AB 1897 imposes new liability on employers who contract for labor to hold them accountable for any wage-and-hour violations if they use staffing agencies or other labor contractors to obtain workers.
In summary, the law provides that if a labor contractor fails to pay its workers properly or fails to provide workers’ compensation coverage for those employees, the “client employer” can now be held legally responsible and liable.
A “client employer” is a “business entity that obtains or is provided workers to perform labor within its `usual course of business’ from a labor contractor.”
A “worker” pertains to non exempt employees. This law does not include employees who are exempt under the executive, professional or administrative exemptions.
A “labor contractor” excludes certain nonprofit entities, labor unions, motion picture payroll services and third parties who are parties to an employee leasing arrangement.
A “client employer” does not include, and the law does not apply to:
• Businesses with a workforce of less than 25 workers, including those hired directly by the client employer and those provided by a labor contractor.
• A business entity with five or fewer workers supplied by a labor contractor or labor contractors to the client employer at any given time.
• Certain motor carriers, non-motor carriers, motor clubs and cable operators.
The new law does not prohibit a client employer from seeking indemnification from the labor contractor for any violation and assessment of the potential penalties. However the law specifically prohibits a client employer from shifting any legal duties or liabilities under workplace safety laws to the labor contractor.
Before pursuing a civil action against the “client employer,” a worker is required to give notice and meet a certain standard of proof.