California has adopted a new law that proponents say will better protect workers in warehouses and distribution centers from exploitation, but that critics say could slow down productivity at a time when the supply chain is already embroiled in bottlenecks.

Signed into law by Gov. Gavin Newsom after being passed by state legislators, the new law requires companies to disclose any quotas or workplace productivity measures they put on workers within the Golden State. The disclosures must be made to employees and state agencies.

Furthermore, the legislation outlaws companies from implementing quotas and penalties that negatively impact workers’ health and safety. Some labor analysts believe the law could set a precedent, and that other states could seek to adopt similar measures.

The law prohibits employers from “taking adverse action against an employee for failure to meet a quota that has not been disclosed or for failure to meet a quota that does not allow a worker to comply with meal or rest periods or occupational health and safety laws.”

Relatedly, it requires that any action taken by an employee to comply with occupational health and safety laws be considered “time on task” and productive time for the purposes of any quotas.

It’s “time to put a stop to corporations putting profits over people,” said Newsom. “No one should lose their job because they took a bathroom break.”

California Assemblywoman Lorena Gonzalez proposed the legislation in direct reaction against e-commerce marketplace giant Amazon, which uses performance quotas to assess warehouse/distribution center worker productivity as it aims to continually quicken shipping and delivery times. Gonzalez said the law restores to workers “basic dignity” and “empowers them to keep themselves safe.”

“As we look at the future of work, we must fight for the future of workers,” Gonzalez said in a tweet. “This is groundbreaking legislation written with the direct input of warehouse workers to empower those same workers.”

#AB701 was signed into law! This creates the nation's first transparency requirements & worker protections against abusive warehouse quotas. This is just the beginning of our work to regulate @amazon & its algorithms that put profits over workers' safety. https://t.co/ZKOqYa8HEk pic.twitter.com/JOUC4tDqxh

— Lorena Gonzalez (@LorenaAD80) September 23, 2021

While crafted in response to Amazon’s practices, the law applies at warehouse and distribution centers run by any entity operating in California. That includes companies in the promotional products industry. There are, for instance, seven Top 40 promotional products suppliers headquartered in California and, overall, 606 ASI-listed suppliers in the state. Other promo companies may be headquartered elsewhere, but have distribution centers/warehouses in California. All will need to comply with the new law.

The California Retailers Association is among the law’s critics.

“We are disappointed Gov. Newsom signed AB 701, which will exacerbate our current supply chain issues, increase the cost of living for all Californians and eliminate good-paying jobs,” said association President Rachel Michelin. “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.”

Michelin added that the law will hamper efforts to get “COVID-19 tests from warehouses and distribution centers to hospitals, pharmacies and doctors’ offices. AB 701 is a recipe for disaster that will make our current problems even worse for everyone.”

.@RachelEMichelin: "We are disappointed @CAgovernor @GavinNewsom signed #AB701, which will exacerbate our current supply chain issues, ⬆️ the cost of living for all Californians & eliminate good-paying jobs...Read more https://t.co/F272oXc2An @NoonAB701

— CA Retailers Association (@CaRetailers) September 23, 2021

The law could also open the door to more court battles for employers. It authorizes a current or former employee to bring an action for injunctive relief to obtain compliance with the law’s requirements and to “reasonable attorney’s fees in that action.”  

Among other measures, the law requires California’s labor commissioner to report to the state 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.”