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Amazon has reached a legal settlement in California over claims it failed to adequately inform its warehouse workers about Covid-19 cases in the workplace.

California's attorney general said workers had been left "terrified and powerless".

The delivery giant will pay $500,000 (£370,000), but did not admit wrongdoing in agreeing the settlement.

It is the first test of the state's "right to know" rules that require employers to keep staff informed.

The legislation requires firms to notify workers promptly of potential Covid exposures at their work sites, to tell them about pandemic-related protections, benefits, disinfection and safety plans, and to report cases to local health agencies.

It comes as Amazon is gearing up for the holiday season. US retail spending, including online, is already running higher than this time last year, despite supply chain problems and rising inflation.

However, rates of the virus are also expected to rise, as socialising moves indoors in the colder weather, and as families gather indoors for Thanksgiving.

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Amazon has faced criticism through the course of the pandemic for its approach to protecting its workers.

"As the company enjoyed booming and historic sales with its stock price doubling, Amazon failed to adequately notify warehouse workers and local health agencies of Covid case numbers, often leaving them unable to effectively track the spread of the virus," California's attorney general Rob Bonta said.

"This left many workers understandably terrified and powerless to make informed decisions to protect themselves and to protect their loved ones."

The ruling applies only to California, where Amazon employs around 150,000 workers, and must still be approved by a judge.

However, the firm has been criticised over its policies elsewhere and is also facing legal action in New York over safety at two of its fulfilment centres there.

Amazon said there was no change required to the way it notified its workers if they had been in close contact with a Covid case. The firm said the issue was around the structure of bulk employee Covid-related notifications.

"We're glad to have this resolved and to see that the AG [Attorney General] found no substantive issues with the safety measures in our building," said Amazon spokeswoman, Barbara Agrait.

"We've worked hard from the beginning of the pandemic to keep our employees safe and deliver for our customers – incurring more than $15bn in costs to date – and we'll keep doing that in months and years ahead."