BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Carole Migden, Chair
Date of Hearing: June 27, 2007 2007-2008 Regular
Session
Consultant: Gideon L. Baum Fiscal:Yes
Urgency: No
Bill No: AB 1710
Author: Swanson
Version: As Amended June 20, 2007
SUBJECT
Payment of wages.
KEY ISSUE
Should the Legislature require all temporary services employers
and leasing employers to pay certain employees weekly, and
clarify the difference between a "discharge" and an "end of
assignment"?
PURPOSE
AB 1710 would require that temporary services employers and
leasing employers, with certain exceptions, pay their employees
weekly, regardless of when the assignment ends, unless the
employee is discharged, quits, is assigned to work for a client
on a day-to-day basis, or if the employee is assigned to work
for a client engaged in a labor dispute.
ANALYSIS
Existing law defines "temporary services employers" and "leasing
employers" as employing units that supply workers to perform
services for the client, and perform the following functions:
(1) Negotiates with clients or customers for such matters as
time, place, type of work, working conditions, quality, and
price of the services;
(2) Determines assignments or reassignments of workers, even
though workers retain the right to refuse specific assignments;
(3) Retains the authority to assign or reassign a worker to
other clients or customers when a worker is determined
unacceptable by a specific client or customer;
(4) Assigns or reassigns the worker to perform services for a
client or customer;
(5) Sets the rate of pay of the worker, whether or not through
negotiation;
(6) Pays the worker from its own account or accounts;
(7) Retains the right to hire and terminate workers.
Existing law requires, with certain special provisions, that if
an employer discharges an employee, the employer must pay all
earned and unpaid wages to the employee immediately upon
discharge. Exemptions are provided to employers for an employee
working in the motion picture industry, the oil drilling
business, or at a venue that hosts live theatrical or concert
events and is enrolled in a hiring hall or other employment
system created through a bona fide collective bargaining
agreement.
Existing law requires that when an employee quits his or her
employment, the employer must pay his or her wages within 72
hours, unless the employee gave notice 72 hours prior to
quitting, which would require that wages are paid at the time of
quitting.
Existing law requires that if an employer willfully fails to pay
the wages of an employee who is discharged, or if an employer
intentionally pays an employee with a check, draft, or voucher
that bounces, the wages of the employee shall continue to accrue
as a penalty to the employer for up to 30 days. The Labor
Commissioner must also collect additional penalties of $100 for
the first violation, or $200 and 25% of the amount unlawfully
held for each subsequent violation.
This bill would require temporary services employers and leasing
employees pay their employees weekly, regardless of when the
assignment ends. This requirement would not apply to bona fide
non-profit organizations that provide temporary service
employees to clients, farm labor contractors, and garment
manufacturing employers.
Hearing Date: June 27, 2007 AB 1710
Consultant: Gideon L. Baum Page 2
Senate Committee on Labor and Industrial Relations
This bill would exempt temporary services employers and leasing
employers from the requirement of weekly pay if the employee
quits his or her employment, or if the employee has been
discharged, requiring payment as per existing law.
This bill would also exempt temporary services employers and
leasing employers from the requirement of weekly pay if the
temporary services employer or leasing employer send an employee
to work for a client engaged in a trade dispute, or if the
temporary services employer or leasing employer assigns an
employee to work on a day-to-day basis and the employee reports
to the employer for an assignment, returns to the employer upon
the completion of the assignment, and is not defined as a
clerical employee under the Industrial Welfare Commission wage
orders. Payment under these circumstances is required at the
end of the each day, regardless of when the assignment ends.
This bill allows an employee of a temporary services employer or
leasing employer who suffers physical injuries in the course of
employment to hold both the client and the temporary services
employer or leasing employer either jointly or severably liable
for damages, and may bring a legal action against the client and
the temporary services employer or leasing employer, unless the
client secures payment of worker's compensation for all
employees, including the employees of a temporary services
employer or leasing employer.
COMMENTS
1. Need for this bill?
This bill is the product of a series of negotiations between
the temporary services employers and several labor
organizations. The crux of the meetings was to craft a bill
that would clarify the difference between discharge and the
end of an assignment due to the ruling of the California
Hearing Date: June 27, 2007 AB 1710
Consultant: Gideon L. Baum Page 3
Senate Committee on Labor and Industrial Relations
Supreme Court in Smith v. L'Oreal.
In Smith v. L'Oreal, which was decided on July 10, 2006,
L'Oreal had hired the plaintiff as a hair model. The
assignment was scheduled to last for a single day, and the
plaintiff would be paid $500. After the conclusion of the
plaintiff's assignment, L'Oreal did not pay her for over two
months. The plaintiff sued, arguing she was discharged, and
therefore owed a monetary penalty from the employer due to his
non-payment. The Court unanimously found for the plaintiff
and stated that L'Oreal should have paid its temporary
employee immediately upon the end of her assignment, which the
court viewed as the same as a discharge. The Court stated,
"Excluding employees like the plaintiff from the prospective
scope of [Labor Code] sections 201 and 203 would mean that
employees who fulfill their employment obligations by
completing the specific assignment?would be exposed to
vulnerability from delayed wage payments, while? employees who
are fired for good cause would be entitled to immediate
payment of their earned wages?"
