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California Restricts Warehouse Work Quotas

Sept. 24, 2021
New law views employee quotas as exploitive and dangerous.

A new law in California aims at strictly regulating employer-imposed work quotas on warehouse and distribution center workers in that state. The new law, called AB 701, will go into effect on Jan. 1, 2022.

“We cannot allow corporations to put profit over people,” said Gov. Gavin Newsom (D), when he signed the bill on Sept. 22. “The hardworking warehouse employees who have helped sustain us during these unprecedented times should not have to risk injury or face punishment as a result of exploitative quotas that violate basic health and safety.”

Legislators and labor union advocates made it clear that a major reason for the new law is to take aim at retail giants Amazon and Walmart, who they accuse of exploiting their nonunion workforce. But the law’s impact will be felt far beyond those two companies.

Rachel Michelin, president of the California Retailers Association, one of the business groups that opposed the legislation, asserted that the new law “will exacerbate our current supply chain issues, increase the cost of living for all Californians and eliminate good-paying jobs.”

She added, “With California’s ports facing record backlogs of ships waiting off the coast and inflation spiking to the fastest pace in 13 years, AB 701 will make matters worse for everyone—creating more back-ordered goods and higher prices for everything from clothes, diapers and food to auto parts, toys and pet supplies.”

The new measure is the first in the United States to restrict work quotas in distribution, but it may not be the last. In fact there is a good chance you can bet on that happening; the only question is when.

“Much has been written about a possible ‘California contagion’—that new laws that originate in California may eventually spread across the country,” notes Bruce J. Sarchet, an attorney with the law firm of Littler Mendelson. “Other states and cities could also now look to further regulate the workplace by passing ‘quota’ laws of their own.”

The bill’s statement of purpose declares that quotas placed on warehouse and distribution center employees lead to “high rates of injury and illness.” The bill also claims that quotas suppress employees’ compensation by preventing them from receiving the full benefit of state and local minimum wages if a quota is increased to make up for the impact of a minimum wage increase, Sarchet points out.

Ominously, the law expressly states that local governments—cities and counties—may adopt ordinances that provide “equal or greater protection to employees.”

The new law will apply to warehouse distribution centers, as defined by North American Industry Classification System (NAICS) codes: 493110 for General Warehousing and Storage; 423 for Merchant Wholesalers, Durable Goods; 424 for Merchant Wholesalers, Nondurable Goods; and 454110 for Electronic Shopping and Mail-Order Houses. 

However, the new law’s definition of “warehouse distribution center” explicitly excludes NAICS Code 493130, Farm Product Warehousing and Storage.

Under AB 701, a quota is defined as “a work standard under which an employee is assigned or required to perform at a specified productivity speed, or perform a quantified number of tasks, or to handle or produce a quantified amount of material, within a defined time period and under which the employee may suffer an adverse employment action if they fail to complete the performance standard.”

The Devil in the Details

Within 30 days of hire, or within 30 days of the Jan. 1, 2022, effective date of the new law, the employer must present each worker with a written description of each quota to which the employee is subject.

This written description must include the quantified number of tasks to be performed or materials to be produced or handled, within the prescribed period. It also must detail whatever potential adverse employment action that the worker could face as a consequence of failing to meet the quota.

In fact, the law expressly forbids an employer from taking any adverse employment action against an employee for failure to meet any quota if it has not been disclosed in writing to the employee as required by the law.

In addition, the bill makes unlawful any quota that prevents an employee from taking a meal or rest period, prevents the use of bathroom facilities, including reasonable travel time to and from bathroom facilities, or infringes on any of California’s other occupational health and safety laws.

Any action an employee needs to take in order to comply with occupational health and safety laws must be considered “time on task” and “productive time” for purposes of any quota.

Employees also will have the right to request a copy of any quota, as well as the most recent 90 days of the employee’s own personal “work speed data.” The law describes work speed data as: “information an employer collects, stores, analyzes or interprets relating to an individual employee’s performance of a quota, including, but not limited to, quantities of tasks performed, quantities of items or materials handled or produced, rates or speeds of tasks performed, measurements or metrics of employee performance in relation to a quota, and time categorized as performing tasks or not performing tasks.”

Employers are required to comply with such requests as soon as practicable, but no later than 21 calendar days from the date of the request. Former employees also have a right to request this kind of information about quotas and their work speed data. However, a former employee is limited to only one such request.

A rebuttable presumption of unlawful retaliation will exist if an employer in any manner discriminates, retaliates or takes any adverse action against any employee within 90 days of either making a request for quota data or making a quota-related complaint to the employer or a government agency.

The California labor commissioner is charged with enforcing the new law, including being able to subpoena quota records and work speed data.

If a worksite or employer is found to have an annual employee injury rate of 1.5 times higher than the warehousing industry’s average annual injury rate, the Division of Occupational Safety and Health or the Division of Workers’ Compensation will notify the labor commissioner, who then will determine whether an investigation of violations is appropriate.

Individual employees will also be free to pursue a private lawsuit against an employer for alleged violations. When they are successful in court, they will be able to obtain in addition to injunctive relief, attorneys’ fees and costs. If that is not enough, the law also permits local district attorneys and city attorneys to enforce its provisions.

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