California Governor signs controversial warehousing bill into law

California Gov. Jerry Brown signed a bill into law yesterday aimed at curbing alleged abuses by staffing agencies against temporary labor in warehouse and distribution centers. Warehouse interests, however, fear the bill will end up re-regulating their industry in the nation's populous state.

The new law requires temporary agencies that staff warehouses and DCs in California to produce documentation—such as signed contracts—to prove they comply with state law and have sufficient funds to pay the temporary workers they provide to warehouse operators. The law is scheduled to take effect Jan. 1 unless legal action delays it.

Supporters of the bill say it protects laborers who are placed in warehouses and DCs but then don't get paid by the staffing agencies and are sometimes subjected to illegal and unsafe working conditions. Meanwhile, the staffing agencies themselves collect fees from warehouse operators for these services. Supporters of the bill say it extends basic protections common for workers in multiple industries to the warehousing and distribution segment.

But the International Warehouse Logistics Association (IWLA), a trade group representing third-party operators of warehouses and DCs, says "the law goes far beyond that" by requiring that all warehouse companies and their customers, upon request or complaint, file copies of their contracts with the state's Labor Commissioner.

By opening previously confidential contracts to public scrutiny and possible legislative or regulatory action, California would be the only state to have re-regulated warehouse operations, according to IWLA. Ironically, Gov. Brown deregulated the state's warehousing industry during his first go-round as governor in 1980.

IWLA also contends that warehouse contracts with customers are already governed by the Uniform Commercial Code, a rule adopted by every state that allows companies to follow harmonized terms of contract law so they are free to conduct business in states where they are not domiciled.

Joel D. Anderson, IWLA president and CEO, said today that the state has the option of opening a rulemaking proceeding. IWLA is planning a webinar to discuss the law and its ramifications, Anderson said.

The state legislature approved the bill, A.B. 1855, on Aug. 31, giving Gov. Brown 30 days to either sign it, veto it, or take no action. Only a veto would have killed the bill.

About 68,300 third-party warehouse and storage workers are employed statewide, according to IWLA. About one-fourth of those are employed in the fast-growing region east of Los Angeles known as the "Inland Empire." Most of the alleged abuses being targeted by the law have occurred in this region.

The overall worker total could be larger if DCs owned and operated by retailers are included, IWLA says.