On the day that Seattle’s new $4 per hour “hazard pay” ordinance took effect, two trade associations representing local grocery companies filed suit to block the ordinance.
The Northwest Grocery Association and the Washington Food Industry Association are suing the City of Seattle in U.S. District Court, asking a judge to enjoin the city from implementing its new requirement that large grocery store chains — ones with at least 500 employees worldwide — pay their in-store hourly workers an additional $4 per hour in “hazard pay” to compensate for the risks of working during the COVID-19 pandemic.
The associations’ complaint argues three separate reasons why they belief the ordinance is illegal:
- it is preempted by the National Labor Relations Act;
- it violates the equal protection clauses of both the federal and state Constitutions;
- it violates the prohibition against government impairment of contracts in both the federal and state Constitutions.
National Labor Relations Act
The National Labor Relations Act preempts state and local laws that (from the complaint):
“by design or consequence, regulate or interfere with the then-existing balance of economic power between labor and management with respect to zones of activity that, under federal labor law, are intended to be left to the free play of economic forces. Laws subject to NLRA preemption include laws that interfere with or attempt to regulate the economic tools available to labor or management during the course of collective bargaining or that otherwise interfere with the collective bargaining process, such as those that alter the parties’ rights and economic alternatives during collective bargaining, or the processes and procedures utilized for union organizing.”
The plaintiffs argue that COVID-related hazard pay has, in fact, been an ongoing subject of collective bargaining between unions and grocery employers, and as such the city’s ordinance illegally tips the scales of the balance of power between employees and employer in favor of the employees. The complaint goes on to argue that the hazard pay is not a “minimum wage,” but instead is a “mandatory hourly bonus for a specific group of workers, regardless of the wage negotiated in the current collective bargaining agreements or other employment agreements.”
Equal Protection Clause
The complaint argues that the Equal Protection Clauses of both the U.S. Constitution and the Washington State Constitution require “that persons who are similarly situated receive like treatment under the law, and that statutes may single out a class for distinction only if that classification bears a rational relationship to the purpose of the statute. It alleges that the “hazard pay” ordinance illegally singles out grocery stores for disparate treatment, while not placing the requirements on similarly situated businesses such as drug stores and other essential retail outlets. It goes on to argue that the ordinance’s stated purpose (protecting public health, addressing economic insecurity, and promoting job retention during the COVID-19 pandemic) is not rationally related to discriminatory treatment of grocery stores.
The complaint alleges that the ordinance impairs the collective bargaining agreements between the grocery stores and their represented workers, which specify the rates at which employees are paid. That, it says, is in violation of the Contracts Clause of the U.S. and Washington State Constitutions, which prohibit the government from impairing contracts. While the courts have allowed government impairment of contracts when it serves a legitimate public purpose, the plaintiffs argue that the city’s stated purpose is “merely an attempt to impose a public policy rationale on interest-group driven legislation for labor unions and, in particular, for UFCW” (the union representing local grocery workers).
Some quick thoughts on the legal arguments being proffered by the plaintiffs:
- In general the courts have been giving great deference to governments during the COVID-19 emergency. The hazard pay ordinance was passed as emergency legislation and clearly invokes the COVID pandemic as the underlying rationale, so it will be an uphill battle for the plaintiffs to argue that the city is overstepping. Not impossible, but a heavy burden.
- The argument that the ordinance violates the NLRA may be a tough sell; while it is true that it isn’t establishing a minimum wage, the plaintiffs will need to establish why a minimum wage ordinance is legal and a hazard pay ordinance is not. However, the City Council, and in particular the ordinance’s sponsor, Councilmember Mosqueda, have made no secret of the fact that the UFCW was instrumental in the proposing and crafting of this bill, so there is plenty of evidence that the Council fully intended to tip the scales in favor of the union. The adjudication of what state/local regulations are pre-empted is a perennial issue in front of courts, and in this case the court may follow many of its predecessors in simply punting it over to the National Labor Relations Board to decide.
- Probably the strongest argument on its face is the “equal protection” allegation: that this unfairly singles out grocery stores but not other “essential” retail businesses.
- The allegation that it violates the Contracts Clause might have some teeth, mainly because the City Council has been squishy in their explanation of exactly how $4 an hour directly translates into protecting public health, addressing economic insecurity, and promoting job retention. Or, for that matter, where the $4 figure came from versus $2 or $6 per hour.
- The complaint says that the plaintiffs will be seeking both a preliminary and permanent injunction. Their likelihood of obtaining a preliminary injunction is low, because they are required to show that they will suffer “irreparable harm” without one; but at the end of the day the harm inflicted upon them is entirely monetary, and a court can easily repair that in the future by ordering the city to pay monetary damages to repay all the “hazard pay” it actually paid out to employees. Since all the companies are currently profitable, it will be difficult to argue that Seattle’s hazard pay ordinance will force them out of business or cause some other form of irreparable harm.
This is only day 1 of this case, and it will heat up when the plaintiffs eventually file a motion for a preliminary injunction In the meantime, the “hazard pay” ordinance is now in effect and the city’s larger grocery store chains are still required to comply.
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