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California Warehouse Quota Bill Explained in 2024

The California Warehouse Quota Bill, officially known as Assembly Bill 701 (AB 701), is aimed at regulating productivity quotas in the warehousing industry to protect workers from unsafe working conditions and unfair labor practices. AB 701 was signed into law by Governor Gavin Newsom in September 2021 and took effect on January 1, 2022.
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What Does the California Warehouse Quota Bill Say?

According to SWCK, key provisions of AB 701 include [1]:

  • Covered Locations: The law applies to warehouse distribution centers classified under specific North American Industry Classification System (NAICS) codes, such as General Warehousing and Storage, Durable Goods Merchant Wholesalers, Nondurable Goods Merchant Wholesalers, and Electronic Shopping and Mail-Order Houses. However, it excludes Farm Product Warehousing and Storage.
  • Covered Employers: AB 701 applies to employers with 100 or more employees in a single warehouse or 1,000 warehouse employees in California. This count includes employees hired through staffing agencies if they are under the control of the warehouse operator.
  • Disclosure Requirements: Effective January 1, 2022, employers must provide written descriptions of all quota systems to employees. These descriptions should outline the task and timeframe of quotas, as well as potential repercussions for not meeting them. All new hires must receive these disclosures at the time of employment.
  • Adverse Employment Actions: Any employer action that negatively impacts employment, including negative reviews, is considered an adverse employment action. This includes reductions in pay, hours, termination, or negative reviews.
  • Quota Limitations: Quotas cannot impede employees' ability to take meal breaks, rest breaks, use the bathroom, or comply with health and safety regulations or standards. Quotas that hinder these rights are considered illegal.
  • Employee Rights: Employees have the right to request copies of their data for the last 90 days, including the quotas they are subject to and records of their performance. Employers must comply with these requests within 21 days.
  • Protection Against Retaliation: Employers are prohibited from retaliating against employees who request data or fail to meet undisclosed quotas. Employers who fail to comply with data disclosure requests in a timely manner may be subject to a penalty of $750.

What is the Purpose of a Quota?

According to Investopedia 2021 research, a quota is a restriction imposed by a government that limits the quantity or value of goods that a country can import or export within a specified period [2]. Quotas are used in international trade to manage the volume of trade between countries. They are often imposed on specific products to reduce imports and promote domestic production. Theoretically, quotas encourage domestic production by limiting foreign competition.

Government programs that enforce quotas are often considered protectionist policies. Governments may also implement quotas out of concern for the quality or safety of imported products.

Quotas are different from tariffs or customs, which place taxes on imports or exports. Governments impose both quotas and tariffs as protective measures to try to control trade between countries, but there are distinct differences between them - Agency Stated.

Tariffs are designed to generate revenue for the government and protect domestic producers by raising the cost of imported goods. Quotas, on the other hand, are more effective at restricting trade, especially when domestic demand is not sensitive to price changes. However, quotas can also be more disruptive to international trade compared to tariffs. When applied selectively to different countries, quotas can be used as a tool of economic coercion.

Are Work Quotas Illegal?

According to a 2021 notice from the Department of Industrial Relations (DIR), employers are allowed to implement quotas, but AB 701 imposes restrictions on their use [3].

An employee cannot be required to meet a quota that prevents compliance with meal or rest periods, use of bathroom facilities (including reasonable travel time to and from bathrooms), or compliance with occupational health and safety standards - Agency Stated.

A quota that obstructs compliance with meal or rest periods, access to bathroom facilities, including reasonable travel time to and from such facilities, or occupational health and safety laws outlined in the Labor Code or division standards is deemed unlawful and cannot serve as the basis for an adverse employment action.

A quota might be unlawful if it directly or indirectly prevents employees from exercising these statutory rights. For instance, a quota mandating continuous productive activity during work hours would be unlawful as it would directly hinder employees from taking meal and rest periods, using bathroom facilities during work hours, or exercising their rights concerning health and safety standards.

Likewise, a quota cannot be set so high that employees who take meal and rest breaks, use the bathroom, or attempt to uphold their rights under occupational health and safety standards will fail to meet the quota. Such a quota indirectly prevents an employee from exercising these statutory rights and is also considered unlawful. An employer cannot take adverse employment action against an employee for failing to meet an unlawful quota or a quota that has not been disclosed to the employee.

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References:

1. https://www.schneiderwallace.com/media/california-new-york-and-washington-warehouse-quota-laws-explained/
2.https://www.dir.ca.gov/dlse/FAQ_warehousequotas.htm
3.https://www.investopedia.com/terms/q/quota.asp