CA Bill Changes Self-Checkout Grocery Kiosks

Senate Bill 442, introduced by Senator Lola Smallwood-Cuevas, seeks to mandate permanent dedicated staffing for self-checkout kiosks at retail stores and prohibit the purchase of regulated items at the kiosks. The bill addresses concerns of worker safety stemming from a decline in customer service and increased retail theft related to kiosk self-service.

SB 442 aims to regulate self-checkout machines in grocery stores and retail drug establishments over 15,000 square feet, or superstores larger than 75,000 square feet, including retail drug establishments with 75 or more locations in the state.

Senator Lola Smallwood-Cuevas emphasizes that the bill’s primary intent is to address a “missing piece to the puzzle” in California’s efforts to combat retail theft while protecting workers.

The bill requires at least one employee to monitor self-checkout stations exclusively, prohibiting them from performing other duties at the store. Proponents argue this is essential, as employees often juggle multiple kiosks to address customer issues and prevent theft.

Nancy Mendoza, a Safeway worker in Redwood City, shared her experience at an Assembly hearing, noting that sometimes only two people are available to work in departments and run back and forth to help customers or force them onto self-checkout.

She also shared how self-checkout led her to take multiple jobs to make ends meet. “Less hours means less pay ... many of us have to work two or three jobs to pay our bills.” This reflects concerns that automation often reduces staffing and increases unemployment for frontline workers.

A primary concern is improving worker safety and conditions in stores with self-checkout kiosks. Self-checkout kiosks have become commonplace, but often “these kiosks are used to replace customer-facing staff, leaving one employee to manage customers, manage and monitor theft, and respond to disruptions, all at the same time,” said Senator Smallwood-Cuevas.

This understaffing leads to a “crisis with chronic understaffing and an overworked workforce.” A Harvard Kennedy School study cited by Senator Smallwood-Cuevas found that 61% of workers with self-checkouts felt insufficiently staffed, putting them at risk from angry customers and theft attempts.

The motivation behind SB 442 is to reduce retail theft, especially at self-checkout stations, which are significant hotspots for such crime. Companies report that many of their losses stem from self-checkout and workforce reduction.

The bill’s text states that self-checkout machines lead to 16 times more shrinkage than traditional cashier transactions. In 2022, self-checkout represented under 30% of transactions but caused over $10 billion in lost profits for food retailers. The shrink rate for self-checkout is 3.5% compared to 0.21% for cashier stations.

SB 442 limits purchases at self-checkout stations by prohibiting items that require age verification, such as alcohol and tobacco and items with security-theft devices that need employee assistance to remove.

The bill sets a 15-item limit for self-checkout transactions. While employers aren’t penalized for customers bringing more than this limit, businesses must have a policy and clear signage to indicate it. This aims to streamline self-checkout processes, similar to existing express lanes.

The bill proposes a $1,000 daily civil penalty for violations, capped at $200,000, with enforcement by the Labor Commissioner. It does not preempt local ordinances that provide equal or greater worker protections.

2011 Ban on Alcohol Sales

California’s ban on alcohol sales at self-checkout kiosks originates from a 2011 law, Assembly Bill 183. The law aimed to address the increased risk of illegal alcohol purchases by minors resulting from inadequate staffing and technological failures. As a result, California is the only state that completely prohibits the sale of alcoholic beverages at self-service checkouts.

Following the passage of AB 183, the retail industry argued for a less restrictive interpretation of the law. This issue was addressed in the 2013 case, California Grocers Association v. Department of Alcoholic Beverage Control.

The California Grocers Association contended that if a self-checkout kiosk required employee intervention to process an alcoholic beverage sale, it still complied with the law’s requirements.

However, the California District Court of Appeal disagreed, stating that a “customer-operated checkout stand” refers to the equipment itself, prohibiting any customer-initiated alcohol transactions, regardless of employee involvement.

The court’s ruling made it clear that the law demands that all alcohol sales be conducted by store employees at traditional registers, thus eliminating legal ambiguity. A store employee in California cannot lawfully override the system to permit alcohol purchases at self-checkout kiosks.

In California, retail stores have adjusted their point-of-sale systems to comply with strict laws regarding alcohol sales at self-checkout kiosks. When an alcoholic beverage is scanned, the POS system freezes the transaction and often pauses the entire terminal.

A flashing light or notification sends an alert to the self-checkout attendant.

An employee approaches the customer to inform them that, under California law, alcohol cannot be purchased at self-checkout. The customer is directed to a staffed checkout lane to complete their purchase. The employee may void the alcohol from the transaction or suspend it at a traditional register for later resumption.

This process ensures alcohol sales are not conducted at self-checkout, adhering to legal requirements.

In states that permit alcohol sales at self-checkout, the procedure ensures a human checkpoint. When a customer scans an alcoholic item, the kiosk’s software instantly freezes the transaction and sends an alert to a nearby employee, typically with a flashing light.

That employee must then physically approach the customer to verify their age by checking a valid ID and visually assessing them for signs of intoxication. If the customer is of legal age and appears sober, the employee uses a special code or badge to override the freeze, allowing the transaction to continue; otherwise, the sale is refused.

The Opposition

Opponents of SB 442, primarily represented by the California Chamber of Commerce and the California Grocers Association, express “strong opposition” due to several “outstanding concerns.”

Ashley Hoffman from the California Chamber of Commerce voiced concern about the requirement for a dedicated self-checkout monitor, which opponents view as inefficient.

“And so granularly regulating exactly what a worker can and cannot do without consideration of potential needs in the store,” said Hoffman at a Senate hearing.

Daniel Conway from the California Grocers Association expressed concern that the legislation contains arbitrary provisions that won’t enhance the shopping experience and will increase in-store costs by raising labor expenses.

He stated that self-checkout was designed to reduce labor costs, but the bill will reintroduce costs from the dedicated kiosk attendant. He questioned whether the bill is about customer service or profitability.

Senator Tony Strickland noted that rising minimum wage has driven retailers to automation, and the new legislation will “drive more retailers out of the State.” Senator Shannon Grove highlighted California’s higher grocery prices than Texas, suggesting that such legislation hinders cost-saving automation efforts.

Senator Kelly Seyarto called the bill “unnecessary,” claiming stores already have sufficient supervision for automated lanes and that the Legislature is trying to restore labor in a counterproductive way artificially.

While there is a 15-item limit sign that won’t incur penalties for customers exceeding it, there are worries about the lack of enforcement and potential citations of up to $200,000 for not having signs.

Restrictions on items locked behind cabinets could lead to inconsistencies across stores, causing employees to explain differing policies. They advocate for a single statewide standard to avoid “patchwork local ordinances,” as illustrated by Long Beach’s initiative for its two-to-one ratio self-checkout regulations.

In response to potential operational cost increases from SB 442, the California Grocers Association suggested allowing alcohol sales at self-checkout kiosks to help offset these new expenses.

Alcohol consumption in the U.S. has reached a record 90-year low, with only 54% of adults reporting use, according to Gallup. This decline aligns with 53% of Americans now believing moderate alcohol consumption is harmful.

Meanwhile, cigarette smoking rates in the U.S. have reached an 80-year low, with only 11% of adults smoking as of August 2024, down from 41% in 1944, according to Gallup.

For any inquiries or further information, please contact Jose Cervantes at JoseC.Press@pm.me