BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1744| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1744 Author: Bonnie Lowenthal (D) Amended: 8/24/12 in Senate Vote: 21 SENATE LABOR & INDUSTRIAL RELATIONS COMM. : 4-0, 7/03/12 AYES: Lieu, DeSaulnier, Leno, Padilla NO VOTE RECORDED: Wyland, Runner, Yee SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 49-26, 5/30/12 - See last page for vote SUBJECT : Employee compensation: itemized statements SOURCE : Author DIGEST : This bill requires, on and after July 1, 2013, that an employees itemized pay stub statement include, if the employer is a temporary services employer, the rate of pay for each assignment and total hours worked for each legal entity with a specified exemption. This bill requires that, if the employer is a temporary services employer, staffing agency, or professional employer organization, the notice include the name, the physical address of the main office, the mailing address if different from the physical address of the main office, and the telephone number of the legal entity for whom the employee will perform work, and any other information the Labor Commissioner deems material and necessary. CONTINUED AB 1744 Page 2 Senate Floor Amendments of 8/24/12 exempt a security services company from the itemized wage statement requirements for temporary services employers if the security services company is licensed by the Department of Consumer Affairs and solely provides security services. Senate Floor Amendments of 8/23/12 add language which incorporates changes to Labor Code Section 226 proposed by SB 1255 (Wright) and AB 2674 (Swanson), to be operative only if this bill and either or both of those bills are chaptered and become effective on or before January 1, 2013, and this bill is chaptered last. Senate Floor Amendments of 8/20/12 rewrite and recast the itemized wage statement provisions of this bill to correct a drafting error. 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. 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. Existing law also: Exempts the state or a city, county, city and county, district, or other governmental entity from the above provisions; and 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. CONTINUED AB 1744 Page 3 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. 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. This bill requires, on and after July 1, 2013, that the itemized pay stub statement include, if the employer is a temporary services employer, the rate of pay for each assignment and total hours worked for each legal entity, with a specified exemption. This bill requires that, if the employer is a temporary services employer, staffing agency, or professional employer organization, the notice include the name, the physical address of the main office, the mailing address if different from the physical address of the main office, and the telephone number of the legal entity for whom the employee will perform work, and any other information the Labor Commissioner deems material and necessary. Comments Temporary services employers and existing law . According to the author's office, the percentage of Californians whose jobs are temporary has nearly quadrupled in the past 30 years. The author's office 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's office, 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 CONTINUED AB 1744 Page 4 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 percent of the industry's revenues came from clerical positions; 65 percent 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 entity. This bill applies the same provisions currently in place for farm labor contractors to temporary services employers. Related Legislation AB 469 (Swanson), Statutes of 2011, Chapter 655, required 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Verified 8/24/12) AFSCME California Amalgamated Transit Union California Employment Lawyers Association California Labor Federation CONTINUED AB 1744 Page 5 California Nurses Association California Pipe Trades Council Engineers and Scientists of California International Brotherhood of Electrical Workers International Longshore and Warehouse Union Professional and Technical Engineers, Local 21 San Francisco Labor Council UNITE HERE United Food and Commercial Workers Union, Western States Council Utility Workers Union of America, Local 132 Warehouse Workers United Western States Council of Sheet Metal Workers OPPOSITION : (Verified 8/24/12) California Association for Health Services at home California Chamber of Commerce California Grocers Association National Federation of Independent Business Plumbing-Heating-Cooling Contractors Association of California Pridestaff Prostaff Search LLC TrueBlue, Inc. Western Electrical Contractors Association, Inc. ARGUMENTS IN SUPPORT : Proponents argue that this bill ensures 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 bill provides essential protection to temporary workers and will modernize labor law to reflect the growing form of alternate employment. ARGUMENTS IN OPPOSITION : Opponents, such as the California Chamber of Commerce, believe that by tying the reporting requirements to the payroll statement, this bill opens businesses up to litigation risks. CONTINUED AB 1744 Page 6 ASSEMBLY FLOOR : 49-26, 5/30/12 AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Gatto, Gordon, Gorell, Hall, Hayashi, Roger Hernández, Hill, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning, Pan, V. Manuel Pérez, Skinner, Solorio, Swanson, Torres, Wieckowski, Williams, Yamada, John A. Pérez NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly, Beth Gaines, Garrick, Grove, Hagman, Halderman, Harkey, Jeffries, Jones, Knight, Logue, Mansoor, Miller, Morrell, Nestande, Nielsen, Norby, Olsen, Portantino, Silva, Smyth, Wagner NO VOTE RECORDED: Fletcher, Galgiani, Huber, Perea, Valadao PQ:dmk 8/25/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED