Hero Pay Presented to Council Moves to Second Step

The Burbank City Council meeting was held virtually on Tuesday, April 13, 2021 where a presentation was made regarding enactment of a local minimum wage and/or Hero Pay. The staff recommendation presented was to direct staff on whether or not to pursue increasing the minimum wage in Burbank and for Council to provide specifics. The second recommendation would be to direct staff on whether or not to bring back a Hero Pay ordinance and for Council to provide certain specifics.

The presentation brought to Council was a first step report requested by Council Member Konstantine Anthony during the February 9, 2021 Council meeting. The presentation was provided by Administrative Analyst, Erica De Leon, from the Community Development Department. It was noted in the presentation that as of January 1, 2021 the current minimum wage for California is $13/hour for businesses with 25 or less employees and $14/hour for businesses with more than 25 employees. By January 1, 2023, California will have a minimum wage of $15/hour despite the size of the business. City councils can enact and enforce it’s own minimum wage which the City of Los Angeles has done and adopted $15/hour starting July 1, 2021.

An analysis would be needed regarding the minimum wage increase in Burbank including addressing the following: general fund fiscal impact, staffing and enforcement which would estimate to $110,000 annually, wages commensurate to cost of living, and impacts on the small business community in which small businesses are still suffering from the pandemic and increasing wages may be detrimental to their business.

The second part of the report was on Hero Pay, which is also known as Hazard Pay or Thank You Pay, for essential workers at grocery stores, pharmacies, and convenience stores. The Hero Pay is a temporary pay increase for frontline grocery and drug store employees that is adopted locally. During the pandemic, many chains provided extra COVID-19 compensation including Kroger, Albertsons, Costco, Target, and Trader Joe’s. This included temporary wage increases and/or one-off bonuses, in which some chains are still providing. Target increased their minimum wage to $15/hour in 2020 and Trader Joe’s increased an additional $4/hour nationwide starting February 1, 2021, for all hourly non-management crew members. 

Long Beach was the first city to enact an increase of $4/hour and was adopted in February of 2021. Other cities like Glendale have approved a $5/hour increase for 120 days while South Pasadena’s ordinance is set to be presented at their April 21, 2021 meeting for an increase of $3/hour for 60 days. The City of Pasadena’s ordinance was denied on March 22, 2021.

Some of the Hero Pay components needed to be addressed are the temporary “premium” pay amount, the employer size, duration, and what employees are defined. On average the duration time has been 120 days and employer size of 300+ employees nationwide with a minimum of 10-14 per single store.

Potential impacts and considerations for Hero Pay were also addressed in the presentation including possible store closures. Kroger closed three underperforming stores in Los Angeles and Long Beach as a result of the Hero Pay enacted. Other impacts are legal challenges in which 8 out of the 20 cities with a local ordinance have faced.  Higher prices for consumers to counteract the higher wages, potentially delayed wage increases/promotions, reduction in hours, wages, or jobs, and city enforcement and attorney office needed for any legal challenges are other listed possible impacts.

After the presentation, the Council opened up for discussion and Councilmember Anthony made a motion to bring the minimum wage discussion back at the beginning of next year to let businesses have time to recover financially from the pandemic. The Council voted unanimously in favor of tabling the discussion and focusing on Hero Pay.

City Attorney Amy Albano shared that Glendale’s ordinance and the study were very comprehensive and focused on 300 or more workers nationwide with more than 10 employees per store. It also included retail drug stores and grocery stores selling primarily food or household goods. Council Member Sharon Springer expressed that it was hard to pick the heroes in terms of this pay because there are also healthcare workers and home improvement service people that worked through the pandemic. She also noted that she would not be supporting the ordinance.

Mayor Bob Frutos expressed that the employees of Hero Pay didn’t provide a fair account for the workers of the pandemic including 7-11 workers, 99 Cent Store workers, bank tellers, employees delivering food to seniors, and the Boys and Girls Club, which all remained working during the first months of the pandemic. Mayor Frutos mentioned that the Governor will possibly be opening the state in June of this year and that it’s not fair to other critical minimum wage workers. “It’s about being equal to everyone,” he stated and doesn’t support the ordinance. He also expressed concern that our grocery stores could be at risk of closing due to the Hero Pay as well as job cuts for residents.

Councilmember Nick Schultz mentioned he preferred the term Hazard Pay because there are many more heroes out there not included in the pay. He countered his previous colleague’s opinions and stated that these bigger retailers had a large profit increase in the first three months of the pandemic, some ranging in a 42-98% increase in profits and that the economic relief isn’t just about the businesses but also about supporting the employees going to these businesses and working minimum wage. He said he would support it and would like to see an ordinance close to Glendale’s $5/hour for 120 days but then lowered to 60 days further into the discussion after listening to his colleague’s opinions.

Vice Mayor Jess Talamantes also supported the ordinance by suggesting $3/hour for 60 days and noted that the focus should be on the bigger organizations that have had a larger profit increase. Council Member Anthony also supported the ordinance in the discussion and was in favor of 60 days and then re-evaluating at that time. He also asked if the City Attorney could look at both Glendale and Long Beach’s studies and bring back information on both.

Councilmember Schultz made a motion to have staff bring back a second step for an ordinance increasing pay by $5/hour during a period of 60 days in which the Vice Mayor seconded. Mayor Frutos made a substitute motion to include 7-11 workers, 99 Cent Store workers, and bank tellers because they are also hazard workers and have the same issues as grocery and pharmacy workers and were needed throughout the pandemic. Councilmember Anthony added to include fast food franchise drive-through employees, while Vice Mayor Talamantes added Credit Unions. City Attorney Amy Albano addressed that the big box companies may already be included via the parameters of the size of the location and number of employees.

Vice Mayor Talamantes then asked how to include all Burbank businesses in this ordinance and Albano suggested that increasing the minimum wage in Burbank by $5/hour for 60 days could be an option if Council was interested in that and mentioned that bank tellers and drive-through employees fell under a different hazard than grocery store employees who had to work person-to-person contact.

Councilmember Schultz withdrew his second from Mayor Frutos’ substitute motion and Mayor Frutos followed by removing his substitute motion altogether due to concerning legal reasons. They continued with the original motion made by Councilmember Schultz and the motion carried with a 3-2 vote. A second step report will be brought back at the May 4, 2021, Council meeting.