CA Aims at Amazon, Throws Wrench in Retail Supply Chain

Yesterday, California governor Gavin Newsom signed AB701, a law that unnecessarily attempts to micromanage and inhibit individual warehouse operations—the latest in a timeline of unwarranted over-regulation in the state. While the bill was ostensibly targeted at Amazon, the reality is that it will impact all retailers with distribution center operations in California. 

AB701 claims to address worker safety and well-being, but is primarily bureaucratic in effect.  The law will require further documentation of existing warehouse policies and will add more processes that are already sufficiently regulated by California’s existing occupational protections—some of the most comprehensive in the nation.  Furthermore, the included extension of the California Private Attorneys General Act (PAGA) represents a field day for lawyers and will mainly serve to add to the caseload of California’s overburdened court system.

America’s leading retailers operate hundreds of warehouses and distribution centers in California, and have depended on the frontline workforce of those facilities to keep goods moving to U.S. consumers—especially throughout the pandemic.  The safety and retention of frontline workers is an absolute top priority for RILA member retailers.  With a historically tight labor market, retailers continue to create more well-paying jobs and to foster a safe, inclusive, and empowered culture in warehouses and distribution centers.

The California Retail Association led a coalition urging Newsom to veto the bill, and made clear the bill was unnecessary. CRA CEO Rachel Michelin said “If there is a business that is not living up to the workplace standards, they should be held accountable — we don’t disagree with that, but do we need this broad, sweeping legislation … that impacts every aspect of the supply chain in California? I don’t think so.”

Rather than addressing one e-commerce giant’s actions head-on and enforcing existing occupational regulations, California has chosen instead to create duplicative and overbroad legislation for an entire industry—a law that will mainly serve to increase bureaucracy and litigation,drive up costs, eliminate jobs, and exacerbate the country’s current supply chain challenges.

As with the recently-enacted warehouse indirect source rule targeting truckers in southern California, this is just another example of good intentions leading to bad legislation.

For more information on how this legislation will impact retailers, please contact RILA Vice President of Supply Chain Jess Dankert.
  • Public Policy
  • State Affairs
  • Supply Chain

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