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2021-03-09 Item 12 Grocery Store and Drugstore Hazard PayCITY COUNCILAGENDA REPORTITD^^%I?s<yiffRtiCITY OF MILLBRAE621 Magnolia AvenueMiIIbrae, CA 94030SUBJECT:COVID-19 Hazard Pay for Large Grocery Storeand Large Drugstore Workers - Consider UrgencyOrdinanceATTACHMENTS:1. Proposed Urgency OrdinanceReport No.Agenda Item:For Agenda of: March 9, 2021Department: Community DevelopmentOriginator:rcy Smith,funify Development DirectorApprove^Budget Action:Yes S No-{—/yFinance Review: N/AREPORT TYPE: S ACTION D INFORMATIONALITEM TYPE: D CONSENT D PUBLIC HEARING D EXISTING BUSINESS S NEW BUSINESSRECOMMENDATION:Staff recommends that the City Council adopt an Urgency Ordinance to require large grocery stores andlarge drugstores to provide hazard pay to their public-facing employees due to the COVID-19 pandemic.BACKGROUND:Features of the OrdinanceAt the request of Council members, the city has prepared an urgency ordinance for action by the Council.The ordinance would require grocery stores and drug stores that employ 1,000 or more employeesnationwide to pay "hazard pay" in the amount of $5 per hour to their frontline employees working throughthe COVID-19 pandemic. Many cities and counties throughout the state have or are currently consideringthe adoption of hazard pay ordinances. The first two largest cities in the state to formally adopt ordinancesinclude Long Beach and Oakland. The City of South San Francisco adopted an urgency ordinance onFebruary 24, 2021, which was retroactive to February 11,2021 . The City of San Mateo adopted both anEmergency Ordinance and Ordinance on March 1, 2021. Several other Peninsula communities are alsoconsidering the adoption of hazard pay ordinances. San Mateo County is considering adopting anordinance, and the San Jose City Council and the Santa Clara County Board of Supervisors have directedtheir staffs to draft ordinances for adoption. On February 9, the City ofBelmont discussed the concept butdecided not to move forward with the preparation of an ordinance. The ranges in the hazard pay rates spanfrom $3 to $5 per hour.The ordinance attached to this report as Attachment 1 is an urgency ordinance and, if adopted by at leasta four-fifths affirmative vote, will go into effect immediately and expire 120 days after enactment.California Government Code Section 36937 authorizes the City Council to introduce and adopt anordinance it declares to be necessary for immediate preservation of the public peace, health, and safety atone and the same meeting if passed by at least four-fifths affirmative votes. The basis for this ordinanceis that essential grocery workers have continued to report to work and serve their communities, despitePage 1 of 3662412 the ongoing hazards and danger of being exposed to and infected by the novel coronavirus, helping toensure individuals throughout the City of IVtillbrae have had access to the food they need during thispandemic. These frontline workers should be justly compensated for the clear and present dangers of doingtheir jobs during the pandemic, as further described in the ordinance recitals. The City Council adoptedthe COVID-19 Pandemic emergency declaration on March 19, 2020 via Resolution No. 2020-18.The Amount of Hazard PayConsistent with other ordinances adopted to date in San Mateo County, the ordinance has been drafted toprovide for a $5.00 per hour pay increment. The ordinance provides for a credit against this amount forhazard pay that employers are voluntarily paying at the time the ordinance goes into effect.Covered EmployersThe ordinance applies to grocery stores and drugstores that employ 1,000 or more employees nationwide.The terms "grocery store" and "drugstores" are defined in the ordinance as follows:o "Drugstore" means a store that devotes seventy percent (70%) or more of its business toretailing a general range of drugs, pharmaceuticals, cosmetics and related products,including food products, which may be fresh or packaged. There is a rebuttablepresumption that if a store receives seventy percent (70%) or more revenue from retailinga general range of drugs, pharmaceuticals, cosmetics and related products, including foodproducts, then it qualifies as a drugstore.o "Grocery Store" means a retail store that is located within the geographic limits of the City,and that sells primarily household foodstuffs for offsite consumption, including the sale offresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods,beverages, baked foods, or prepared foods. Other household supplies or other productsshall