BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1897|
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THIRD READING
Bill No: AB 1897
Author: Roger Hernández (D)
Amended: 8/22/14 in Senate
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE : 4-1, 6/11/14
AYES: Hueso, Leno, Padilla, Mitchell
NOES: Wyland
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/14/14
AYES: De León, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
ASSEMBLY FLOOR : 51-23, 5/29/14 - See last page for vote
SUBJECT : Labor contracting: client liability
SOURCE : California Labor Federation
California Teamsters Public Affairs Council
United Food and Commercial Workers Western States
Council
DIGEST : This bill establishes specified liability for client
employers that obtain workers from third-party labor
contractors, as specified; and prohibits the bill's provisions
from being interpreted to impose liability in specified
circumstances.
Senate Floor Amendments of 8/22/14 make technical changes,
update the labor contractor definition, provide a notice
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requirement for civil action, and specify which client employers
this bill does not impose liability on.
ANALYSIS : Existing California common law theory of joint
employment requires a determination as to whether the entity in
question has the right to direct and control the manner and
means by which the work is performed, known as the "right of
control" test. (S. G. Borello & Sons, Inc. v Dept. of Industrial
Relations (1989) 48 Cal.3d 341. and Martinez v. Combs (2010) 49
Cal.4th 35)
Existing law requires that both garment manufacturers and farm
labor contractors are licensed and/or registered, and regulated
by the Division of Labor Standards Enforcement.
Existing law requires that a person engaged in garment
manufacturing who contracts with another person for their
performance of garment manufacturing operations shall guarantee
the payment of the minimum wage and overtime.
Existing law states that an entity shall not enter into a
contract for labor or services with a construction, farm labor,
garment, janitorial, security guard, or warehouse contractor,
where the entity knows or should know that the contract does not
include funds sufficient to allow the contract to company with
all applicable local, state, and federal laws.
This bill establishes specified liability for client employers
that obtain workers from third-party labor contractors, as
specified. Specifically, this bill:
1.Defines "client employer" as a business entity that obtains or
is provided workers to perform labor within its usual course
of business from a labor contractor.
2.Specifies "client employer" does not include any of the
following:
A. 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.
B. A business entity with five or fewer workers supplied by
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a labor contractor or labor contractors to the client
employer at any given time.
C. The state or any political subdivision of the state,
including any city, county, city and county, or special
district.
1.Defines "labor" as labor, work, or service whether rendered or
performed under contract, subcontract, partnership, station
plan, or other agreement if the labor to be paid for is
performed personally by the person demanding payment.
2.Defines "labor contractor" as 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. This does not include:
A. A bona fide nonprofit, community-based organization that
provides services to workers.
B. A bona fide labor organization or apprenticeship
program.
C. A motion picture payroll services company.
1.Clarifies that "worker" does not include an employee who is
exempt from the payment of an overtime rate of compensation
for executive, administrative, and professional employees.
2.Defines "usual course of business" as the regular and
customary work of a business, performed within or upon the
premises or worksite of the client employer.
3.States that 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 both of
the following:
A. Payment of wages.
B. Failure to secure valid workers' compensation coverage.
1.Prohibits a client employer from shifting to the labor
contractor any legal duties or liabilities, as specified, with
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respect to workers supplied by the labor contractor.
2.Requires, at least 30 days prior to filing a civil action
against a client employer for violations covered by this bill,
a worker or his/her representative notify the client employer
of the violations.
3.Clarifies that these provisions are in addition to, and shall
be supplemental of, any other liability or requirement
established by statute or common law.
4.Specifies that this bill 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, and vice
versa.
5.Requires, upon request by a state enforcement agency or
department, a client employer or a labor contractor promptly
provide to the agency or department any information required
to verify compliance with applicable state laws.
6.Authorizes the Labor Commissioner, the Division of
Occupational Safety and Health, and the Employment Development
Department to adopt regulations and rules of practice and
procedure necessary to administer and enforce the provisions
of this bill that are under their respective jurisdiction.
7.Makes a waiver of this section contrary to public policy, and
is void and unenforceable.
8.Prohibits this bill from being interpreted to impose
individual liability on a homeowner or the owner of a
home-based business for labor and services received at the
home or to impose liability on a client employer for the use
of an independent contractor other than a labor contractor.
9.Prohibits this bill's provisions from being interpreted to
impose liability on a client employer:
A. 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/intrastate operating authority to
ship or receive freight.
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5
B. 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.
C. That is a cable operator, a direct-to-home satellite
service provider or a telephone corporation, as specified,
based upon its contracting with a company to build,
install, maintain, or perform repair work utilizing a
contractor's employees and vehicles if the name of the
contractor is visible on employee uniforms and vehicles.
