BILL ANALYSIS Ó
SB 516
Page 1
Date of Hearing: June 26, 2013
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
SB 516 (Steinberg) - As Amended: May 7, 2013
SENATE VOTE : 38-0
SUBJECT : Foreign labor contractors: registration.
SUMMARY : Requires foreign labor contractors to register with
the Labor Commissioner, as well as follow additional contractual
and bonding requirements, as specified. Specifically, this
bill :
1)Requires, on and after July 1, 2015, any person acting as a
foreign labor contractor to register with the Labor
Commissioner.
2)Requires the Labor Commissioner (on and after August 1, 2015)
to post on its website the names and contact information for
all registered foreign labor contractors.
3)Provides that the Labor Commissioner may not register a person
to act as a foreign labor contractor, and may not renew a
registration, until all of the following conditions are
satisfied:
a) The person has executed a written application containing
specified information.
b) The Labor Commissioner, after investigation, is
satisfied as to the character, competency, and
responsibility of the person.
c) The person has deposited a surety bond as follows:
i) For gross receipts up to $500,000, a $25,000 bond.
ii) For gross receipts of $500,000 to $2 million, a
$50,000 bond.
iii) For gross receipts over $2 million, a $75,000 bond.
d) The person has paid a registration fee of $500 plus a
SB 516
Page 2
filing fee of $10.
4)Provides that the Labor Commissioner may not register a person
as a foreign labor contractor if the person was found to have
violated specified provisions of state and federal law.
5)Requires, on and after July 1, 2015, a person using the
services of a foreign labor contractor to disclose specified
information to the Labor Commissioner.
6)Prohibits a person from knowingly entering into a contract for
the services of a foreign labor contractor that is not
registered.
7)Requires a person using or anticipating using the services of
a foreign labor contractor to deposit with the Labor
Commissioner a surety bond as follows:
i) For payrolls up to $500,000, a $25,000 bond.
ii) For payrolls of $500,000 to $2 million, a $50,000
bond.
iii) For payrolls over $2 million, a $75,000 bond.
8)Requires a foreign labor contractor to disclose in writing
specified information to each foreign worker who is recruited
for employment.
9)Prohibits a foreign labor contractor or a person using the
services of a foreign labor contractor from assessing any fee,
including, but not limited to, visa fees, processing fees,
transportation fees, legal expenses, placement fees, and other
costs, to a foreign worker for employment services.
10)Provides that a foreign worker may not be required to pay any
costs or expenses that are not customarily assessed against
all workers similarly employed, as specified.
11)Provides that a person may not intimidate, threaten,
restrain, coerce, discharge, or in any manner discriminate
against a foreign worker or a member of his or her family in
retaliation for a foreign worker's exercise of any rights
under the law.
SB 516
Page 3
12)Provides that a person who violates any provision of these
requirements shall be subject to a civil penalty of not less
than $1,000 and not more than $25,000 per violation.
13)Provides that the Labor Commissioner or an aggrieved person
may bring enforcement actions, as specified.
14)Provides that foreign labor contractors and those persons
using their services to obtain foreign workers or employees
are jointly and severally liable for violations.
15)Provides that a person who, upon information and belief,
claims a violation of the law has been committed may bring a
civil action for injunctive relief on behalf of the general
public and, upon prevailing, shall recover reasonable
attorney's fees and costs.
16)Makes related and conforming changes.
17)Makes related legislative findings and declarations.
EXISTING LAW :
1)Defines a "foreign labor contractor" as any person who for
compensation agrees to assist in securing or who actually
secures for or provides employment services to foreign
workers.
2)Defines "employment services" to include, but not be limited
to, procuring employment, marketing labor, or otherwise
arranging the employment or transportation, housing, and other
living accommodations for foreign workers.
3)Requires foreign labor contractors to provide to a foreign
worker the material terms of a work contract, prohibits a
foreign labor contractor from asserting false, fraudulent, or
misleading information, and prohibits retaliation by a foreign
labor contractor against a foreign worker, who makes a claim
against the foreign labor contractor for violations of the
law.
FISCAL EFFECT : According to the Senate Appropriations
Committee, the Department of Industrial Relations (DIR)
estimates that it would incur first-year costs of $756,000
(special funds) and $606,000 ongoing to implement the provisions
SB 516
Page 4
of the bill.
