Amended in Senate August 22, 2014

Amended in Senate August 19, 2014

Amended in Senate July 1, 2014

Amended in Assembly May 28, 2014

Amended in Assembly May 23, 2014

Amended in Assembly April 10, 2014

Amended in Assembly March 28, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1897

Introduced by Assembly Member Roger Hernández

February 19, 2014

An act to add Section 2810.3 to the Labor Code, relating to private employment.

LEGISLATIVE COUNSEL’S DIGEST

AB 1897, as amended, Roger Hernández. Labor contracting: client liability.

Existing law regulates the terms and conditions of employment and establishes specified obligations of employers to employees. Existing law prohibits a person or entity from entering into a contract for labor or services with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor, if the person or entity knows or should know that the contract or agreement does not include sufficient funds for the contractor to comply with laws or regulations governing the labor or services to be provided.

This bill would require 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 begin delete wages, the obligation to provide a safe work environment, as specified, end delete begin insert wages end insert and the failure to obtain valid workers’ compensation coverage. begin insert The bill would prohibit a client employer from shifting to the labor contractor legal duties or liabilities under workplace safety provisions with respect to workers provided by the labor contractor. end insert The bill would define 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, except as specified. The bill would define 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 begin delete business and end delete begin insert business. The bill end insert would except from begin delete this end delete begin insert the end insert definition begin insert of labor contractor end insert specified nonprofit, labor, and motion picture payroll services organizations begin insert and 3rd parties engaged in an employee leasing arrangement, as specified end insert . The bill would specify that it does not prohibit client employers and labor contractors from mutually contracting for otherwise lawful remedies for violations of its provisions by the other party. The bill would require a client employer or labor contractor to provide to a requesting enforcement agency or department, and make available for copying, information within its possession, custody, or control required to verify compliance with applicable state laws. The bill would authorize the Labor Commissioner, the Division of Occupational Safety and Health, and the Employment Development Department to adopt necessary regulations and rules to administer and enforce the bill’s provisions. The bill would provide that waiver of its provisions is contrary to public policy, void, and unenforceable. The bill would prohibit its provisions from being interpreted to impose liability in specified circumstances.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 2810.3 is added to the Labor Code, to
read:

2810.3.  

(a) As used in this section:

(1)  begin insert (A) end insert begin insert   end insert “Client employer” means a business entity, regardless
of its form, that obtains or is provided workers to perform labor
within its usual course of business from a labor contractor. begin delete “Client
employer” does not include a business entity with a workforce of
less than 25 workers, including those hired directly by the client
employer and those obtained from, or provided by, any labor
contractor, and five or fewer workers supplied by a labor contractor
at any given time. “Client employer” does not include the state or
any political subdivision of the state, including any city, county,
city and county, or special district. end delete

begin insert

(B) “Client employer” does not include any of the following:

end insert begin insert

(i) A business entity with a workforce of less than 25 workers,
including those hired directly by the client employer and those
obtained from, or provided by, any labor contractor.

end insert begin insert

(ii) A business entity with five or fewer workers supplied by a
labor contractor or labor contractors to the client employer at any
given time.

end insert begin insert

(iii) The state or any political subdivision of the state, including
any city, county, city and county, or special district.

end insert

(2) “Labor” has the same meaning provided by Section 200.

(3) “Labor contractor” means an individual or entity that
supplies, either with or without a contract, a client employer with
workers to perform labor within the client employer’s usual course
of business. “Labor contractor” does not include any of the
following:

(A) A bona fide nonprofit, community-based organization that
provides services to workers.

(B) A bona fide labor organization or apprenticeship program
or hiring hall operated pursuant to a collective bargaining
agreement.

(C) A motion picture payroll services company as defined in
subparagraph (A) of paragraph (4) of subdivision (f) of Section
679 of the Unemployment Insurance Code.

begin insert

(D) A third party who is a party to an employee leasing
arrangement, as defined by Rule 4 of Section V of the California
Workers’ Compensation Experience Rating Plan-1995 (Section
2353.1 of Title 10 of the California Code of Regulations), as it
read on January 1, 2014, except those arrangements described in
subrule d of Rule 4 of Section V, if the employee leasing
arrangement contractually obligates the client employer to assume
all civil legal responsibility and civil liability under this act.

end insert

(4) “Wages” has the same meaning provided by Section 200
and all sums payable to an employee or the state based upon any
failure to pay wages, as provided by law.

(5) “Worker” does not include an employee who is exempt from
the payment of an overtime rate of compensation for executive,
administrative, and professional employees pursuant to wage orders
by the Industrial Welfare Commission described in Section 515.

(6) “Usual course of business” means the regular and customary
work of a business, performed within or upon the premises or
worksite of the client employer.

