If you use temporary workers in your operation, you need to be aware of a measure making its way through the legislature that would shift a disproportionate amount of liability onto your business.
The measure, AB 1897, authored by Assemblyman Roger Hernandez, a West Covina Democrat, has a number of provisions that would have a detrimental effect on employers that use temporary labor.
The measure would force employers to pay wages, taxes and workers’ compensation on workers if a contracting agency fails to, even if the employer has already paid the temp agency or labor contractor for the workers.
The measure would also change enforcement by putting the onus on employers to provide documentation on temp workers to various labor-related state agencies, instead of the temp firms that are the employer of record.
The bill would allow inspectors from the labor commissioner, Cal/OSHA and the Employment Development Department to request proof of compliance from either the temp firm or the employer that is using the temporary workers that wages are being paid correctly, that taxes and withholdings are being remitted and that there is a valid workers’ comp policy covering the temp workers.
The California Chamber of Commerce says this unfairly shifts the responsibility to employers if the temporary agency fails to pay the workers.
Also, it says the wording of the bill would require employers to produce to regulators personnel records that they do not control or have in their possession. And employers are not legally able to require the temp agency to hand over those documents.
Additionally, the chamber says that requiring an employer to produce the personnel records of the contractor jeopardizes the confidentiality of the temporary workers, opening them up to the specter of litigation between employers and the temp firms they use.
Under the measure, an employer would share all legal responsibility and liability – including employer contributions, worker contributions, personal income tax and workers’ compensation – with an individual or company that supplies workers. For example, if a temp agency doesn’t pay its workers, the responsibility would fall on the temporary employer.
Hernandez says that he introduced the bill to target temp agencies and labor contractors that try to skirt the law and businesses that use them to avoid liability for workers they don’t want on their payrolls.
There have been documented cases of employees not getting paid, and not being covered after being injured at a job site because the temp agency or labor contractor failed to secure workers’ comp coverage. The employees are left in the lurch, as employers don’t feel they should be responsible for the failings of the temp agency they already paid.
But the problem is that the bill could cast a pall over the labor contracting industry and sweep up legitimate contracting arrangements and temp agencies that play by the rules.
The California Grocers Association contended in written testimony to the Assembly Labor Committee that the overly broad definitions in the bill “create tension of the right of control’’, a key test in determining whether a worker is an employee or an independent contractor.
“This bill essentially eliminates independent contractors because it says that both the provider of the services as well as the ultimate employer is legally responsible,” it said.