California Restricts Use of Quotas in Warehouses
California Restricts Use of Quotas in Warehouses

On January 1, 2022, Assembly Bill 701, which aims to regulate and curb the use of quotas in warehouses, will go into effect. While the bill was specifically intended to target Amazon, all California warehouse employers must pay close attention to its provisions and to accompanying regulations that will likely be issued in 2022.

The bill requires employers of 100 or more nonexempt employees at a single warehouse distribution center, or 1000 or more non-exempt employees at one or more warehouse distribution centers in the state, to provide each employee with a written description of each quota they are subject to upon hire or within 30 days of the effective date of the statute. The disclosure of the quota must include the quantified number of tasks to be performed or materials to be produced or handled within the defined time period. The employer must also disclose any potential adverse action that could result from a failure to meet the quota.

AB 701 prohibits employers from requiring quotas that prevent compliance with meal or rest periods, use of bathroom facilities, or occupational health and safety laws. Any actions that employees take to comply with occupational health and safety laws must be considered time on task and productive time for the purposes of any quotas or monitoring systems. Employers are prohibited from taking adverse action against employees for failure to meet an undisclosed quota or an unlawful quota.

Under the bill, current or former employees who believe that meeting a quota caused a violation of their right to a meal or rest period or required them to violate any occupational health and safety law or standard, have the right to request a written description of each quota to which the employee is subject and a copy of the most recent 90 days of the employee’s own personal work speed data. Most concerningly for employers, the bill creates a private right of action for current or former employees to bring an action for injunctive relief to obtain compliance with specified requirements. If an employee prevails in such a suit, he or she may recover costs and reasonable attorney’s fees in that action. A former employee is limited to one request for work speed data. 

This bill requires that the Labor Commissioner to engage in coordinated and strategic enforcement efforts with the Department of Industrial Relations, including the Division of Occupational Safety and Health and the Division of Workers’ Compensation, in order to enforce the bill. AB 701 requires the commissioner to report to the Legislature by January 1, 2023, the number of claims filed with the commissioner, data on warehouse production quotas in warehouses in which annual employee injury rates are above the industry average, and the number of investigations undertaken and enforcement actions initiated, per employer, as specified. Additionally, the Division of Occupational Safety and Health or the Division of Workers’ Compensation must notify the commissioner if a particular worksite or employer is found to have an annual employee injury rate of at least 1.5 times higher than the warehousing industry’s average annual injury rate.

Written by Assembly member Lorena Gonzalez, a former union official, AB 701 is based on the assumption that quotas generally do not allow time for workers to comply with safety guidelines or to recover from strenuous activity during productive work time, leaving them vulnerable to injury and illness. The California Chamber of Commerce deemed AB 701 a “job-killer” bill, noting that it sets the stage for frivolous litigation and overlapping and confusing regulations. Governor Newsom’s office praised  the law for establishing “new, nation-leading transparency measures for companies to disclose production quota descriptions to their workers and prohibits the use of algorithms that disrupt basic worker rights such as rest periods, bathroom breaks or compliance with health and safety laws.”

  • Pooja S. Nair
    Partner

    Pooja S. Nair is a business litigator and problem solver with a focus on the food and beverage sector. She advises food and beverage clients, startups and other businesses on a comprehensive range of issues, including employment ...

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