Costa Mesa, California, Enacts Premium Pay Ordinance for Retail Grocery and Pharmacy Workers

On March 16, 2021, the City Council of Costa Mesa, California, passed an urgency ordinance establishing premium pay for retail grocery and pharmacy workers during the COVID-19 pandemic. Costa Mesa is a large city in Orange County located southeast of Los Angeles. The ordinance requires that large retail establishments that sell groceries or prescription and nonprescription drugs in Costa Mesa provide their workers with premium pay of $4.00 for each hour worked. The ordinance took effect immediately and will expire 120 days from its effective date.

Covered Employers and Employees

Costa Mesa’s ordinance imposes the premium pay requirement on “retail establishments” that employ at least 300 workers nationally, at least 15 workers at a location in Costa Mesa, and meet one of the following requirements:

1. They devote 70 percent or more of the sales floor area to retailing food products and/or receive 70 percent or more of their revenue from retailing food products.
2. They occupy more than 85,000 square feet and dedicate 10 percent or more of the sales floor to selling food products that are tax-exempt under California law (Revenue and Taxation Code Section 6359).
3. They are retail pharmacies that sell both “prescription and nonprescription medicines” and “miscellaneous items” such as “sundries, dry foods, packaged foods, beverages, fresh produce, meats, deli products, dairy products, canned foods, or prepared foods.”

Employees of establishments that meet the above criteria are eligible for $4.00 per hour worked of premium pay if they have “perform[ed] at least two … hours of work in a calendar week” for the employer. Managerial, supervisory, and confidential employees are not included.

Employers that were already providing premium pay of at least $1.00 per hour as of the ordinance’s effective date may credit that amount toward complying with the ordinance. For example, if an employer were already providing $3.00 per hour in premium pay to covered employees, it would only need to provide an additional $1.00 per hour.

Worker Protections

The ordinance prohibits employers from reducing a grocery worker’s compensation or limiting a grocery worker’s earning capacity because the ordinance went into effect. If an employer reduces a grocery worker’s compensation or limits an employee’s earning capacity, the employer must demonstrate that it would have taken the same action had the Costa Mesa City Council never passed the ordinance. The ordinance also prohibits employer retaliation against workers who exercise their rights under the ordinance.

Posted Notice

The ordinance requires that employers notify covered workers in writing about their rights. The notice must include information regarding (1) “[t]he right to premium pay guaranteed by [the] [o]rdinance”; (2) “[t]he right to be protected from retaliation”; and (3) “[t]he right to bring a civil action” for an employer’s violation of the ordinance. Employers must post the required notice in a location that employees use for breaks, as well as in an electronic format accessible to the grocery workers via a smartphone application or an online web portal. Employers must provide the notice of rights “in English, Spanish, and any other primary language spoken by at least 10% of the employees.”

Records Retention

Employers must keep records demonstrating compliance with the ordinance “for a period of two years.” An employer’s failure to do so will result in a rebuttable presumption that the employer violated the ordinance.

Enforcement

The ordinance creates a private right of action for covered workers who are “aggrieved” by violations of the ordinance. The ordinance also authorizes “reasonable attorneys’ fees and costs” for employees who successfully pursue such civil actions. Furthermore, the ordinance allows “for exemplary damages in the amount of two times the monetary damages suffered by the aggrieved grocery worker” if the worker establishes that “a person … act[ed] with malice, fraud, or oppression in violating” the ordinance.

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.