1. Labor Commissioner's Office

Frequently Asked questions on Warehouse Quotas (Assembly Bill 701)

On January 1, 2022, Assembly Bill 701, also known as the Warehouse Quotas law, goes into effect.

1. What is the Warehouse Quotas law?

AB 701 creates 13 new sections of the Labor Code regulating the use of quotas by “Warehouse Distributions Centers,” which 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.

2.  Which warehouses are covered?

The law covers employers who directly or indirectly control 100 or more employees at a single warehouse distribution center or 1,000 or more employees at one or more warehouse distribution centers in California. Employees provided by outside staffing agencies may also be included where the employer controls the terms and conditions of employment for those employees. (Lab. Code § 2100, subd. (f).)

3.  When does the new law go into effect?

AB 701 goes into effect on January 1, 2022.

4.  What is a quota?

A “quota” is defined as “a work standard under which an employee is assigned or required to perform at a specified productivity speed, or perform a quantified number of tasks, or to handle or produce a quantified amount of material, within a defined time period and under which the employee may suffer an adverse employment action if they fail to complete the performance standard.”

This would include processing a required number of packages in a specific amount of time, such as 200 packages per hour. It would also include having to clear all packages from a conveyor belt based on belt speed, clearing all incoming or outgoing inventory within a single shift, or filling a certain number of containers in a specific time or in one work shift. (Lab. Code § 2100, subd. (h).)

5. When do employers have to provide information about quotas?

By January 31, 2022, employers must provide to each employee a written description of each quota the employee works under. This includes the number of tasks to be performed or materials that must be produced or handled within a time period, and any potential adverse employment action that could result  from failing to meet the quota. This information must be given to all new employees when hired. (Lab. Code § 2101.)

6.  What is an “Adverse Employment Action?”

An “adverse employment action” is any action taken by an employer that materially and negatively affects employment. Some examples of adverse employment actions include a negative performance review, a reduction in pay or hours, or termination.

7.  Can employers use quotas?

Employers can use quotas, but AB 701 places limits on quotas.

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.

A quota that prevents compliance with meal or rest periods, use of bathroom facilities, including reasonable travel time to and from bathroom facilities, or occupational health and safety laws in the Labor Code or division standards is unlawful and may not be the basis for an adverse employment action. A quota may be illegal if it directly or indirectly precludes employees from exercising these statutory rights. For example, a quota that requires that employees always be engaged in productive activity during work hours would be unlawful as it would directly prevent employees from taking meal and rest periods, and prevent them from using bathroom facilities during work hours or exercising their rights regarding health and safety standards.

Similarly, a quota may not be so high that if an employee takes meal and rest breaks, goes to the bathroom, or attempts to exercise their rights under occupational health and safety standards, they will fail to meet the quota. Such a quota indirectly precludes an employee from exercising these statutory rights and is also 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. (Lab. Code § 2102; see Lab. Code § 2103.)

8. What information can an employee request when a quota prevents meal or rest breaks, or prevents compliance with occupational health and safety standards?

     For current employees:

If a current employee believes that meeting a quota prevented them from exercising their rights to a meal period or rest period, or from exercising their rights regarding occupational health and safety standards, they may request a written description of the quotas they are subject to and a copy of their most recent 90 days of their personal-work-speed data. The employer must provide the information within 21 days. An employer that does not monitor work-speed data need not provide it. (Lab. Code § 2104.)

     For former employees:

If a former employee believes that meeting a quota prevented them from exercising their rights to a meal period or rest period, or from complying with occupational health and safety standards, they may request a written description of the quotas they were subject to and a copy of the most recent 90 days of their personal-work-speed data before separation. The employer must provide the information within 21 days. An employer that does not monitor work-speed data need not provide it. A former employee is limited to one request. (Lab. Code § 2104.)

9.  Does the new law protect employees from retaliation for requesting information, complaining about quotas, or failing to meet undisclosed quotas?

Yes. The new law prohibits employers from retaliating against employees for requesting information about quotas, complaining about the impact of a quota on their ability to take meal or rest breaks or bathroom breaks, or from exercising their rights regarding health and safety standards. Employers cannot retaliate against employees for failing to meet an undisclosed quota. (Lab. Code § 2102.)

If an employer takes any adverse employment action against an employee within 90 days of the employee making their first request of the year for information about a quota or personal-work-speed data or making a complaint related to a quota to the Labor Commissioner, other agency, or the employer, there is a rebuttable presumption of unlawful retaliation. (Lab. Code § 2105.)

10.  What can an employee do if they think they are subject to an unlawful quota?

If an employee believes they are subject to an unlawful quota they can file a Report of a Labor Law Violation with the Labor Commissioner’s Bureau of Field Enforcement, a program within the Labor Commissioner’s Office that conducts field investigations based on worker complaints.

Employees who have suffered an adverse employment action related to quotas can file a Retaliation Complaint with the Labor Commissioner’s Office.

If an employer does not comply with an employee’s written request for written descriptions of quotas and their personal-work-speed record, an employee can file an individual wage claim for penalties under Labor Code section 1198.5. The employee’s request must be in writing and the employer must provide the records within 30 days per Labor Code section 1198.5. A violation will subject the employer to a $750 penalty.

If an employee cannot take a meal period or rest period because they must comply with a quota or for other reasons, the employee may seek premium wages. The employee can file an individual wage claim for premium wages.

For more information or if you have questions about your rights or obligations under the law, call 1-833-LCO-INFO (1-833-526-4636).

January 2022