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The Labor Commissioner’s Office cited Services, LLC $5,901,700 for violations of the Warehouse Quotas law in two of their distribution warehouses in Moreno Valley and Redlands.

This law requires warehouse employers to provide employees written notice of any quotas they must follow, including the number of tasks they need to perform per hour and any discipline that could come from not meeting the quota.

Amazon failed to provide written notice of quotas. The employer argued they did not need a quota system because they use a peer-to-peer evaluation system.

However, this law defines a quota as work that must be performed at a specified speed or the worker suffers discipline. It also places limits on quotas that prevent compliance with meal or rest periods, use of bathroom facilities, or compliance with occupational health and safety laws. A quota may be illegal if it is not disclosed to workers or precludes employees from exercising these statutory rights.

The Labor Commissioner’s Office began its initial inspection on September 22, 2022. The investigation found there were 59,017 violations for the Moreno Valley and Redlands warehouses from October 20, 2023 to March 9, 2024. Penalties were issued under Labor Code 2699(f), which provides penalties of $100 for each violation.

The Warehouse Worker Resource Center (WWRC) assisted the Labor Commissioner’s investigation. WWRC is a nonprofit organization dedicated to improving working conditions in the warehouse industry in Southern California.

The Warehouse Quota law went into effect on January 1, 2022 pursuant to the provisions of AB 701, which created 13 new sections of the Labor Code (2100 – 2112) regulating the use of quotas by “Warehouse Distributions Centers.The key provisions of this law include:

– – Locations: Facilities covered by the law are defined in Labor Code section 2100 by referring to North American Industry Classification System (NAICS) codes. These include General Warehousing and Storage, Durable Goods Merchant Wholesalers, Nondurable Goods Merchant Wholesalers, and Electronic Shopping and Mail-Order Houses. Section 2100 specifically exempts Farm Product Warehousing and Storage from the warehouses covered by the new law.
– – Employers: The law covers employers with 100 or more employees in a single warehouse or 1,000 warehouse employees in California. Included in staff totals are staffing agency hires if they are under control of the warehouse operator.
– – Disclosure: As of January 1st 2022, employers must provide written descriptions of all quota systems to employees. The details should describe the task and timeframe of quotas and potential repercussions of not meeting a quota. All new hires must receive disclosures at time of employment.
– – Repercussions or Adverse Employment Action: Any employer action that negatively impacts employment, including negative reviews, are considered repercussions. Reduction in pay, reduction in hours, termination, and negative reviews are all adverse employment actions.
– – Quota Limitations: Quotas cannot make it harder for employees to take meal breaks, rest breaks, use the bathroom, or comply with health and safety regulations or standards. Quotas that impact these are illegal.
– – Employee Rights: Employees can request copies of their data for the last 90 days, the quotas they are subject to and records on their performance. Employers have 21 days to comply.
– – No Retaliation: Employers are not to retaliate against request for data, and employers are not to retaliate against employees who fail to meet an undisclosed quota. A penalty of $750 will be applied to employers who do not meet the required data disclosure requests in a timely fashion.

Similar protective laws were adopted by New York and Washington, triggered by the rapid growth of e-commerce during the pandemic. Amazon was a specific example of abuse noted by the Legislative Analysis prepared when AB 701 was introduced.

The Analyst noted ” the National Employment Law Project (NELP) reported that Amazon, Inc., “relies on an extreme high-churn model, continually replacing workers in order to sustain dangerous and grueling work pace demands.” This report further found that workers who can’t keep up with extreme productivity goals are fired or encouraged to quit and many workers leave their jobs due to injuries. Additionally, NELP analyzed publicly available Census Bureau data for five California counties where Amazon fulfillment centers have had a significant presence in the warehouse sector between 2011 and 2017 and concluded that “turnover for all California warehouse workers (including Amazon) grew from 42.1% in 2011 to 83% in 2017.”