COMMENTS : In 1988, after hearing testimony that labor agents
were recruiting foreign workers by making false representations
and promises of employment, the Legislature enacted AB 4554
(Roybal-Allard, Ch. 1450, Stats. 1988) to address some of the
abuses by labor agents. AB 4554 contained disclosure and
contract requirements aimed at providing foreign labor workers
with information regarding their wages and other terms of
employment.
Since 1988, abusive treatment and working conditions of foreign
labor workers has continued. A recent study of labor practices
with respect to foreign labor workers in the United States found
that "regardless of visa category, employment sector, race,
gender or national origin, internationally recruited workers
face disturbingly common patterns of recruitment abuse,
including fraud, discrimination, severe economic coercion,
retaliation, blacklisting and, in some cases, forced labor,
indentured servitude, debt bondage and human trafficking." (The
American Dream Up For Sale: A Blueprint for Ending
International Labor Recruitment Abuse, The International Labor
Recruitment Working Group (Feb. 5, 2013)
[as of
Apr. 20, 2013], at p. 5.) This report concluded that "disparate
rules and requirements for workers, employers and recruiters, as
well as lax enforcement of the regulations that do exist, allow
and even incentivize recruiters and employers to engage in
abuses." (Id.)
According to the Office of Immigration Statistics within the
Department of Homeland Security, there were approximately
150,000 foreign temporary workers in California as of September
2011. (Office of Immigration Statistics, 2011 Yearbook of
Immigration Statistics, U.S. Dept. of Homeland Security (Sept.
2012) (as of Apr. 20, 2013),
Supplemental Table 3 Nonimmigrant Admissions (I-94 Only) by
Class of Admission and State or Territory of Destination: Fiscal
Year 2011.) These foreign temporary workers maintain lawful
nonimmigration status and are authorized to work in California
under various classifications of federal work visas. However,
concerns have arisen that the visa process itself has provided
opportunities for labor recruiters to exploit foreign workers.
SB 516
Page 5
Existing federal law, the Trafficking Victim Protection Act of
2000 (TVPA) (P.L. 106-386, reauthorized by P.L. 113-4) combats
the use of force, fraud, or coercion for the purpose of
subjecting an individual to involuntary servitude, peonage, debt
bondage, or slavery. In order to further combat the growing
problem of foreign labor abuses, this bill would provide
supplemental disclosure requirements, prohibitions on
mistreatment of foreign temporary workers, and authorize
additional enforcement actions.
KEY PROVISIONS OF THIS BILL
Registration of Foreign Labor Contractors and Related
Requirements
This bill, as of January 1, 2015, would require the Labor
Commissioner to establish registration requirements for a person
acting as a foreign labor contractor. This bill, as of July 1,
2015, would require a person acting as a foreign labor
contractor to register with the Labor Commissioner.
This bill would prohibit the registration or renewal of a person
acting as a foreign labor contractor unless all of the following
conditions are satisfied:
The person has executed a written application in a form
prescribed by the commissioner, subscribed and sworn to by
the person, and containing all of the following: (1) a
statement by the person of all facts required by the
commissioner concerning the applicant's character,
competency, responsibility, and the manner and means by
which the person proposes to conduct operations as a
foreign labor contractor if registered; (2) the names and
addresses of all persons, except bona fide employees on
stated salaries, financially interested, either as
partners, associates, or profit sharers, in the proposed
operation as a foreign labor contractor, together with the
amount of their respective interests; and (3) a declaration
consenting to the designation by a court or the
commissioner as an agent available to accept service of
summons in any action against the registrant, if the
registrant has left the jurisdiction in which the action is
commenced or otherwise has become unavailable to accept
service;
SB 516
Page 6
The commissioner, after investigation, is satisfied as
to the character, competency, and responsibility of the
person;
The person has deposited with the commissioner a surety
bond, as specified, in an amount based on the size of the
person's annual gross receipts from operations as a foreign
labor contractor; however, if the foreign labor contractor
has been the subject of a final judgment in a year in an
amount equal to that of the bond required, that contractor
shall be required to deposit an additional bond within 60
days, and shall be conditioned on the foreign labor
contractor complying with all foreign labor contractor
requirements and paying all damages to any person by
failure to do so, or by any violation, or false statements
or misrepresentations made in the registration process.
