California Law Now Makes Employers Liable For Staffing Firm Violations

Sep 30, 2014

California flag and capitolCalifornia employers will now share liability with their labor contractors for complying with  state labor and wage laws, including safety and workers’ compensation laws.

Governor Jerry Brown signed into law the hotly contested AB 1897, which extends to nearly all employers rules that previously applied to temps and contract workers in the agricultural, construction and garment industries.

Strongly supported by organized labor, the bill was labeled a “job killer” by the California Chamber of Commerce, which sought to rally its members to have the governor veto the bill.

The bill gives temps the right to sue the company, rather than the staffing agency, for violations of California labor laws. They must first give the client employer 30 days notice of an alleged violation.

In addition, the law forbids employers from shifting liability, meaning the client,as well as the labor provider, could be subject to fines and penalties imposed by the state. The law also empowers state enforcement agencies to demand access to records or other information from either the staffing agency or the employer “to verify compliance with applicable state laws.”

Discussing the bill with Staffing Industry Analysts prior to it reaching the Governor, Saba Shatara, an attorney at law firm Drinker Biddle, said, “Employers must now be especially cautious in selecting a staffing agency — and evaluate the agency before partnering with them — in order to limit their risk of retaining non-compliant contractors. When contracting with staffing agencies, employers should also specify remedies against the agency for liability created by the labor contractor’s acts.”

The law doesn’t apply to businesses employing five or fewer temps, or with fewer than 25 employees. Non-profits and labor groups are also exempt, as are a handful of other employers or contract arrangements.

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