California Passes New Labor Law

Sacramento, CA With Governor Jerry Brown signing a new California labor law, the state has now addressed issues about California labor issues in the temp industry. Although temps were already covered by some California labor codes, it was not always clear whether the temp agencies or the companies hiring the agencies were responsible for California labor violations.

As of September 28, Assembly Bill 1897 makes client employers responsible when subcontracted agencies violate California labor laws by underpaying their workers, according to The Huffington Post (9/29/14). In other words, if a large company uses a temp agency for staff and the temp agency underpays the workers, the company that hired the temp agency can also be held responsible, and may face fines.

Although temp jobs are often thought of in terms of office personnel, frequently temp workers are used to staff warehouses and food processing plants. These employees may be subject to labor violations including not receiving proper meal and rest breaks, not being paid minimum wage and not being paid overtime. They may also face harsh working conditions and safety hazards.

Large companies do so to keep their costs down because temporary workers tend to cost less than permanent employees. Assembly Bill 1897 does not shift full responsibility for labor violations to the hiring company but requires the hiring company to share liability with the contractor.

This means that the larger companies that staff using outsourcing cannot claim ignorance when their employees are paid less than the minimum wage. It also protects temp workers from filing suit against a temp agency that might, when faced with a suit, declare bankruptcy to avoid paying workers.

“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,” according to the Legislative Counsel's Digest.

The bill defines the client employer as “the business entity that obtains or is provided workers to perform labor within the usual course of business from a labor contractor, except as specified.”

Earlier in September, Governor Brown also signed into law a bill that requires California employers to provide three paid sick days a year, making California only the second state in the US to require sick leave for employees. According to The Sacramento Bee (8/30/14), the sick leave bill does not include in-home caregivers.