D. A motor club holding a certificate of authority issued
pursuant to existing 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.
Comments
According to the author:
A recent report by ProPublica found that in California,
temporary workers face a 50% greater risk of getting
injured on the job than permanent employees. That
disparity was even greater for serious accidents,
especially since the growth of labor contractors has been
most pronounced in blue-collar industries. Labor
contractors are increasingly recruiting immigrant workers.
In fact, ProPublica has documented rise of "temp towns,"
which are dominated by staffing agencies that prey on
undocumented immigrants. Even the staffing agencies may
have layers of subcontracts who charge workers to find work
and provide transportation.
Not only does the use of a contractor make it harder to
hold the company accountable for the treatment of workers,
but it also interferes with the right to organize.
Contract laborers work for the labor contractor, so at one
site, there can be multiple employers. That results in
split bargaining units, multiple elections, and a
constantly divided workforce.
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Current law is simply insufficient to protect workers'
rights in the shadows of the subcontracted economy. AB
1897 holds companies accountable for serious violations of
workers' rights, committed by their own labor suppliers, to
workers on their premises. This simple rule will
incentivize the use of responsible contractors, rather than
a race to the bottom. It will protect vulnerable temporary
workers, as well as businesses that follow the law and
don't profit from cheating workers. It offers workers a
clear path to accountability for workplace violations and
it offers employers a clear path to compliance."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, this bill
authorizes (1) both the Labor Commissioner and Division of
Occupational Safety with the Department of Industrial Relations
(DIR), and (2) the Employment Development Department (EDD), to
adopt regulations and rules of practice to administer and
enforce the provisions of this bill. Consequently, this bill
will result in a cost pressure to each department. DIR
estimates one-time expenses of $250,000 (special fund), while
EDD's costs may total up to $150,000 (General Fund).
SUPPORT : (Verified 8/22/14)
California Labor Federation, AFL-CIO (co-source)
California Teamsters Public Affairs Council (co-source)
United Food and Commercial Workers Western States Council
(co-source)
AFSCME
Air Conditioning & Refrigeration Contractors Association
Air Conditioning Sheet Metal Association
Alameda County Labor Council, AFL-CIO
Asian American Alliance for Justice - Asian Law Caucus
Asian Americans Advancing Justice - Los Angeles
Asian Americans for Community Involvement
Asian Pacific Islander Justice Coalition of Silicon Valley
California Alliance for Retired Americans
California Conference of Machinists
California Conference of the Amalgamated Transit Union
California Employment Lawyers Association
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California Faculty Association
California Immigrant Policy Center
California Legislative Conference of the Plumbing, Heating &
Piping Industry
California Nurses Association
California Professional Firefighters
California Rural Legal Assistance Foundation
California School Employees Association
California State Association of Electrical Workers
California State Council of Service Employees
California State Pipe Trades Council
Centro Legal de la Raza
Chinese Progressive Association
CLEAN Carwash Campaign
Community Action Board of Santa Cruz County
Consumer Attorneys of California
Employee Rights Center
Engineers & Scientists, IFPTE Local 20
Equal Rights Advocates
Garment Workers Center
Interfaith Council on Economics and Justice
International Longshore and Warehouse Union, Coast Division
International Longshore and Warehouse Union, Southern California
District
Council
Jockeys Guild
Katherine & George Alexander Community Law Center
Koreatown Immigrant Workers Alliance
Latinos United for a New America
Legal Aid Society-Employment Law Center
Los Angeles County Federation of Labor, AFL-CIO
Maintenance Cooperation Trust Fund
Merced-Mariposa Central Labor Council, AFL-CIO
Monterey Bay Central Labor Council, AFL-CIO
Napa Solano Central Labor Council, AFL-CIO
National Association of Social Workers, California Chapter
National Electrical Contractors Association, California Chapters
National Employment Law Project
National Lawyers' Guild Labor & Employment Committee
North Bay Labor Council, AFL-CIO
Northern California Carpenters Regional Council
Northern California District Council, ILWU
Professional & Technical Engineers, IFPTE Local 21
San Mateo Central Labor Council, AFL-CIO
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SEIU Local 1000
South Bay Labor Council, AFL-CIO
State Building and Construction Trades Council of California
Sunrise Floor Systems LLC
Teamsters Joint Council No. 42
Teamsters Joint Council No. 7
Teamsters Local 63,137, 150, 315, 350, 386, 396, 431, 517, 542,
856, 890, and 986
UNITE HERE
United Auto Workers, Local 5810
