Workers' Compensation

California: Governor Signs Bill to Protect Temporary Workers

Labor Contracting; Client Liability; Temporary Workers. AB 1897 (Ch. No. __), signed by Governor Brown on Sept. 28, 2014, establishes civil legal responsibility and civil liability of client employers, which obtain workers from third-party labor contractors, for the payment of wages and the failure to obtain valid workers’ compensation coverage. AB 1897 prohibits a client employer from shifting to the labor contractor the legal duties or liabilities under workplace safety provisions with respect to the workers provided by the labor contractor. AB 1897 defines both “client employer” and “labor contractor” and provides exceptions to each. AB 1897 does not prohibit client employers and labor contractors from mutually contracting for otherwise lawful remedies for violations of its provisions by the other party. The Labor Commissioner, the Division of Occupational Safety and Health, and the Employment Development Department are authorized to adopt any necessary rules to administer and enforce AB 1897.

As stated in the bill analysis, the sponsors of the bill argue that “reliance on labor contractors undermines the enforcement of labor laws and erodes working conditions in key industries.” Workers’ rights go unprotected in “the shadows of the subcontracted economy.” Presently a worker must prove joint employer status to hold a company responsible for a workplace injury—a costly, slow and difficult litigation process. The bill protects “vulnerable temporary workers” and holds companies accountable for workplace violations. Meanwhile, employer groups opposed the bill, arguing that it forces a company to “essentially insure the wage and hour obligations, workers’ compensation coverage, and occupational health and safety duties of a separate employer’s employees.” Specifically, the bill “holds an innocent third-party individual or business liable for the employment obligations of another employer.” The bill will create significant litigation, according to these employer groups. They also point out that adequate protections already exist under the law for dealing with “documented problems that involve contracting.”