【2009 Archives】

To a company worth hundreds of billionsof dollars009 Archives does anything under six digits even rate as chump change?

On Monday, Washington State's department of labor and industries cited Amazonfor "unsafe labor practices" at one of its fulfillment centers related to the "pace" Amazon requires its workers to keep up. The department is calling it a "willful serious violation" because it has cited Amazon for similar violations at other plants three times before, so it says it's clear Amazon is aware of these issues.

The punishment? Amazon has to submit a "written abatement plan" within 60 days, which means it has to tell the department how it will make changes to prevent injuries. And it has received a fine. Of $60,000. Total.

What certainly seems like a laughable disparity between the size of the violator and the penalty amount highlights the lopsided power dynamic between Big Tech companies and the regulators of their industry, particularly when it comes to Amazon's treatment of its labor force.

"The levying and enforcement of significant penalties are an important part of safety enforcement," Kenneth Dau-Schmidt, an Indiana University professor of labor and employment law, said. "With a company as large and rich as Amazon it’s a legitimate worry whether the Department of Labor has the resources to successfully investigate and prosecute safety violations."

For some context, Amazon is currently worth $300 – $400 billion. That value fluctuates thanks to stock value — in 2018, its worth climbed to over $1 trillion. But it's safe to say Amazon is worth hundreds of billions. 

So what is $60,000 to, say, a $300 billion corporation? Is a fine likely to have any impact when it is 0.0002 percent of a company's value? That's a number that rounds to zero several times over.

"Sixty thousand dollars is not going to make any corporation, much less Amazon, change their practices," Louis Hyman, a labor relations, law, and history professor at Cornell University, said. "The real problem is that fines can just become costs."

However, that $60,000 is supposed to represent the enormous gravity of Amazon's repeated violations in the eyes of the state. Washington department of labor representative Dina Lorraine explained that a "number of factors" go into calculating fines, including "number of employees, safety history, how serious the violation is, etc." In fact, because the violation was a repeat offense, and because Amazon "has said publicly they weren’t willing to make changes to their pace and it was not the quick pace that was causing injuries to employees," Lorraine said, the department landed on the classification of "willful serious violation." That classification allowed the department to levy ten times the fine that would have applied to a lesser violation classified simply as "serious."

But the state seems to know the fight is far from over.  

"Whether that dollar amount is enough motivation to get them to make changes is something we can’t control," Lorraine said. "We are in negotiations with them and hope we can come to an agreement to make changes that will protect their workers."

Amazon is challenging the citation.

“We strongly disagree with L&I’s claims and don’t believe they are supported by the facts," Kelly Nantel, an Amazon spokesperson, said over email. "We intend to appeal the citation.”

Given Amazon's stance and the financial coffers at its disposal, experts think settling is a likely outcome of most citations. But that's partly because labor laws have not kept pace with the ballooning size and influence of corporations. The Occupational Safety and Health Act, broadly known as OSHA, passed in 1970. There has not been much change to the statute in the last half century, which puts the law out of step with the realities of the present.

"OSHA standards are largely based on 1970s technology and industrial safety practices developed well before the automated warehouses of Amazon," Dau-Schmidt said. "OSHA is definitely behind the times."

With corporations outpacing the regulatory power of bureaucratic government institutions, fines become just something corporations factor into running their businesses. According to a databasecompiled by national policy resource center Good Jobs First, Amazon has faced a total of 74 safety-related labor offenses, with fines of over $3.25 million. The individual fines were between $5,000 - $30,000 each — so in fact, the Washington fine of $60,000 is significantly higher than usual.

But you still don't see Amazon relaxing the productivity quotas(it says don't exist) driving its factory injury rate that is nearly doublethe industry average.

"The laws we have take too long to enforce, and even when they are enforced, they are just the cost of doing business," Hyman said. "Amazon could get a 60k fine every day and it would still be in their interest to overwork employees."