(b) A client employer shall share with a labor contractor all civil
legal responsibility and civil liability for all workers supplied by
that labor contractor for begin delete all end delete begin insert both end insert of the following:

(1) The payment of wages.

begin delete

(2) The obligation to provide a safe work environment under
the provisions of Division 5 (commencing with Section 6300).

end delete begin delete

(3)

end delete

begin insert (2) end insert  Failure to secure valid workers’ compensation coverage as
required by Section 3700.

begin insert

(c) A client employer shall not shift to the labor contractor any
legal duties or liabilities under the provisions of Division 5
(commencing with Section 6300) with respect to workers supplied
by the labor contractor.

end insert begin delete

(c)

end delete

begin insert (d) end insert  At least 30 days prior to filing a begin delete claim end delete begin insert civil action end insert against a
client employer for violations covered by this section, a worker or
his or her representative shall notify the client employer of
violations under subdivision (b).

begin delete

(d)

end delete

begin insert (e) end insert  Neither the client employer nor the labor contractor may
take any adverse action against any worker for providing
notification of violations or filing a claim begin insert or civil action end insert .

begin delete

(e)

end delete

begin insert (f) end insert  The provisions of begin delete subdivision (b) end delete begin insert subdivisions (b) and (c) end insert
are in addition to, and shall be supplemental of, any other theories
of liability or requirement established by statute or common law.

begin delete

(f)

end delete

begin insert (g) end insert  This section does not prohibit a client employer from
establishing, exercising, or enforcing by contract any otherwise
lawful remedies against a labor contractor for liability created by
acts of a labor contractor.

begin delete

(g)

end delete

begin insert (h) end insert  This section does not prohibit a labor contractor from
establishing, exercising, or enforcing by contract any otherwise
lawful remedies against a client employer for liability created by
acts of a client employer.

begin delete

(h)

end delete

begin insert (i) end insert  Upon request by a state enforcement agency or department,
a client employer or a labor contractor shall provide to the agency
or department any information within its possession, custody, or
control required to verify compliance with applicable state laws.
Upon request, these records shall be made available promptly for
inspection, and the state agency or department shall be permitted
to copy them. This subdivision does not require the disclosure of
information that is not otherwise required to be disclosed by
employers upon request by a state enforcement agency or
department.

begin delete

(i)

end delete

begin insert (j) end insert  The Labor Commissioner may adopt regulations and rules
of practice and procedure necessary to administer and enforce the
provisions of subdivisions (b) and begin delete (h) end delete begin insert (i) end insert that are under his or her
jurisdiction.

begin delete

(j)

end delete

begin insert (k) end insert  The Division of Occupational Safety and Health may adopt
regulations and rules of practice and procedure necessary to
administer and enforce the provisions of subdivisions begin delete (b) end delete begin insert (c) end insert and
begin delete (h) end delete begin insert (i) end insert that are under its jurisdiction.

begin delete

(k)

end delete

begin insert (l) end insert  The Employment Development Department may adopt
regulations and rules of practice and procedure necessary to
administer and enforce the provisions of subdivisions (b) and begin delete (h) end delete
begin insert (i) end insert that are under its jurisdiction.

begin delete

(l)

end delete

begin insert (m) end insert  A waiver of this section is contrary to public policy, and is
void and unenforceable.

begin delete

(m)

end delete

begin insert (n) end insert  This section shall not be interpreted to impose individual
liability on a homeowner for labor or services received at the home
or the owner of a home-based business for labor or services
received at the home.

begin delete

(n)

end delete

begin insert (o) end insert  This section shall not be interpreted to impose liability on
a client employer for the use of an independent contractor other
than a labor contractor or to change the definition of independent
contractor.

begin delete

(o)

end delete

begin insert (p) end insert  This section shall not be interpreted to impose liability on
the following:

(1) 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.

(2) 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.

(3) A client employer that is a cable operator begin delete , end delete as defined by
Section begin delete 8350 end delete begin insert 5830 end insert of the Public Utilities Code, begin insert a direct-to-home
satellite service provider, or a telephone corporation as defined
by Section 234 of the Public Utilities Code, end insert based upon its
begin delete subcontracting end delete begin insert contracting end insert with a company to build, install,
maintain, or perform repair work utilizing the employees and
vehicles of the begin delete subcontractor end delete begin insert contractor end insert if the name of the
begin delete subcontractor end delete begin insert contractor end insert is visible on employee uniforms and
vehicles.

begin insert

(4) A motor club holding a certificate of authority issued
pursuant to Chapter 2 (commencing with Section 12160) of Part
5 of Division 2 of the Insurance Code when it contracts with third
parties to provide motor club services utilizing the employees and
vehicles of the third-party contractor if the name of the contractor
is visible on the contractor’s vehicles.

end insert