The bond shall also be payable for interest on wages and
for any damages arising from violation of applicable orders
of the Industrial Welfare Commission, and for any other
monetary relief awarded to a foreign worker as a result of
a violation of law by the foreign labor contractor; and
The person has paid to the commissioner a registration
fee of $500 plus a $10 dollar filing fee.
This bill would prohibit the registration of a foreign labor
contractor who was found by a court, the Secretary of Labor, or
the commissioner to have violated any of the following
provisions: (1) the federal Trafficking Victims Protection Act
of 2000 (Division A, Public Law 106-386), as amended (TVPA); (2)
Labor Code sections 1682 to 1699; (3) Penal Code section 236.1;
or (4) an applicable guest worker program.
Requirements Imposed on Persons Using Services of a Foreign
Labor Contractor
This bill would require a person using the services of a foreign
labor contractor to procure foreign workers or employees to
disclose to the Labor Commissioner such use of a foreign labor
contractor. Such disclosure must include, but is not limited
to:
The names and addresses of all persons (except bona fide
employees on stated salaries) financially interested,
either as partners, associates, or profit sharers, in the
SB 516
Page 7
person's business enterprise, together with the amount of
their respective interests;
A declaration consenting to the judicial designation of
the Labor Commissioner as an agent available to accept
service of summons in any action against the person, if the
person has left the jurisdiction in which the action is
commenced or otherwise has become unavailable to accept
service;
A copy of the foreign labor contractor's disclosure to
all foreign workers or employees obtained by the person
through the services of the foreign labor contractor or its
agents; and
Information about the steps the person has taken to
verify the accuracy of the information provided in the
foreign labor contractor's disclosure.
This bill would prohibit a person from knowingly entering into
an agreement for the services of a foreign labor contractor that
is not registered.
This bill would require a person using or anticipating using the
services of a foreign labor contractor to deposit with the Labor
Commissioner a surety bond in an amount based on the size of the
person's annual payroll for all employees, as specified, and
provide that if the person has been the subject of a final
judgment in a year in an amount equal to that of the bond
required, that person must deposit an additional bond within 60
days, and use of the bond will be conditioned on the person
complying with all the registration requirements and paying all
damages to any person by failure to do so, or by any violation,
or false statements or misrepresentations made in complying with
the registration requirements. The bond shall also be payable
for interest on wages and for any damages arising from violation
of applicable orders of the Industrial Welfare Commission, and
for any other monetary relief awarded to a foreign worker as a
result of a violation of law by the person.
Civil Penalties and Remedies to Plaintiff
Existing law authorizes the commissioner or person harmed by a
violation of the foreign labor contractor laws to bring an
action for injunctive relief and damages, and authorizes an
award of damages, costs, and reasonable attorney's fees in an
amount no less than $500 to the prevailing victim. (Bus. &
Prof. Code Sec. 9998.8(b).) This bill would modify this
SB 516
Page 8
provision and authorize a civil penalty, between $1,000 and
$25,000, per violation, to be assessed against a person in
violation of the foreign labor contractor laws, and would
authorize the Labor Commissioner or foreign worker to:
Bring an action for injunctive relief against a person
who violates the foreign labor contractor laws and, upon
prevailing, recover costs and reasonable attorney's fees.
Bring an action for damages, against the person to
recover the greater of actual damages or $500 per employee
per violation for an initial violation, and $1,000 per
employee for each subsequent violation, and, upon
prevailing in the action, recover costs and reasonable
attorney's fees; and
Enforce the liability on the bonds of the foreign labor
contractor or employer.
The author argues that a statutory civil penalty is necessary to
offset the large amounts of money that many foreign workers lose
as a result of the predatory tactics utilized by unscrupulous
foreign labor contractors, and to serve as a deterrent to those
defrauding these workers. Further, existing law authorizes farm
workers to file an action against an unlawful employer for
injunctive relief, damages, and attorney's fees. (See Lab. Code
Secs. 1697(b) and 1697.1(c).) Notably, this bill would provide
the same rights of action and remedies as the Legislature has
already provided to farm workers.
