Sacramento, CAA California bill designed to protect temporary workers from California labor code violations took effect at the start of January. The law now makes companies responsible for the actions of temp agencies that they subcontract to. In other words, if a temp agency violates California labor law, the company that hired the temp agency could also be liable for those California employee violations.
In September 2014, California Governor Jerry Brown signed Assembly Bill 1897 into law. That bill became effective as of January 1, 2015. The bill is designed to address significant issues in warehousing and other industries that typically outsource their employment to temp agencies and staffing firms. Outsourcing their employment can save companies money on wages - because such arrangements usually result in lower-paying jobs - and the companies can also claim they are not responsible for low pay given to employees.
Employees who are hired by the temp agencies and outsourced then find themselves in a difficult position. Claims for failure to pay minimum wage filed against the staffing agencies often result in a battle between the company that hired the agency and the agency itself. The agency can argue that the larger company had firm control over the wages it offered, while the larger company argues it had no knowledge of the staffing firm’s labor code violations, including low pay. In the meantime, the employee is left without proper pay and terrible working conditions.
“This bill would require a client employer to share with a labor contractor all civil legal responsibility and civil liability for all workers supplied by that labor contractor for the payment of wages and the failure to obtain valid workers’ compensation coverage,” AB 1897 states. Prior to the bill, it was only illegal for a person or company to enter into a contract with a temp agency or staffing firm if the company or person knew that the contract would not provide sufficient funds to ensure employees were properly paid.
What this means for employees is that if they are hired by a staffing agency or temp firm and contracted to another company, and if they are not paid at least the legally mandated minimum wage, they may be able to file a lawsuit not only against the staffing agency that hired them but also against the company they were contracted to. It also means the state can go after larger companies when the staffing agencies they contract employment to violate the law.