United Farm Workers of America
Utility Workers Union of America, Local 132
Warehouse Workers United
Western States Council of Sheet Metal Workers
Working Partnerships USA
OPPOSITION : (Verified 8/22/14)
Agricultural Council of California
Air Conditioning Trade Association
Associated Builders and Contractors - San Diego Chapter
Associated Builders and Contractors of California
Associated General Contractors
Association of California Healthcare Districts
Building Owners and Managers Association of California
California Ambulance Association
California Apartment Association
California Asian Chamber of Commerce
California Association of Winegrape Growers
California Bankers Association
California Business Properties Association
California Chamber of Commerce
California Chapter of American Fence Association
California Citrus Mutual
California Coalition on Workers' Compensation
California Communications Association
California Cotton Ginners Association
California Cotton Growers Association
California Employment Law Council
California Farm Bureau Federation
California Fence Contractors' Association
California Grape and Tree Fruit League
California Grocers Association
California Hospital Association
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California Hotel and Lodging Association
California Landscape Contractors Association
California League of Food Processors
California Manufacturers and Technology Association
California Newspaper Publishers Association
California Pool and Spa Association
California Restaurant Association
California Retailers Association
Chambers of Commerce Alliance of Ventura and Santa Barbara
Counties
Civil Justice Association of California
Consolidated Communications Inc. (formerly SureWest)
CSAC Excess Insurance Authority
Custom Logistics & Delivery Association
Desert Hot Springs Chamber of Commerce & Visitors Center
El Dorado County Chamber of Commerce
Family Winemakers of California
Flasher Barricade Association
Fullerton Chamber of Commerce
Greater Bakersfield Chamber of Commerce
International Council of Shopping Centers
International Franchise Association
International Warehouse Logistics Association
Marin Builders Association
NAIOP of California, the Commercial Real Estate Development
Association
National Federation of Independent Business
Nisei Farmers League
Oxnard Chamber of Commerce
Personal Insurance Federation of California
Plumbing-Heating-Cooling Contractors Association of California
Redondo Beach Chamber of Commerce
Rural County Representatives of California
San Diego East County Chamber of Commerce
San Gabriel Valley Economic Partnership
San Gabriel Valley Legislative Coalition of Chambers
San Jose Silicon Valley Chamber of Commerce
Santa Clara Chamber of Commerce and Convention-Visitors Bureau
Simi Valley Chamber of Commerce
South Bay Association of Chambers of Commerce
Southwest California Legislative Council
TechNet
The Chamber of Commerce of the Santa Barbara Region
The United Chambers of Commerce of the San Fernando Valley
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Torrance Area Chamber of Commerce
Urban Counties Caucus
Visalia Chamber of Commerce
Western Agricultural Processors Association
Western Electrical Contractors Association
Western Growers Association
Wine Institute
ARGUMENTS IN SUPPORT : Proponents contend that this bill will
hold companies accountable for serious violations of workers'
rights committed by their own labor suppliers to workers on
their premises. Proponents argue that this bill will
incentivize the use of responsible labor contractors, rather
than a race to the bottom - offering workers a clear path to
accountability for workplace violations and offering employers a
clear path to compliance.
ARGUMENTS IN OPPOSITION : Opponents write, "AB 1897 will
punish nearly every job-creating industry in the state by
inflicting an unreasonable law that is impossible to implement;
impose staggering costs to job creators who are already
overburdened with the overregulation and rising costs that are
required to do business; inappropriately target the private
sector, while exempting government from such regulation; and
increase unnecessary litigation and burden the state's judicial
system by making a business responsible for the actions of
another employer."
ASSEMBLY FLOOR : 51-23, 5/29/14
AYES: Alejo, Ammiano, Bloom, Bocanegra, Bonilla, Bonta,
Bradford, Ian Calderon, Campos, Chau, Chesbro, Dababneh, Daly,
Dickinson, Eggman, Fong, Fox, Frazier, Garcia, Gatto, Gomez,
Gonzalez, Gordon, Gray, Hall, Roger Hernández, Holden,
Jones-Sawyer, Levine, Lowenthal, Medina, Mullin, Muratsuchi,
Nazarian, Pan, John A. Pérez, V. Manuel Pérez, Quirk,
Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner,
Stone, Ting, Weber, Wieckowski, Williams, Yamada, Atkins
NOES: Achadjian, Allen, Bigelow, Chávez, Conway, Dahle,
Donnelly, Beth Gaines, Gorell, Grove, Hagman, Jones, Linder,
Logue, Maienschein, Mansoor, Melendez, Nestande, Olsen,
Patterson, Wagner, Waldron, Wilk
NO VOTE RECORDED: Brown, Buchanan, Cooley, Harkey, Perea,
Vacancy
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PQ:e 8/25/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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