Stater may end two-tier pay
A labor agreement this week between supermarket chain Stater Bros. and unionized workers threatens the two-tier wage system at the heart of a bitter labor dispute that crippled the Southern California grocery industry three years ago.
Stater and the United Food and Commercial Workers union declined to provide details of the contract, pending a vote Wednesday by 14,000 Stater employees. But people familiar with the agreement said it would end the tiered wage scale and improve health benefits. The current contract expires March 5.
The UFCW plans to use the tentative pact as the model for its talks with the three larger grocery chains involved in the 4 1/2 -month strike and lockout that ended in February 2004.
The labor dispute involving Safeway Inc.'s Vons and Pavilions stores, Kroger Co.'s Ralphs and Albertsons (now owned by Supervalu Inc.) disrupted shopping across Southern California. Customers turned to such stores as Stater, Trader Joe’s, Costco and others that weren’t part of the work stoppage.
For the roughly 60,000 workers then at the three big chains, the resulting contract created a dual pay scale that gave new hires lower wages and longer waiting periods to qualify for health insurance.
Stater Bros. avoided the labor dispute by agreeing in advance to honor the terms of any contract worked out by the union and the larger chains.
“We wanted to get this behind us so that we can operate our supermarkets without the threat of a strike,” said Jack Brown, chief executive of Colton-based Stater, which operates 162 stores. “Hopefully, this will encourage the other three chains to negotiate in good faith. I am worried about the effect of another strike on the food industry in Southern California.”
For decades the union has negotiated with the major chains as a group. In the current round of talks, the union plans to negotiate with each major chain separately in hopes of rolling back the dual pay scale and waiting period for health insurance.
“We are hoping that if a regional company like Stater Bros. can put together a fair agreement, then the national chains can do the same,” said Connie Leyva, president of UFCW Local 1428 in Claremont.
Greg Conger, president of Local 324 in Buena Park, said that at a minimum, the tentative pact with Stater would tell UFCW members at Ralphs, Vons and Albertsons “that a good employer can step up to the plate.”
But representatives of the major market chains did not seem inclined Friday to concede ground to the union.
Noting that two-tier wage systems are common in UFCW contracts nationwide, Safeway spokesman Brian Dowling said, “Vons will negotiate a deal that we can live with and allows us to remain competitive in the marketplace both in the near and long term.”
Vons, which has 273 stores and 24,000 employees in Southern California, contends that it must contain expenses to remain competitive with discounters, which historically have offered lower wages and benefits than the region’s grocery chains. Labor costs are the single largest expense for a traditional grocery store, Dowling said.
Albertsons, with 250 stores and 23,000 workers in the region, will begin contract talks with UFCW Local 324 in Orange County on Tuesday and has invited Vons and Ralphs representatives to the meeting, even though they won’t take part in the negotiations, said Stephanie Martin, an Albertsons spokeswoman.
“We are pleased to start talking,” she said.
Ralphs spokesman Terry O’Neil declined to comment on the labor negotiations except to say that the chain had approached each of the seven UFCW locals with dates to begin talks. Ralphs has 263 stores and about 21,000 employees.
UFCW Local 770 in Los Angeles, however, has not signed on to the Stater Bros. agreement.
Although he said he believed that the tentative pact with Stater was “a step in the right direction,” Local 770 President Rick Icaza said, “We don’t think it goes far enough for those grocery workers whose wages have been stagnant for the past few years.”
Local 770 has contracts at four Stater stores covering 400 employees.
When the UFCW’s talks with Ralphs, Vons/Pavilions and Albertsons stalled three years ago, the union struck Vons and the two other chains immediately locked out their own union workers.
The strike and lockout, which extended into Central California, ended after the union and management agreed on the two-tier pay system.
Veteran employees held on to their wages and most of their health benefits. But instead of raises, they received a series of bonus payments that lacked the compounding effect of annual percentage increases.
Labor experts were divided about whether this early contract with Stater would affect the wider negotiations.
“If you are a large player, you are not going to care what the union did with a smaller guy,” said Jeff Berman, a Los Angeles labor attorney who typically represents management in other industries.
Berman believes that the pact could give the three major chains an incentive to obtain “a better deal to put economic pressure on the smaller player.”
But Stater CEO Brown said he would never sign a deal that would put his company at an economic disadvantage. Labor experts said the Stater contract probably contained a clause that would extend to the chain any concessions made by the union in its contracts with the larger grocers.
Other labor experts believe that the early agreement with Stater will give the union leverage when it sits down with the larger chains.
The UFCW will argue in the talks and in the media that it had signed “a reasonable settlement with Stater Bros.” and that recalcitrance by the other companies would prove how “unwilling they are to come to grips with reality,” said Michael Posner, a Los Angeles attorney who represents labor.
Negative publicity with customers and continuing legal problems from the previous work stoppage will put pressure on the big grocery companies to settle quickly and peaceably, Posner said.
The three chains face an antitrust trial this year in U.S. District Court in Santa Ana over a mutual-aid pact they used to blunt losses from the labor dispute. Under the agreement, Ralphs, which was the target of picket lines for only a portion of the dispute, channeled money to Albertsons and Vons, grocers that suffered large drops in sales because of the job action.
Kroger, which also owns the Food 4 Less chain, paid a combined $146 million to Albertsons and Vons, according to the California attorney general’s office. The state has sued the chains, alleging that the agreement violated federal antitrust laws. The chains have said that the pact was legal.
Ralphs had additional legal problems resulting from the labor dispute. Last year, the company pleaded guilty to felony charges that some of its managers used fake names and Social Security numbers to illegally rehire about 1,000 workers during the work stoppage. Ralphs agreed to pay a $20-million fine to the federal government and create a $50-million restitution fund, most of which would go to the 19,000 employees who were locked out.
The U.S. attorney’s office said that its investigation was continuing and that the government had the option to charge specific individuals in the case.