be secondary to the primary purpose of food sales. For the purposes of this ordinance,"Grocery Store" also means a retail store of any kind located within the geographic limitsof the City that devotes 1 0% or more of its interior space to the sale of household foodstuffsfor offsite consumption, including the sale of fresh produce, meats, poultry, fish, deliproducts, dairy products, canned foods, dry foods, beverages, baked foods, or preparedfoods.In Millbrae, this includes five stores with a physical location in the City: Safeway, Lucky's, Trader Joe's,and Walgreens (two locations). Online on-demand or subscription-based grocery or drug delivery servicesare excluded.Research has shown that for regional retailers with multiple locations in the Bay Area, the City with thehighest mandated hazard pay becomes the new minimum for all employees as it is difficult for stores tohave different hourly wages in the same region. Also, owners do not want to create a situation betweenstores where one set of employees have higher wages than another for the same job.Covered EmployeesThe ordinance has been drafted to require the payment of hazard pay to non-salaried part-time or full-timeemployees whose work exposes them to contact with store patrons. A detailed definition is included.Exception for Collective Bargaining AgreementsThe ordinance provides that it does not apply to employers who have entered into a collective bargainingagreement that explicitly waives entitlement to the hazard pay the ordinance requires.Page 2 of 3 DurationThe urgency ordinance has been drafted to expire 120 days after its adoption. It is anticipated that this willprovide enough time for the covered employees to be vaccinated. In San Mateo County, vaccinations ofthis group began on February 22,2021.Other Key FeaturesThe ordinance has been drafted to include key features found in the ordinances adopted by other Californiacities. These include a requirement that employers provide notice to their employees of the protectionsafforded by the ordinance and the provision of a private right of action authorizing employees to bringtheir own actions to enforce the ordinance. Business owners are required to maintain records thatdemonstrate compliance.Legal Challenges to Other OrdinancesThe grocery store industry has sued to have hazard pay ordinances declared illegal. The industry arguesthat such ordinances violate the Constitution's Equal Protection Clause by singling out grocery stores ofa certain size for regulation. In addition, they argue that the ordinances violate constitutional prohibitionsagainst the impairment of contracts and that they are preempted by the National Labor Relations Act, thefederal law regulating labor relations and the collective bargaining process.Hazard pay ordinances are an extraordinary response to extraordinary challenges inflicted upon thecommunities across the state by the COVID-19 pandemic. Not surprisingly, there is not a well- establishedbody of caselaw to provide guidance on the legal issues presented. The grocery store industry argues thathazard pay ordinances simply go too far in attempting to address the pandemic's impacts on grocery storeworkers. City staff and the attorneys have not had the time to adequately evaluate these arguments toprovide a confident answer to whether a hazard pay ordinance would withstand a legal challenge.OutreachAs a courtesy, staff has contacted affected stores to notify them of this item for Council consideration.Any responses received will be communicated to Council at or prior to the Council meeting.FISCAL IMPACT:The adoption of this urgency ordinance will not have a material impact on the City's budget and does notcreate any substantial obligations on the City, absent a legal challenge. It is expected that staff resourceswould be needed to provide outreach on the provisions of the ordinance. Staff resources, includingattorney services, could also be required in the enforcement of the ordinance.COUNCIL ACTION:Staff recommends that the City Council adopt an Urgency Ordinance to require large grocery stores andlarge drugstores to provide hazard pay to their public facing employees due to the COVID-19 pandemic.Page 3 of 3 ORDINANCE NO.CITY OF MILLBRAE, COUNTY OF SAN MATEOSTATE OF CALIFORNIA***AN URGENCY ORDINANCE REQUIREVG LARGE GROCERY STORES AND LARGEDRUGSTORES TO PROVIDE HAZARD PAY TO THEIR EMPLOYEES DUE TO THE COVID-19 PANDEMICWHEREAS, on March 19, 2020, the California State Public Health Officer,designated specific sectors and their workers, including grocery stores, as Essential