Executive Summary
Coverage: California Employers Contracting with Labor Contractors
Effective Date: January 1, 2015
Overview: New law provides that employers and labor contractors share liability for payment of wages and failure to secure workers’ compensation.
Action Required: Review agreements with labor contractors for compliant employment practices.
The Details
“Client employers” operating in California utilizing “labor contractors” (e.g. temporary staffing firms) will now share civil legal responsibility and civil liability with labor contractors for workers supplied by the labor contractor for payment of wages and failure to retain valid workers’ compensation coverage.
The law defines a “client employer” as a business that obtains or is provided workers to perform labor within its usual course of business from a “labor contractor.” A “labor contractor” is an individual or entity that supplies, either with our without a contract, a client employer with workers to perform labor within the client employer’s usual course of business. The law contains exclusions for client employers with less than 25 employees, including those hired directly by the client employer and those obtained from, or provided by, any labor contractor and for business entities with five or fewer workers supplied by a labor contractor(s) at any given time. Exclusions from the definition of labor contractor include for example, bona fide labor organizations or apprenticeship program, bona fide nonprofit, community-based organization and motion picture payroll services.
The stated purpose of the new law is to prohibit a client employer from shifting to the labor contractor legal duties or liabilities for the payment of wages and workplace safety.
As always, please contact your HR Business Partner if you have any questions.
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This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice.
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