Joint and Several Liability
This bill would make foreign labor contractors, and those
persons using their services to obtain foreign workers or
employees, jointly and severally liable for violations of the
foreign labor contractor laws. This provision is similar in
concept to Labor Code section 2753, which imposes joint and
several liability on a person who, for money or other valuable
consideration, knowingly advises an employer to treat an
individual as an independent contractor to avoid employee
status.
According to the author and sponsor, this bill, by making both
the foreign labor contractor and the employer jointly and
severally liable for violations of the foreign labor contractor
law, would provide additional deterrence from unlawful conduct
by unscrupulous foreign labor contractors and employers who use
SB 516
Page 9
their services.
Private Attorney General Right of Action
This bill would authorize a person who, upon information and
belief, claims a violation of the foreign labor contractor laws
to bring a civil action for injunctive relief on behalf of the
general public. This bill would authorize this person, upon
prevailing in such action, to recover attorney's fees and costs.
This provision is substantially similar to a private attorney
general right of action provided to protect farm workers from
specified unlawful employment abuses related to charges for
transportation costs committed by farm labor contractors. (See
Lab. Code Sec. 1697.1(d).)
This bill would also authorize the Labor Commissioner, or
deputies and representatives authorized by the Labor
Commissioner, to take assignments of actions on the foreign
labor contractor's bonds and prosecute actions on behalf of
foreign workers who are harmed by violations of the foreign
labor contractor laws and who, in the judgment of the
commissioner, are financially unable to hire an attorney. This
provision is also modeled after the farm worker protections in
Labor Code section 1693 related to farm labor contractors.
ARGUMENTS IN SUPPORT :
The author writes the following in support of this bill:
"Foreign labor contractors are increasingly relied upon to
facilitate the migration of labor from one country to another.
California is the leading destination state in the U.S. for
temporary foreign workers with over 100,000 temporary workers
annually.
While many contractors behave ethically and lawfully, others
do not. They misuse U.S. visa programs to exploit workers,
SB 516
Page 10
often charging exorbitant fees for their services, forcing
workers into debt bondage, falsifying documents, and deceiving
workers about the terms and conditions of proposed employment.
Unscrupulous foreign labor contractors threaten workers with
blacklisting, discrimination, and other forms of retaliation,
including the imposition of additional fees and violence
against themselves, family members, or their home communities,
for reporting abuses or seeking to escape their fraudulently
induced servitude. Legislation is needed to prevent human
trafficking and forced labor of foreign workers in California
resulting from the exploitative and abusive practices of
foreign labor contractors."
The Coalition to Abolish Slavery & Trafficking (CAST), sponsor
of this bill, asserts that foreign workers entering California
on temporary work visas are vulnerable to exploitation and human
trafficking. Foreign labor contractors, after making false
promises to foreign workers to entice them to work in
California, employ intimidation, threats, restraint, and
coercion against foreign workers to enslave them in debt bondage
by charging exorbitant recruitment fees to the foreign worker,
who is then forced to work to pay off of the recruitment fees.
CAST provides the following examples:
"In 2012, six Mexican workers were fraudulently recruited to
come to the United States to work in forestry. The recruiter
came to their small town in rural Mexico to convince the
workers to work in Northern California. The workers were
promised a good salary and free room and board in the United
States (U.S.). Relying on these promises the workers entered
the [U.S.] on H2B visas [nonimmigrant visas primarily issued
to foreign nationals to enter into the U.S. temporarily and
engage in nonagricultural employment which is seasonal,
intermittent, a peak load need, or a one-time occurrence]
arranged by the recruiters and traveled to California.
However, once in the [U.S.], their conditions were vastly
different than promised. They were charged extremely high
deductions for room and board and were often not paid for
their labor. They were forced to live and work in dangerous
conditions, sleeping in tents in the wilderness, living
without electricity, and denied clean drinking water. The
workers were kept in terror of their traffickers, who were
armed and repeatedly threatened to shoot and kill the workers
SB 516
Page 11
if they did not comply with the traffickers' demands.