CriticalInfrastructure Workers ("essential workers") to ensure the "continuity of functions criticalto public health and safety, as well as economic and national security"; andWHEREAS, since the beginning of the COVID-19 pandemic, grocery workers inthe City ofMillbrae have continued to report to work and serve their communities, despitethe ongoing hazards and danger of being exposed to and infected by the novel coronavirus,helping to ensure individuals throughout the City ofMillbrae have had access to the foodthey need during this pandemic; andWHEREAS, essential grocery workers cannot choose to work from home—theymust come to work to do their jobs, which involve heightened risk of exposure andinfection ofCOVID-19 through substantial interaction with customers on an ongoing basisand indoors where there is less air circulation; andWHEREAS, despite the efforts of grocery stores to take precautions and keepcustomers and employees safe, including requiring masks, social distancing, and sanitizingcash registers, food conveyor belts, and shopping carts, the health threats that these groceryworkers face cannot be overstated; andWHEREAS, United Food and Commercial Workers ("UFCW") Locals in NorthernCalifornia, which represent grocery workers, report that over 700 grocery workers in theirranks have tested positive with COVID- 19, and members of their union have beenhospitalized or have died from the coronavirus; andWHEREAS, the City ofMillbrae recognizes that essential grocery workers must bejustly 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; andWHEREAS, there are three large grocery chains operating in Millbrae that employworkers in Millbrae, and have at least 1,000 employees nationwide, with workers who arefacing the hazards of COVID- 19 in the workplace every day; andWHEREAS, on January 17, 2021, the California Department of Public Healthreported another COVID-19 variant that had grown more common across the state sinceDecember, with worrisome signs that this variant may be highly transmissible; andAttachment 1 WHEREAS, in December 2020, January 2021, February 2021, and March 2021,agrowing list of cities across California, including Berkeley, Los Angeles, Long Beach, SanJose, San Leandro, and San Mateo began announcing legislation for hazard pay foressential grocery workers during the period where counties are in the Purple, Red, orOrange level of Community Transmission for COVID-19 under State Health orders.NOW THEREFORE THE CITY COUNCIL OF THE CITY OF MILLBRAE DOESORDAIN AS FOLLOWS:Section 1. RecitalsThe City Council finds the foregoing recitals to be true and correct and hereby incorporates thoserecitals into this Ordinance.Section 2. Emergency NeedIn accordance with Section 36937 of the California Government Code, the City Council finds anddeclares that adoption of this Emergency Ordinance is necessary for preserving the public peace,health, safety, or welfare for the following reasons:(a) The COVID-19 pandemic has led to the current state of emergency in California.(b) The virus is spreading rapidly across the region with many clusters arising within retailstores. Grocery stores remain a critical piece of infrastructure in our fight against theCOVID-19 virus and in protecting the food supply chain.(c) Large grocery and drugstores are the primary points of distribution for food and otherdaily necessities for the residents of the City of^^illbrae and are therefore essential to thevitality of our community.(d) Turnover, inability to pay for housing and increased childcare costs as a result of schoolclosures and other necessities could become an immediate problem for certain groceryworkers if they are not given relief.(e) To protect the food supply chain and the public health and safety, the City ofMillbrae musttake steps to guard against turnover and ensure that large grocery stores in Millbrae havewell-trained, consistent and stable staffing.Section 3. Effective DatePursuant to Government Code Section 36937, this ordinance is effective immediately.Section 4. DefinitionsThe definitions set forth in this Section shall govern the construction and meaning of the termsused in this Ordinance:(a) "Base Wage" means the hourly wage paid to Covered Employees as of the effective date of thisordinance less Hazard Pay owed under this ordinance or any other premium hourly rate already paidto compensate Covered Employees for working during the pandemic (referred to herein as "employer-initiated hazard pay").(b) "City" means the City ofMillbrae.