Amazon-Focused AB 701 In California Gets Governor's Signature

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California Gov. Gavin Newsom has signed legislation known as AB 701 that targets quotas in the warehouse industry.

The legislation was introduced by Assemblywoman Lorena Gonzalez, who is also the author of AB 5, which targets independent contractors in the state. In the same way that Uber (NYSE: UBER), Lyft (NASDAQ: LYFT), and trucking were seen as the primary targets of AB 5, Amazon's (NASDAQ: AMZN) warehouses have always been seen as the primary target of AB 701.

In a prepared statement regarding his signing of the legislation on Wednesday, Newsom said the law "establishes new, nation-leading transparency measures for companies to disclose production quota descriptions to their workers." Newsom said the law will also prohibit the use of algorithms "that disrupt basic worker rights such as rest periods, bathroom breaks or compliance with health and safety laws."

Quotas are not banned under AB 701. But the law requires such things as open disclosure of any quotas that an employee is subject to and prohibits quotas from hindering an employee from being able to take legally mandated benefits such as rest breaks.

As FreightWaves reported earlier, the opponents of the legislation were most concerned about provisions in the bill that extend the California Private Attorneys General Act. Under PAGA, an employee can effectively take on the role of the state's labor commissioner and take action against an employer that the worker believes is violating state employment laws.

A Senate report on the legislation said the PAGA provision "acts as a force multiplier for the labor commissioner."

The California Retailers Association has been the lead organization in a coalition that fought AB 701. Rachel Michelin, president of the retailer group, said in a statement that the new law "will exacerbate our current supply chain issues, increase the cost of living for all Californians and eliminate good-paying jobs."

"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," she said in the statement.

In an earlier interview with FreightWaves, Michelin had called the PAGA provisions "the most troublesome" part of the law. However, it was not mentioned in the statement released after the Newsom signing.

The law goes into effect Jan. 1.

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