It will not work," the union said in a statement. “Threatening frontline workers with ruthless job cuts and endangering the community’s access to food in the middle of a public health crisis is inexcusable and will only serve to strengthen this movement to provide hazard pay for frontline workers."
The union noted it would use "every tool available to stop Kroger’s war on essential workers, including doing all we can to ensure that our local, state and federal leaders hold companies like Kroger accountable for flagrantly choosing to ignore their responsibility to protect our community and follow these critical health, safety and wage laws.”
Kroger previously offered its employees hazard pay in the early months of the pandemic before cutting it in May and replacing it with a $400 bonus.
Kroger says it has invested $1.5 billion to implement dozens of safety measures, including social distancing signage, increased cleaning and sanitization procedures and free personal protective equipment, and for employee bonuses during the pandemic, including $50 million paid out to frontline associates on Feb. 11.
In addition, the company says that it continues to advocate for its frontline grocery workers to be prioritized to receive COVID-19 vaccines, and is encouraging every associate to get inoculated by offering a $100 payment for employees receiving their second dose.