(c) "Covered Employee" means any individual who works in a Grocery Store or Drugstore on either afull-time or part-time basis, and whose work exposes them to contact with store patrons.(d) "Covered Employer" means any Person who (a) directly or indirectly or through an agent or any otherPerson owns or operates a Grocery Store or a Drugstore and employs or exercises control over thewages, hours or working conditions of any Covered Employee; and (b) employs 1,000 or moreemployees nationwide regardless of where those employees are employed. To determine the numberof employees employed by a Grocery Store or Drugstore, the calculation shall be based upon:1) The actual number of employees who worked for compensation during the twoworkweeks preceding the effective date of this ordinance; and2) All employees who worked for compensation shall be counted, including but notlimited to:(A) Employees who are not covered by this ordinance;(B) Employees who worked within the geographic limits of the City;(C) Employees who worked outside the geographic limits of the City; and(D) Employees who worked in full-time employment, part-timeemployment, joint employment, temporary employment, or throughthe services of a temporary services or staffing agency or similarentity.(e) "Employer-Initiated Hazard Pay" means a premium hourly rate to compensate Covered Employeesfor the hardships and/or risks associated with working during the COVID-19 pandemic. If a CoveredEmployer pays such Employer-Initiated Hazard pay on a flat rate basis, the premium hourly rate isderived by dividing the flat rate payment for a workweek by the number of hours worked in theworkweek.(f) "Hazard Pay" means an additional $5.00 per hour wage bonus in addition to each CoveredEmployee's Base Wage or Holiday Premium wage for each hour worked within the City.(g) "Holiday Premium" means the hourly wage paid to Covered Employees for performing work during aholiday or holiday season.(h) "Hours Worked" means the time during which a Covered Employee is subject to the control of aCovered Employer, including all the time the employee is suffered or permitted to work, and on-call.(i) "Drugstore" means a store that devotes seventy percent (70%) or more of its business to retailing ageneral range of drugs, pharmaceuticals, cosmetics and related products, including food products,which may be fresh or packaged. There is a rebuttable presumption that if a store receives seventypercent (70%) or more revenue from retailing a general range of drugs, pharmaceuticals, cosmeticsand related products, including food products, then it qualifies as a drugstore. (j) "Grocery Store" means a retail store that is located within the geographic limits of the City, and thatsells primarily household foodsfaiffs 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 primarypurpose of food sales. For the purposes of this ordinance, "Grocery Store" also means a retail store ofany kind located within the geographic limits of the City that devotes 10% or more of its interiorspace to the sale of 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.(k) "Person" means any individual, corporation, partnership, limited partnership, limited liabilitypartnership, limited liability company, business trust, estate, trust, association Joint venture, agency,instrumentality, or any other legal or commercial entity, whether domestic or foreign.Section 5. Payment of Hazard Pay to Covered Employees.(a) Hazard Pay. Covered Employers shall pay Covered Employees a wage of no less than thepremium hourly rate set under the authority of this ordinance. The premium hourly rate for eachCovered Employee shall be an additional five dollars ($5.00) per hour for all hours worked at aGrocery Store or Drugstore on top of the Covered Employee's Base Wage or Holiday Premium,whichever applicable at the time of hours worked. The Hazard Pay rate shall not includecompensation already owed to Covered Employees, Holiday Premium rates, gratuities, servicecharge distributions, or other bonuses.(b) Credits. Covered Employers providing employer-initiated hazard pay will be credited fordoing so in accordance with Section 6.Section 6. Credit for Employer-Initiated Hazard Pay(a) Employer-Initiated Hazard Pay shall be credited against the five dollars ($5.00) per hour forthe hourly amount paid to each Covered Employee (e.g., A Covered Employer offering twodollars ($2.00) per hour in Employer-Initiated Hazard Pay owes an additional three dollars ($3.00)per hour in Hazard Pay per this Chapter.) To receive credit for paying a Covered EmployeeEmployer-Initiated Hazard Pay, a Covered Employer must demonstrate that, as of the effectivedate of this ordinance and in any subsequent covered workweeks, the Covered Employer paidsuch Employer-Initiated Hazard Pay to the Covered Employee. No Covered Employer shall becredited prospectively for any past payments. No Covered Employer shall be credited for anyhourly premiums already owed to Covered Employees, such as but not limited to, HolidayPremiums. Nothing herein shall be interpreted to prohibit any employer from paying more thanfive dollars ($5.00) per hour in Hazard Pay.