[Ten] Filipino hotel workers . . . were fraudulently induced
to come to the [U.S.] on H2B visas and work in California,
Arizona and Florida. The workers were induced to take out
high interest loans to pay the thousands of dollars charged by
the traffickers as placement fees. They were promised a good
salary, free room and board, and the chance to receive their
lawful permanent residence. Once in the [U.S.], the workers
were not paid what they were promised and faced high
deductions for room and board. When the workers complained
about their wages and attempted to seek other work, they were
threatened by their employers who repeatedly told them that
they would be arrested and deported if they left their jobs.
Terrified[,] the workers knew that they had no choice but to
continue to work for their traffickers against their will.
More than 250 Thai workers were fraudulently recruited to come
to the [U.S.] on temporary work visas. The recruiters induced
the workers to pay recruitment fees as high as $25,000 and
promised them lucrative jobs in agriculture work in the
[U.S.]. In the [U.S.], they were forced to work on farms in
Washington State and Hawaii by an agency that has offices in
California. The traffickers confiscated the workers'
passports and threatened them with deportation if they
complained. The Thai workers were often forced to live [in]
housing infested with rats and insects and [were] forbidden
from leaving the farm. They endured physical violence and
threats, which left them terrified of their traffickers."
The author further asserts that "businesses are profiting at the
expense of enslaved workers, often unwittingly. Businesses need
the additional information and support of the registration
systems to ensure they protect both [U.S.] workers [as] well as
those recruited internationally by foreign labor recruiters.
Companies who behave ethically and use registered foreign labor
recruiters will benefit from the system and not be liable.
Workers will benefit as well since they will be provided more
information and access to relief if they are abused while
working in California. Moreover, in a broader context,
subjecting all employers who employ foreign workers to a common
standard will level the competitive playing field for
all-particularly the many businesses who do treat workers
fairly."
SB 516
Page 12
ARGUMENTS IN OPPOSITION :
A coalition of employer groups, including the California Chamber
of Commerce, opposes this bill and writes the following:
"According to [this bill], any person or company that assists
in securing or actually secures or provides employment to
foreign workers for compensation is a foreign labor contractor
(FLC), and as such, any employer who hires a foreign worker
would be subject to the requirements of the bill.
Accordingly, this sweeping definition appears to include
employers of all foreign workers who enter the U. S.
legitimately through different types of visas. These workers
are often assisted by a variety of entities, or recruited by
the employer, all of which under this bill will be designated
as foreign labor contractors. Examples of included foreign
employees:
Computer engineers, doctors, nurses, medical
specialists, and researchers.
International college students that come out in groups
to work in theme parks and resorts seasonally.
Hospitality workers for hotels and restaurants.
Actors and other professionals for movie and television
production.
The most alarming requirements in the bill include, but are
not limited to:
All FLCs must register with the Labor Commissioner and
post a bond. The registration includes detailed
information, any of which is incomplete or inaccurate could
be viewed as a violation and the FLC could be subject to
penalties and a lawsuit. The employer would be jointly
liable.
The employer must disclose to the Labor Commissioner the
use of, or planned use of a FLC, and post a surety bond.
Not using a registered FLC subjects the employer to
penalties.
Any violation is equally punishable, without any showing
of harm by the FLC. The employer is jointly liable.
Furthermore, no actual harm must be shown to bring a
private right of action; anyone who believes there is a
violation can file a lawsuit.
SB 516
Page 13
In addition, opponents argue that "[i]mmigration reform is
currently being debated in congress. Both the House of
Representatives and the Senate are taking up bills to address
various aspects of immigration, including foreign labor
contractors in the Senate. The conversation in California is
premature given the rapid pace with which reform is moving in
congress? [this bill] creates duplicative, overlapping and more
onerous requirements than the language in the congressional
Senate bill (S. 744). California should wait until federal
immigration reform has been accomplished in order to avoid
conflicts with federal requirements. Should congress and
California pass conflicting or duplicative FLC registration and
regulation, California employers who hire foreign workers will
be at a competitive disadvantage to businesses in other states
because they will face higher litigation risks, and higher
burdens."
The Motion Picture Association of America (MPAA) opposes this
bill because it argues that a motion picture company that
engages an actor, director, or any member of the crew, who is
not a citizen, would meet the definition of "foreign labor
contractor" and be required to fulfill all of the
responsibilities under the bill, including registering with the
Labor Commissioner and posting a surety bond. MPAA also
contends that the private attorney general provision of the bill
"means any enterprising individual will be able to state a claim
for a potential minor violation of the bill's provisions" and
would be able to pursue frivolous cases against MPAA member
companies as potential "deep pockets."
