National grocery store chain Kroger thinks hazard pay in Long Beach is too high.
The company said it will close two locations in the city because it objects to a local law requiring chains pay their employees an additional $4 an hour during the pandemic, the Los Angeles Times reported.
The City of L.A. on Tuesday will consider a related ordinance for a $5 per hour raise for grocery store employees.
A spokesperson for Ohio-based Kroger — one of the largest grocery chains in the U.S. — said Long Beach was attempting “to pick winners and losers,” according to the report.
The two affected stores, Ralphs and Food 4 Less, together employ 200 people and were already underperforming, the spokesperson said.
The ordinance took effect on Jan. 19 and applies to chain groceries with 300 or more workers nationally and with 15 employees per store within the city. The local law also affects chains that do 70 percent of their business selling food products.
The measure would not affect major chains that sell groceries like Target and Walmart.
The California Grocers Association — which represents 6,000 grocery stores statewide — said it would pursue legal action against the city of L.A. and other local governments if they impose similar measures. It has already filed a federal suit against Long Beach to overturn the ordinance.
GlobalData Retail analyst Neil Saunders said that well-performing grocery stores should be able to pay an additional $4 per hour to workers, but a company like Kroger could point to hazard pay as the “final nail in the coffin” for underperforming stores.