BILL ANALYSIS Ó
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: July 3, 2012 2011-2012 Regular
Session
Consultant: Gideon L. Baum Fiscal:Yes
Urgency: No
Bill No: AB 1744
Author: Lowenthal
As Introduced/Amended: AS PROPOSED TO BE AMENDED
SUBJECT
Employee compensation: itemized statements.
KEY ISSUE
Should the Legislature require temporary services employers to
report the name and address of the legal entities that have
requested the temporary workers, as well as report the hours
worked for each entity?
PURPOSE
To increase payroll reporting requirements for temporary
services employers and protect temporary workers from wage
theft.
ANALYSIS
Existing law defines a temporary services employer as an
employing unit that contracts with clients or customers to
supply workers to perform services for the clients or customers
and that performs a variety of functions, including negotiating
with clients, assigning workers, pays those workers, and retains
the right to hire and fire those workers.
(Labor Code §201.3/Unemployment Insurance Code §606.5)
Existing law provides that every employer must furnish each
employee with an itemized statement at the time of each payment
of wages that shows, among other things, the name and address of
the legal entity that is the employer. A knowing and
intentional violation of this provision is a misdemeanor.
(Labor Code §226)
Existing law also:
i. Exempts the state or a city, county, city and county,
district, or other governmental entity from the above
provisions; and
ii. Provides that the listing by an employer of the name and
address of the legal entity that secured the services of
the employer on the itemized payroll statement shall not
create any liability on the part of that legal entity.
(Labor Code § 226)
Existing law also requires the payroll statement to include, if
the employer is a farm labor contractor, the name of the legal
entity that secured their services on an employee's payroll
statement. (Labor Code § 226)
Existing law also requires employers to provide a notice to
their employees at the time of hiring containing, among other
things, rates of pay, the name and physical address of employer,
and the name, address, and telephone number of the employer's
workers' compensation carrier.
(Labor Code §2810.5)
This bill would require that the payroll statement include, if
the employer is a temporary services employer, the name and
address of the legal entities that secured the services of the
employer and total hours worked for each legal entity.
This bill also provides that the above-requirement can be met
with an attachment to the wage statement that includes all of
the above information, the employee's name, and the last four
digits of the employee's social security number or the
employee's identification number.
Hearing Date: July 3, 2012 AB 1744
Consultant: Gideon L. Baum Page 2
Senate Committee on Labor and Industrial Relations
COMMENTS
1. A Brief Discussion on Temporary Services Employers and
Existing Law:
According to the author, the percentage of Californians whose
jobs are temporary has nearly quadrupled in the past 30 years.
The author states that "temporary services employers" are not
required to include the length of time the employee worked for
a specific legal entity on the employee's paystub. According
to the author, listing the legal entities who secure the
employee's services and the hours worked will bring clarity to
temporary employees and modernize the Labor Code to reflect
this growing form of alternative employment.
Research suggests that the temporary service industry is
expanding and moving from a stopgap-staffing provider to a
more systematic and continuous role as an intermediary between
companies and labor supplies across a broad array of
industries and occupations. According to the United States
Bureau of Labor Statistics, temporary employment in the U.S.
increased from 1.1 million in 1990 to 2.3 million and in 2008,
and also noted that only 16% of the industry's revenues came
from clerical positions; 65% came from office and
administrative support, transportation and material moving,
and production occupations. Additionally, 15% of the
industry's revenues also came from construction and
extraction, healthcare practitioner, and business and
financial operations occupations.
Despite the evolution of the industry, the current body of law
of temporary services employers has largely remained the same
since the early 1980s. However, among certain employer
classifications, existing law has evolved specific wage
statement requirements. For example, farm labor contractors
are required to disclose on the itemized statement the name of
the legal entity that secured the employers' services, as well
as the name and address of the legal entity that secured the
services of the employer on the itemized payroll statement
shall not create any liability on the part of that legal
Hearing Date: July 3, 2012 AB 1744
Consultant: Gideon L. Baum Page 3
Senate Committee on Labor and Industrial Relations
entity.
AB 1744 would apply the same provisions currently in place for
farm labor contractors to temporary services employers.
2. The Wage Theft Prevention Act of 2011 and AB 1744:
AB 469 (Swanson), Statutes of 2011, Chapter 655, requires the
provision of a notice at the time of hiring that lists the
relevant details of a worker's employment. The Labor
Commissioner was tasked with creating the template for the
notice, and completed a template in early May of this year.
For temporary services employers and professional employer
organizations, the template requires specific information on
the legal entity for whom the employee is providing work.
This information would be due with the start of each new
assignment, and could be reflected on a timely pay stub or
notice of such changes can be provided in another writing
required by law within 7 calendar days.
AB 1744 provides that temporary services employers have
complied with the requirements of the Wage Theft Prevention
Act if the name and address of the legal entities that secured
the services of the employer and total hours worked for each
legal entity is included on, or attached with, the employee's
wage statement.
3. Proponent Arguments :
Proponents argue that argues that AB 1744 will ensure that
temporary employees are properly paid. Proponents also argue
that temporary workers are particularly vulnerable to abuse
and often have no guarantee of work and do not know ahead of
time where they will be dispatched or what they will be asked
to do. Proponents note that some temporary workers rotate
between assignments with different rates of pay for different
tasks or sites. Proponents believe that this modest bill
provides essential protection to temporary workers and will
modernize labor law to reflect the growing form of alternate
employment.
Hearing Date: July 3, 2012 AB 1744
Consultant: Gideon L. Baum Page 4
Senate Committee on Labor and Industrial Relations
4. Opponent Arguments :
The American Staffing Association (ASA) and the California
Staffing Professionals (CSP) argue that there has been no
demonstrated need for this bill. ASA and CSP note that
employees are given the name and address of the client and a
description of the work they will be performing when they
accept an assignment. In addition, ASA and CSP write that
this bill would add time, expense, and possible
reconfiguration of the software needed to generate the
paycheck.
Other opponents, such as the Chamber of Commerce, believe
that, by tying the reporting requirements to the payroll
statement, AB 1744 opens businesses up to litigation risks.
5. Prior Legislation :
AB 469 (Swanson), Statutes of 2011, Chapter 655, was discussed
above.
AB 243 (Alejo), Statutes of 2011, Chapter 671, creates the
requirement that farm labor contractors list the entity for
whom the employee performs work.
SUPPORT
California Conference Board of the Amalgamated Transit Union
California Labor Federation
California Rural Legal Assistance Foundation
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore & Warehouse Union
Professional & Technical Engineers, Local 21
UNITE HERE
United Food and Commercial Workers Union, Western States Council
Utility Workers Union of America, Local 132
Warehouse Workers United
Hearing Date: July 3, 2012 AB 1744
Consultant: Gideon L. Baum Page 5
Senate Committee on Labor and Industrial Relations
OPPOSITION
American Staffing Association
California Association for Health Services at home
California Chamber of Commerce
California Grocers Association
California Independent Grocers Association
California Staffing Professionals
National Federation of Independent Business
Plumbing-Heating-Cooling Contractors Association of California
TrueBlue, Inc.
Western Electrical Contractors Association, Inc.
Hearing Date: July 3, 2012 AB 1744
Consultant: Gideon L. Baum Page 6
Senate Committee on Labor and Industrial Relations