(b) Covered Employers must, upon request, immediately provide the following to the CityManager's Office to receive credit for Employer- Initiated Hazard Pay:1) A copy of the Employer's Hazard Pay policy; and2) A statement, provided under penalty of perjury, explaining Covered Employees' hourlyBase Wages, hourly Holiday Premiums, hourly employer-initiated hazard pay, and anyother wage bonuses received during the last twelve (12) all months; and 3) For any Covered Employee(s) as to whom a Covered Employer seeks credit forEmployer- Initiated Hazard Pay, documentation reflecting that such payments weremade, for each hour claimed; and4) Documentation that allows the City to review for compliance by assessing wages for thepast twelve (12) months and that is itemized in such a way that the City can understanda Covered Employee's Base Wage distinguished from Holiday Premiums and otherbonuses or pay increases that are separate and distinct from employer-initiated hazardpay.(A) The following constitutes acceptable evidence of employer-initiated hazard paydescribed in Subsection (B)(4): A spreadsheet, of all Covered Employees and theirwages for each pay period for the last twelve (12) months, that allows the City todistinguish Base Wage from Holiday Pay and other bonuses or pay increases thatare separate and distinct from employer-initiated hazard pay.(B) Production of the evidence described in Subsection (B)(4)(a) does not exempt anyCovered Employer from maintaining, and providing access to, the underlyingpayroll records described in this Section.(c) Any offer of proof under subsection (b)(4) shall be accompanied by a writtenacknowledgment that it was submitted under penalty of perjury.Section 7. WaiverThe provisions of this ordinance may not be waived by agreement between an individual CoveredEmployee and a Covered Employer. All the provisions of this ordinance, or any part thereof, maybe waived in a bona fide collective bargaining agreement, but only if the waiver is explicitly setforth in such agreement in clear and unambiguous temis.Section 8. ProhibitionsIt shall be unlawful for a Covered Employer or any other Person to interfere with, restrain or denythe existence of, or the attempt to exercise, any rights protected under this ordinance. Employersshall not take retaliatory action or discriminate against any employee or former employee becausethe individual has exercised rights protected under this ordinance. Such rights include, but are notlimited to, the right to request Hazard Pay pursuant to this ordinance; the right to file a complaintwith the City or inform any person about an employer's alleged violation of this ordinance; theright to participate in an investigation, hearing or proceeding or cooperate with or assist the City inits investigations of alleged violations of this ordinance, and the right to inform any person of theirrights under this ordinance. Protections of this ordinance shall apply to any employee whomistakenly, but in good faith, alleges noncompliance with this ordinance. Taking adverse actionagainst an employee, including lowering an employee's Base Wage or Holiday Premium Wages orreducing work hours, within 90 days of the employee's exercise of rights protected under thisordinance shall raise a rebuttable presumption of having done so in retaliation for the exercise ofsuch rights.Section 9. Enforcement(a) The failure of any person to comply with any requirement imposed under this ordinance is aviolation of city law and may be enforced through any of the remedies provided in Millbrae Municipal Code Chapter 1.05.