COMMITTEE STAFF COMMENTS :
1)Proposed Amendment to Exclude Licensed Talent Agencies
The Association of Talent Agents (ATA) expressed concerns that
the introduced version of this bill inadvertently included
talent agencies that already fall under the regulatory oversight
of the Department of Industrial Relations. Existing law
(commencing with Labor Code section 1700), among other things,
subjects talent agents to background checks, fingerprinting,
acceptable conduct standards, surety bond requirements, and
specific limitations on fees.
In response to this concern, the author has agreed to exclude
licensed talent agencies from the provisions of the bill with
SB 516
Page 14
proposed amendment language as follows:
On page 4, in line 37, after the period insert:
"Foreign labor contractor" does not include a person
licensed by the Labor Commissioner as a talent agency under
Chapter 4 (commencing with Section 1700) of the Labor
Code."
Committee staff has been advised that with this proposed
amendment, ATA will remove its opposition to the bill. Since
this bill has been double-referred to the Assembly Judiciary
Committee, the author will be taking this amendment in that
committee.
2)Direct Employer Conduct vs. Third-Party Foreign Labor
Contractors
As noted above, opponents express concern that the breadth of
the bill could include within the definition of the bill
employers that directly secure the employment of foreign
workers, such as in assisting with work visas and similar
activities. Specifically, opponents contend that, under this
bill any person or company that assists in securing or actually
secures or provides employment to foreign workers for
compensation is a FLC, and as such, any employer who hires a
foreign worker would be subject to the requirements of the bill.
They contend that this "sweeping definition" appears to include
employers of all foreign workers who enter the country
legitimately through different types of visas.
The author and the sponsor indicate that the provisions of this
bill related to FLCs are intended to regulate third-party actors
that engage in these services, not necessarily employers who
engage in these services directly on their own. Therefore, in
response to these concerns, the author proposes to amend this
bill as follows:
On page 4, in line 28, after the period insert:
"Employment services" do not include the activities of an
employer, or employee of an employer, if those services are
provided directly to foreign workers solely to find workers
for the employer's own use, and are provided without the
SB 516
Page 15
participation of any foreign labor contractor."
Since this bill has been double-referred to the Assembly
Judiciary Committee, the author will be taking this amendment in
that Committee.
It should be noted that this bill will continue to impose
specified requirements on persons using or anticipating using
the services of a foreign labor contractor, as discussed above.
3)Provisions of the Bill Related to Civil Penalties, Joint and
Several Liability and Private Attorney General Right of Action
As discussed above, the bill contains specific provisions
related to civil penalties, joint and several liability, and
private attorney general rights of action. As noted above,
opponents have raised significant concerns with these provisions
of the bill. This bill has been double-referred to the Assembly
Judiciary Committee, where a more thorough discussion of these
specific provisions may be more appropriate.
REGISTERED SUPPORT / OPPOSITION :
Support
Alliance to End Slavery and Trafficking
Coalition to Abolish Slavery and Trafficking
Coalition of Immokalee Workers
International Justice Mission
Safe Horizon
Solidarity Center
Verite
Vital Voices Global Partnership
American Association of University Women - California
California Labor Federation, AFL-CIO
California Rural Legal Assistance Foundation
District Attorney, City and County of San Francisco
Food Chain Workers Alliance
National Council of Jewish Women-California
Pilipino Workers Center of Southern California
Polaris Project
Religious of the Sacred Heart of Mary
Religious Sisters of Charity
Thai Community Development Center
SB 516
Page 16
Opposition
American Council of Engineering Companies - California
Bay Area Council
California Attractions and Parks Association
California Chamber of Commerce
California Hospital Association
California Hotel and Lodging Association
California Manufacturers and Technology Association
California Restaurant Association
California Ski Industry Association
California Travel Association
Los Angeles Chamber of Commerce
Motion Picture Association of America
Motion Picture Association of America
National Federation of Independent Business
Southwest California Legislative Council
TechAmerica
TechNet
Valley Industry and Commerce Association
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091