San Mateo, California Enacts ‘Hazard Pay’ Ordinance for Large Grocery and Drug Stores

On March 1, 2021, the City Council of San Mateo, California, adopted “An Emergency Ordinance Requiring Large Grocery Stores and Large Drugstores to Provide Hazard Pay to their Employees” to ease the burdens caused by the COVID-19 pandemic. San Mateo is an incorporated city located in the San Francisco Bay Area. The ordinance requires large grocery stores and drug stores in San Mateo to provide their workers with hazard pay of $5.00 per hour in addition to their hourly “base wages” or “holiday premium wages.” The ordinance took effect on March 1, 2021, and will expire on May 30, 2021, unless reenacted.

Covered Employers

The ordinance defines covered employers as “any Person who (a) directly or indirectly or through an agent or any other Person owns or operates a Grocery Store or a Drugstore and employs or exercises control over the wages, hours or working conditions of any Covered Employee; and (b) employs 750 or more employees nationwide regardless of where those employees are employed.”

Under the ordinance, a drugstore is defined as “a store that devotes seventy percent (70%) or more of its business to retailing a general 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 seventy percent (70%) or more revenue from retailing a general range of drugs, pharmaceuticals, cosmetics and related products, including food products, then it qualifies as a drug store.”

The ordinance defines a grocery store as “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 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 primary purpose of food sales.” The ordinance further states that a grocery store includes “a retail store of any kind located within the geographic limits of the City that devotes 10% or more of its interior space 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.”

Covered Employees

The ordinance applies to employees who: are “entitled to payment of a minimum wage from any employer under San Mateo Municipal Code Section 5.92.010” (i.e., the individual must perform at least two hours of work for an employer within the City of San Mateo and be entitled to payment of a minimum wage under state law); “work in a Grocery Store or Drugstore on either a full-time or part-time basis”; and are exposed to store patrons. The ordinance does not specifically exclude managers or supervisors.

Paid Time Off for Vaccination

Covered employers must “provide Covered Employees up to [four] hours of paid time off … to obtain COVID-19 vaccinations.”

Prohibited Retaliation

Employers may not “interfere with, restrain or deny the existence of, or the attempt to exercise, any rights protected under the ordinance.” The ordinance specifies that “[s]uch rights include, but are not limited to, the right to request Hazard Pay pursuant to this ordinance; the right to file a complaint with the City or inform any person about an employer’s alleged violation of this ordinance; the right to participate in an investigation, hearing or proceeding or cooperate with or assist the City in its investigations of alleged violations of this ordinance, and the right to inform any person of their rights under the ordinance.”

Further, the ordinance prohibits employers from “[t]aking adverse action against an employee, including lowering an employee’s Base Wage or Holiday Premium Wages or reducing work hours, within 90 days of [an] employee’s exercise of rights protected under this ordinance.” Any adverse action taken creates “a rebuttable presumption of having done so in retaliation for the exercise of such rights.”

Posted Notice

The ordinance requires that employers provide covered employees with a written notice of their rights under the ordinance in a location utilized by employees for breaks, as well as “in an electronic format that is readily accessible to” employees (e.g., an online web portal or smartphone application). The notice must provide information regarding: (1) the right to premium pay; (2) “the right to be protected from retaliation for exercising in good faith” their rights under the ordinance; and (3) the right to bring a civil action for any violations of the ordinance. Employers must provide the notice “in English and any language that the Covered Employer knows or has reason to know is the primary language” of its employees.

Record Retention

The ordinance does not include a specific record retention period. However, employers may wish to retain compliance records for a period of three to four years, in the event that employers need those records to defend their actions in response to agency action or civil litigation.

Collective Bargaining Agreements

Collective bargaining agreements may waive the ordinance’s application if the agreements explicitly set out the waiver “in clear and unambiguous terms.”

Enforcement

The city may enforce compliance through administrative action, as outlined in the San Mateo Municipal Code. The ordinance also creates a private right of action for covered workers who suffer either financial injury or retaliation because the employer violated the ordinance. The ordinance authorizes damages for lost wages plus interest, liquidated damages (up to twice the amount of unpaid compensation), civil penalties, and reasonable attorneys’ fees and costs for employees who successfully pursue a civil action.

Credit for Employer-Initiated Hazard Pay

Employers that already have implemented hazard pay for covered employees may credit that amount towards the $5.00 hourly premium mandated by the ordinance. For example, if an employer already increased wages by $2.00 per hour because of COVID-19, the employer need only increase wages by an additional $3.00 per hour to comply with the ordinance. To receive the credit, the ordinance requires employers to demonstrate (with a copy of the hazard pay policy, a statement under penalty of perjury explaining employees’ wages and bonuses for last 12 months, and additional documentation) that “as of the effective date of [the] ordinance[,] and in any subsequent covered workweeks,” the employer paid hazard pay to its employees. The ordinance provides that no credit will be provided for past payments made to employees.

Duration of Hazard Pay

The ordinance will be in effect through May 30, 2021, unless the San Mateo City Council extends the ordinance. The city also announced that the “Council is in the process of adopting a regular ordinance that would last for several months longer.”

Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.