How new CA law on warehouse productivity impacts Amazon

A new California law is curbing the use of warehouse productivity quotas. Yahoo Finance’s Max Zahn shares the details.

Video Transcript

AKIKO FUJITO: A new law in California is threatening to alter the way Amazon operates its warehouses in the state. Gavin Newsom signed a bill on Wednesday limiting the use of productivity quotas in warehouses. Let's bring in Yahoo Finance's Max Zahn, who's following this story for us today. And Max, we should point out the bill doesn't name Amazon anywhere. But it's pretty much implied that this is targeting right at-- this is targeted right at the biggest operator in terms of warehouses and fulfillment centers.

MAX ZAHN: Absolutely. Yes. And the law really is twofold. You know first off it prevents employers, warehouse employers, like Amazon from putting in place these quotas that could prohibit workers from taking advantage of things like breaks or work and safety standards that are afforded to them under California law. So if a worker feels the need to skip a break or to shortcut some of these health and safety standards, then that quota would need to be dialed back.

And the second part of it is transparency. Amazon will now have to disclose exactly what that quota is, both to employees and to regulators. And it gives employees the ability to sue Amazon if that quota is too demanding or deemed too demanding. Now, we reached out to Amazon. They didn't get back to us for comment.

But in the past, you know as early as this year in a shareholder letter from Jeff Bezos, they said, you know they give workers the opportunity to take breaks during a shift. And they make sure that workers can handle these quotas.

AKIKO FUJITO: I guess Max the question you know you just highlighted there is really, to what extent Amazon's already in compliance with these provisions that have been laid out in the law? I mean, how significantly do you think this is going to alter the way Amazon does business?

And I guess the second question here, often we see states passing a specific law and then the federal legislation following. What's the likelihood that other states outside of California and then lawmakers on the federal level are likely to introduce similar legislation?

MAX ZAHN: Yes, so to that first question, Akiko, we don't know for sure the extent to which Amazon is out of compliance with the law. But this is something that we've heard from labor advocates again and again, as we've seen the labor movement come to focus on Amazon earlier this year. Workers have focused on two issues.

The first really is the danger of the work. They say these grueling demands make the work more dangerous. And that's borne out in the stats. We saw studies last year that showed Amazon work has twice the injury rate of the average in the warehouse sector.

And then the second issue is turnover. You know, I've heard from workers in recent years about how the entry level wage at Amazon has gotten better and better. It's now an average of $18 an hour, well above the minimum wage. But that if they can't stay at the company because they're either being fired because they can't keep up or they need to quit because it's simply too exhausting, then it undermines the quality of the job. And just last year the New York Times reported a staggering 150% turnover rate among hourly employees at the company.

So we can infer from that that there is the chance that there really could be a significant change in how Amazon does business in the state of California in order to comply with this law. And the second question about whether this will come up again in other states and eventually be done nationally, I think the fight for 15 movement is a really good sort of model for looking at what could happen. We saw states like California and New York pass $15 minimum wages.

Just years after that got off the ground, that was backed by a huge union, the Service Employees International Union. And it really used McDonald's workers and workers at other prominent companies to change basic fundamental practices in that sector. And we could see that again here and start with other liberal states, potentially spread to others as minimum wage hikes have.

As we saw in Florida most recently last year, so we could see that. Whether it comes up at the federal level, I think that's a question. We still haven't seen this anti-big tech sort of sentiment really coming to fruition with laws. I think if it does, this could become a part of that push.

- Yeah, as we've seen other big tech giants too in California. Uber, Lyft, I'm thinking of their battle when it came to treating their workers as employees, and the threat of rising prices and things like that as well. But interesting to see this pushback on the other side. Max Zahn, bringing us the latest there. appreciate that.

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