The American Staffing Association (ASA) and the California
Staffing Professionals (CSP) are deeply concerned over the
possibility that Smith v. L'Oreal could be applied to their
industry, despite the fact that L'Oreal was and is not a
temporary services employer or a leasing employer.
Specifically, they argue that immediate payment at the
conclusion of a temporary assignment would be difficult, as
many assignments only last for a few hours or a single day,
and most temporary services employers pay once a week. The
ASA and CSP felt that changing their payroll systems to an
irregular and chaotic pay cycle could be potentially
disastrous for the industry.
This bill, therefore, clarifies this issue by explicitly
stating that an employee of a temporary services employer
would be paid weekly, regardless of when the assignment ends,
but in the case of an employee of a temporary services
employer or a leasing employer being discharged, the employee
would be paid immediately.
This bill also resolves several concerns from several labor
Hearing Date: June 27, 2007 AB 1710
Consultant: Gideon L. Baum Page 4
Senate Committee on Labor and Industrial Relations
organizations, notably codifying the time wages are due for
day laborers who receive their assignments and payment from
temporary services employers and leasing employers and
ensuring that employees of temporary services employers or
leasing employers have legal recourse if they are injured and
are not covered by a client's worker's compensation insurance.
2. Proponent Arguments :
The American Staffing Association (ASA) and the California
Staffing Professionals (CSP) believe that AB 1710 is necessary
due to the uncertainties raised in Smith v. L'Oreal in how to
apply existing law to employees of temporary services
employers. By clarifying that the completion of an assignment
by an employee of a temporary services employer is not a
discharge, and that wages will be paid weekly, this bill will
ensure that the uncertainty of the L'Oreal decision will not
hurt the industry, and that the standard industry practice for
the majority of California's temporary services employers will
be codified.
3. Opponent Arguments :
AMN Healthcare opposes the bill, unless a specific exemption
is created for the temporary services employers in the
healthcare industry. According to AMN Healthcare, the
temporary services employers in the healthcare industry do not
always know how long their employees have been working,
particularly on late night shifts, and therefore are reliant
on the hospitals that are their clients to process the payroll
and tell them who to pay and how much is due in wages. As
hospitals pay their employees twice a month, AB 1710's weekly
pay requirement would add additional administrative costs to
the hospitals that use temporary services employers. AMN
Healthcare views their industry as distinct from the rest of
the temporary services employer industry, as most temporary
services employers are not bound to their clients' payrolls,
and therefore feel that they need an exemption that recognizes
this.
4. Prior Legislation :
Hearing Date: June 27, 2007 AB 1710
Consultant: Gideon L. Baum Page 5
Senate Committee on Labor and Industrial Relations
SB 1719 (Cedillo), Chapter 685, Statutes of 2006, created an
exemption that allowed employees that are dispatched from
hiring halls to venues that host live theatrical or concert
events to establish in express terms in their collective
bargaining agreement when they would be paid upon discharge.
AB 3051 (Koretz), Chapter 824, Statutes of 2006, created a
special exemption for employees involved in motion picture
production, stating that they are entitled to back wages
after termination by the next pay period.
SUPPORT
Accounting Options
Adecco
Aerotek, Inc.
All Temporaries, Inc.
Altus Recruiting Solutions, L.L.C.
American Staffing Association
Andiamo Group
Apple One, Inc.
Arie Associates, Inc.
ATI Claim Services, LLC
Banc Force Financial Staffing
Caban Resources
California Chamber of Commerce
California Staffing Professionals
Davidson Legal Staffing
DEC Personnel
Exact Staff, Inc.
Express Personnel Services (2 individuals)
Focus Agency
Index Staffing (2 individuals)
Industrial Services Company (16 Individuals)
J. Borgaine & Associates
KC Staffing
Kearney, Boyle & Associates (7 Individuals)
Matura Farrington Staffing Services
Mitchell Personnel Services
Personnel Plus
Por-Active Staffing (4 individuals)
Hearing Date: June 27, 2007 AB 1710
Consultant: Gideon L. Baum Page 6
Senate Committee on Labor and Industrial Relations
Premier Staffing (2 individuals)
PrideStaff (8 individuals)
Priority Personnel Services, Inc. (5 Individuals)
Property Management Personnel, Inc.
ProTem Legal Services
San Diego Insurance Staffing
Sharf Woodward & Associates, Inc.
Spherion Corporation (2 Individuals)
Sundance Personnel Solutions (7 Individuals)
Synergy Solutions (6 Individuals)
The Plus Group, Inc. (5 individuals)
The TemPositions Group of Companies
TLC Staffing
Top Tempo and Future Personnel
TSS Personnel Agency, Inc.
Workers.Com, an Industrial Services Company
9 Individuals
OPPOSITION
AMN Healthcare
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Hearing Date: June 27, 2007 AB 1710
Consultant: Gideon L. Baum Page 7
Senate Committee on Labor and Industrial Relations