CALIFORNIA BILL CREATES EXPANDED EMPLOYER LIABILITY FOR CONTRACTED WORKERS

Date: January 05, 2015

Despite
valiant efforts by the California business community, AB 1897 by Assemblyman
Roger Hernández (D-West Covina) was signed into law by Governor Jerry Brown on
September 28.  The bill creates new liability for businesses that engage
in labor contracting.  AB 1897 adds Section 2810.3 to the California Labor
Code.


AB 1897 requires a client employer to share with a labor contractor all civil
legal responsibility and civil liability for all workers supplied by that labor
contractor for the payment of wages and the failure to secure valid workers’
compensation coverage.  The bill also prohibits a client employer from
shifting to the labor contractor any legal duties or liabilities under
workplace safety provisions with respect to workers provided by the labor
contractor.

AB 1897 defines a client employer as a business entity that obtains or is
provided workers to perform labor within the usual course of business from a
labor contractor.  A client employer does not include certain “small
businesses” (those with fewer than 25 employees), or the State of
California or any local government jurisdictions.

AB 1897 defines a labor contractor as an individual or entity that supplies
workers, either with or without a contract, to a client employer to perform
labor within the client employer’s usual course of business.  The bill
exempts from the definition of labor contractor certain nonprofit, labor, and
motion picture payroll services organizations, as well as third parties engaged
in an employee leasing arrangement.

AB 1897 specifies that the bill does not prohibit client employers and labor
contractors from mutually contracting for any otherwise lawful remedies for
violations of its provisions by the other party.

Although AB 1897 requires a worker or his/her representative to notify the
client employer of any violations of this law at least 30 days prior to filing
a civil action, there is no right to cure under the bill.  Neither a
client employer nor a labor contractor may take any adverse action against any
worker who provides notification of violations or filing a claim or civil
action.

AB 1897 provides that waiver of its provisions is contrary to public policy,
void, and unenforceable.  The bill specifies that this new section of the
Labor Code shall not be interpreted to impose individual liability on
homeowners or on client employers for the use of independent contractors. 
According to the new language, the bill also not intended to change the
definition of independent contractor.

Finally, AB 1897 prohibits its provisions from being interpreted to impose
liability in specified circumstances.  Specifically, the bill exempts the
following from its provisions:  certain motor carriers of property
(Section 2810.3(p)(1) provides “A client employer that is not a motor
carrier of property based solely on the employer’s use of a third-party motor
carrier of property with interstate or intrastate operating authority to ship
or receive freight”); motor carriers of property subcontracting (Section
2810.3(p)(2) provides “A client employer that is a motor carrier of
property subcontracting with, or otherwise engaging, another motor carrier of
property to provide transportation services using its own employees and
commercial motor vehicles, as defined in Section 34601 of the Vehicle
Code”); cable operators, satellite providers, and telephone corporations;
and, certain motor clubs.

The provisions of AB 1897 take effect on January 1, 2015.

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