On September 22, 2021, Governor Newsom signed Assembly Bill 701, restrictive new legislation regulating certain employers’ use of employee quotas and work speed data in warehouse distribution centers.

The new law governs employers with 100 or more employees at a single warehouse distribution center, or 1,000 or more employees at one or more warehouse distribution centers across the state.  “Warehouse distribution centers” are defined to include those with NAICS Codes for General Warehousing and Storage, Merchant Wholesalers – Durable Goods, Merchant Wholesalers – Nondurable Goods, and Electronic Shopping and Mail-Order Houses.

Covered employers must provide each employee, upon hire or within 30 days of the January 1, 2022, effective date of the legislation, a written description of each quota to which the employee is subject, including the quantified number of tasks to be performed or materials to be produced or handled within a defined time period.  Employers must also inform employees of any potential adverse employment action that could result from a failure to meet this quota.

Employees may not be subject to any quotas that prevent compliance with meal or rest periods, use of bathroom facilities (including travel time to and from bathroom facilities), or occupational health and safety laws.  Specifically, actions taken by employees to comply with health and safety laws must be considered productive time for purposes of any applicable quotas.  Employees may not be subject to adverse employment actions for failure to meet quotas that violate these requirements or for quotas that were not properly disclosed to them as required by the new law.

The law allows employees to request information on their own applicable quotas and personal work speed data.  The law additionally creates a rebuttable presumption of unlawful retaliation anytime an employee suffers an adverse employment action within 90 days of the employee requesting information about his or her quotas or personal work speed data, or complaining about the quota, either internally or externally.

Employers operating warehouse distribution centers should carefully analyze any quotas or production standards that apply to their workforce to ensure they do not impede employees’ ability to take compliant meal and rest periods, use bathroom facilities, or comply with health and safety requirements.  Employers should also begin to prepare the necessary disclosures in advance of the January 31, 2022, disclosure deadline.  The new law will have a major impact on warehousing operations, many of which rely on production quotas based on complex industrial/organizational data.  Employers should review their processes and procedures now to allow sufficient time to make any changes necessary to ensure compliance with this new legislation.