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The Five Components of Best Practice Labor Management 

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With the rise of Amazon and just in time fulfillment and the consequent growth of distribution as an industry within the United States, many companies are looking for ways to improve the productivity of their workforces and reduce their labor costs. One of the most common methods of doing this is having a labor management (LM) program based on quotas or standards for how much work an employee should be completing in a specific amount of time.  

Several states have passed recent laws impacting the use of quotas within the warehouse. We’ve previously discussed California’s AB701 law, which passed last year and required more visibility and restrictions around warehouse quotas. Now, New York and Minnesota have followed suit with very similar laws affecting quotas and employee data. These are the first of likely many laws that will be passed regulating labor management in the warehouse. As more states join in on creating stricter standards in the warehouse, it is becoming even more important for distribution leaders to tighten up their labor management practices. Everyone working in distribution, even those without currently enacted laws, needs to be aware of the changes happening across the nation and be prepared for their own states to follow suit. 

Five Components For Your LM Program 

All three of these laws have five main components. These components should be considered best practice for a fair and successful labor management program and should be adhered to whether these laws currently apply to your facilities or not. Adhering to these best practices will not only drastically enhance your labor management program, thus increasing associate satisfaction, retention and productivity, but it will also make your operations much more prepared to comply with any laws that may be passed in your state.  

Component One: Quota Communication and Visibility 

Each of these new laws requires employers to inform employees of the details of any quota they are subject to and how the quota is calculated. Because of this, the first component of a best practice labor management program is to proactively communicate quota requirements with employees. For employees to believe in your LM program, they need to know how they are being measured and what is expected of them. This is even more essential if you have an incentive program or discipline based upon their performance against a quota. To maintain this component, it is essential to have documentation on all standards in the warehouse and keep that documentation up to date and accessible by employees. 

Component Two: Performance Data Visibility 

The new state legislation also requires employers to provide employees with data on how they are performing against their quotas upon request. A best practice component here would be to have consistent feedback sessions with your employees on how they are performing and how they can improve. Providing employees with visibility into their labor management system (LMS) performance data is a necessary part of this. In fact, we believe that the first use of an LMS should be to identify employees that need coaching and help them improve their performance through observation and training. This helps bring a positive approach to quotas as opposed to using them in a negative, disciplinary fashion. 

Component Three: Rest Breaks and Travel Requirements 

With each of the new laws, quota requirements cannot interfere with taking rest breaks or going to the restroom, and they must account for travel time to and from the work and rest areas. For a standard to be obtainable, it cannot be measured while an employee should be on break. This is an important component of any labor management program, regardless of state legislation. Distribution leaders can easily implement the use of Indirect, Unmeasured or Nonstandard Job codes to maintain fair warehouse standards. The time spent traveling to and from the break room should be part of the use of this job code, meaning if your rest break is 10 minutes with a two-minute walk to the break room, employees should be given 14 minutes of break time. In the case of restroom breaks outside of your normal rest breaks, make sure that your Personal, Fatigue and Delay allowance is sufficient to cover this time.   

Component Four: Employee Safety 

The new legislation also states that meeting quotas cannot interfere with worker safety. Regardless of state-sanctioned requirements, safety should always come first in the workplace. Quotas and standards should be based on safe methods and include time for any required safety precautions. Remember that an injury will always cost you more than you would save by using unsafe practices. 

Component Five: Data Retention 

The fifth component of these laws is a data retention requirement on worker data. It is always important to have a data retention plan in place. The data retention requirements vary from between states, with a one year requirement in California and a three year requirement in New York, but we would recommend everyone to store at least 12 months of summary worker performance data, unless more is required by your state’s laws.  

Ultimately, compliance with these requirements in almost all cases should be viewed as simply following best practices for a robust labor management program. Keep in mind that none of these laws affect employee accountability for attendance, following required procedures or violating safety policies. All distribution leaders should take time to review their existing policies and even go beyond their policies by implementing these five best practices around warehouse quotas and data retention. 

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