ALERT: CA Lawmakers Take Aim at Distribution Center Jobs

By [ Patrick Brady ]
06/02/2021

Last week, the California State Assembly passed AB 701, creating vast new legal liability for distribution center (DC) employers and requiring regulators to review DC operations and consider regulatory limits on productivity quotas. The bill’s lead sponsor argues the legislation will protect warehouse workers from hazardous working conditions—and it’s a bill ostensibly aimed at Amazon. But the impact would be felt by all retailers with distribution centers in California.

Workplace safety is critically important to retailers, but this completely misses the mark when you consider its impact on employers. First, the legislation offers a false premise that workplace performance metrics promote hazardous workplace conditions that lead to workplace injuries. Second, it ignores the U.S. Department of Labor’s General Duty Clause, Section 5(a)(1), which generally requires employers to keep workplaces free from recognized serious hazards, including ergonomic hazards. And it disregards California’s existing regulations on repetitive motion injuries. Lastly, the Division of Occupational Safety and Health (Cal OSHA) also provides extensive guidance for manual material handling, best practices for the food-process industry, and easy ergonomics. Given all of the enforcement tools and guidance already available, you begin to wonder about the true intent of the legislation.

Tucked into AB 701 is a wish list of sorts that makes you wonder whether the labor union sponsors, or the trial bar will have any room left in their stocking. Outside of creating a duplicative regulation that could inhibit DC production, it provides the following:

Private right of action (PRA) for employees that perceive retaliation for their performance (more to come on that later) while requiring attorney fees to be covered by the retailer,
Establishes an employee’s rights to access their most recent three months of the employee’s “work speed data,”
Prohibits employers from taking adverse employment action against employees based upon performance quotas that do not account for undefined “health and safety laws,” and
Requires all employees to be given written notice of any performance “quotas” to which the employee may be subject.

Combining the PRA with the ability of employees to gain access to their “work speed data” quarterly while denying an employer the ability to take any adverse actions against underperforming employees within 90 days of said report being requested, you quickly begin to realize this is not about workplace safety but more to do with workplace job security and lawsuits. This proposal would make it virtually impossible to terminate employees with any kind of awareness of these rules for poor performance.

As supply chains start to recover from the pandemic, retailers are deeply concerned that this measure creates substantial new uncertainty in an already uncertain business environment in California. Inviting regulators to dabble in DC operations is a recipe for disaster, and combined with the new liability and labor restrictions this measure could have impacts on the ability to get items to store shelves and consumers, as well as ripple effects throughout the supply chain.

Fortunately, there is still time to stop this bill from reaching the governor’s desk. I encourage you to reach out to Rachel Michelin, President and CEO of the California Retail Association, whose team is spearheading the industry’s opposition to the legislation. If you are not a member of CRA, please feel free to reach out to Patrick.brady@rila.org to make any introductions.