(b) Any covered grocery or drugstore worker that suffers financial injury as a result of a violationof this ordinance, or is the subject of prohibited retaliation under Section 8, may bring a civilaction in a court of competent jurisdiction against the Covered Employer or other personviolating this ordinance and, upon prevailing, may be awarded reasonable attorney fees andcosts and such legal or equitable relief as may be appropriate to remedy the violationincluding, without limitation: the payment of any unpaid compensation plus interest due to theperson and liquidated damages in an additional amount of up to twice the unpaidcompensation; and a reasonable penalty payable to any aggrieved party if the aggrieved partywas subject to prohibited retaliation.Section 10. RegulationsThe City Manager's Office may promulgate and enforce rules and regulations, and issuedeterminations and interpretations, consistent with and necessary for the implementation of thisordinance. Such rules and regulations, determinations, and interpretations shall have the force oflaw and may be relied upon by employers, employees, and other persons to detemiine their rightsand responsibilities under this ordinance.Section 11. ConflictNothing in this ordinance shall be interpreted or applied to create any power or duty in conflictwith any federal or state law. The term "Conflict," means a conflict that is preemptive underfederal or state law.Section 12. Notice(a) Covered Employers shall provide covered grocery or drugstore workers with a written noticeof rights established by this ordinance. The notice of rights shall be in a form and mannersufficient to inform grocery or dmgstore workers of their rights under this ordinance. Thenotice of rights shall provide information on:1) the right to premium pay guaranteed by this ordinance;2) the right to be protected from retaliation for exercising in good faith the rights affordedby this ordinance; and3) the right to bring a civil action for a violation of the requirements of this ordinance,including a Covered Employer's denial of premium pay as required by this ordinanceand a Covered Employer or other person's retaliation against a covered grocery ordrugstore or drugstore worker or other person for asserting the right to premium pay orotherwise engaging in an activity protected by this ordinance.(b) Covered Employers shall provide the notice of rights required by posting a written notice ofrights in a location of the grocery or drug utilized by employees for breaks, and in anelectronic format that is readily accessible to the grocery or drugstore workers. The notice ofrights shall be made available to the grocery or drugstore workers via smartphone applicationor an online web portal, in English and any language that the Covered Employer knows or hasreason to know is the primary language of the grocery or drugstore worker(s). Section 13. CEQA.This ordinance is not subject to CEQA pursuant to §§ 15060 (c)(2) (the activity will not result in a director reasonable foreseeable indirect physical change in the environment) and 15060 (c)(3) the activity is nota project as defined in § 15378 of the CEQA Guidelines (Title 14, Chapter 3 of the California Code ofRegulations) because it has no potential for resulting in physical change to the environment, directly orindirectly. This ordinance also is exempt from CEQA pursuant to the "common sense" exemption under §15061(b)(3) of the CEQA Guidelines, because the City Council hereby determines and finds that there isno possibility that the ordinance may have a significant effect on the environment.Section 14. Severability.If any subsection, sentence, clause or phrase of this ordinance is for any reason held to be invalid orunconstitutional by a court of competent jurisdiction, such decision shall not affect the validity of theremaining portions of this ordinance, which shall remain in full force and effect. The City Council herebydeclares that it would have passed this ordinance and each and every subsection, sentence, clause andphrase thereof not declared invalid or unconstitutional, without regard to whether any portion of thearticle would be subsequently declared invalid or unconstitutional. The courts are hereby authorized toreform the provisions of this ordinance in order to preserve the maximum permissible effect of eachsubsection herein.Section 15. Effective Date, Expiration, and Publication.This Ordinance shall be published in summary in a newspaper of general circulation, posted inthe City Clerk's Office, and posted on the City's website, all in accord with Government CodeSection 36937.This Ordinance shall be in full force and effect from and after the date of its passage in accordance withGovernment Code Section 36937, and remains in full force and effect for 120 calendar days from theeffective date, unless repealed, extended, or replaced by an affirmative vote of the City Council.INTRODUCED, PASSED and ADOPTED at a regular meeting of the City Council of the City ofMillbrae held on March 9, 2021 by the following vote:AYES:NOES:ABSENT:MAYORATTEST:CITY CLERK