BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 556|
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THIRD READING
Bill No: SB 556
Author: Corbett (D)
Amended: 5/9/13
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-1, 5/7/13
AYES: Evans, Corbett, Jackson, Leno, Monning
NOES: Anderson
NO VOTE RECORDED: Walters
SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE : 4-0, 5/8/13
AYES: Lieu, Leno, Padilla, Yee
NO VOTE RECORDED: Wyland
SUBJECT : Agency: ostensible
SOURCE : California Labor Federation
California Professional Firefighters
Consumer Federation of California
DIGEST : This bill provides that a person or entity that
enters into a contract or agreement for labor or services with a
contractor is liable for any damages caused by that contractor
or his/her employee for work performed under the contract if
certain circumstances exist that causes a member of the public
to believe that the contractor or his/her employee was an agent
of the person or entity.
ANALYSIS :
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Existing law:
1.Provides numerous comprehensive requirements, rights, and
remedies relating to the employer-employee relationship,
including, but not limited to, wages and other compensation,
hours, workers' compensation, labor code violation actions,
employment contracts, and standards for working conditions.
2.Defines "employee" to mean every person in the service of an
employer under any appointment or contract of hire or
apprenticeship, express or implied, oral or written, whether
lawfully or unlawfully employed, as specified. (Labor Code
Sec. 3351) But excludes specified individuals such as someone
who is employed by his/her parent, spouse or child. (Labor
Code Sec. 3352)
3.Defines "independent contractor" to mean any person who
renders service for a specified recompense for a specified
result, under the control of his principal as to the result of
his work only and not as to the means by which such result is
accomplished. (Labor code Sec.3353) The contract of
employment is a contract by which one, who is called the
employer, engages another, who is called the employee, to do
something for the benefit of the employer or a third person.
(Labor Code Sec. 2750)
4.Specifies that no person shall state, in an advertisement that
they are a producer, manufacturer, processor, wholesaler, or
importer, or that they own or control a factory or other
source of supply goods when such is not the fact. No person
shall in any other manner misrepresent the character, extent,
volume, or type of his/her business. (BPC Sec. 17505)
5.Specifies that it is unlawful for any person doing business in
California and advertising to consumers to make any false or
misleading advertising claims. Includes claims that purport
to be based on factual, objective, or clinical evidence;
compare the product's effectiveness or safety to that of other
brands; or, purport to be based on any fact. (BPC Sec. 17508)
6.Authorizes an employer to prescribe the weight, color,
quality, texture, style, form and make of uniforms required to
be worn by his/her employees. (Labor Code Sec. 452)
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This bill:
1.Provides that a person or entity that enters into a contract
or agreement for labor or services with a contractor is liable
for any damages caused by that contractor or his/her employee
for work performed under the contract if certain circumstances
exist that causes a member of the public to believe that the
contractor or his/her employee was an agent of the person or
entity. Specifically, a person or entity that enters into a
contract for labor or services is held liable if either of the
following occurred:
A. The contractor or contractor's employee wore a uniform
that is substantially similar to the uniform of the person
or entity so as to cause a member of the public to believe
that the contractor or contractor's employee was an agent
of the person or entity.
B. The contractor or contractor's employee operated a
vehicle with the logo of the person or entity and the
vehicle had an appearance that would cause a member of the
public to believe that the contractor or contractor's
employee was an agent of the person or entity.
1.Conforms the liability provided in this bill to other immunity
exceptions.
2.Applies only to contracts entered into on or after January 1,
2014.
Background
Under existing law, a contract of employment is a contract by
which one, who is called the employer, engages another, who is
called the employee, to do something for the benefit of the
employer or a third person. Existing law and regulations set
forth the conditions under which a person may be classified as
an independent contractor, and thus not subject to many wage,
overtime, working conditions, and various other labor standards.
The Employment Development Department (EDD), the Franchise Tax
Board, and the federal government are the primary entities that
have established criteria for making a determination as to
whether a person may be classified as an independent contractor.
EDD has developed a guide, worksheets, and forms to assist
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businesses in determining whether a worker is an employee or
independent contractor.
According to a 2012 UC Berkeley Labor Center report,
middle-class long-term jobs are shifting to include more
temporary and subcontracted employment. (Temporary Workers in
CA are twice as likely as non-temps to live in poverty: Problems
with Temporary and Subcontracted work in CA, August 2012) This
type of contingent work has been growing over the past two
decades. The report notes that, "In California almost
one-quarter of a million people worked in the temporary help
services industry in 2010; another 37,000 people worked for
employee leasing firms totaling 282,000 workers in these two
industries."
According to the report, temporary and subcontracted work
present two basic public policy problems, (1) that temporary and
subcontracted arrangements erode wages [leading contingent
workers to rely more on the state services] and (2) temporary
and subcontracted arrangements undermine existing worker
protections first by allowing employer to avoid certain worker
provisions, and second by making enforcement of the remaining
protections difficult. The report suggests that solutions to
this problem range from increasing low wages to mandating the
same pay for temporary workers. In addition, the report
suggests that "policies to combat retaliation and hold other
actors in the supply chain accountable are promising ways to
uphold existing worker protections in the face of workplace
changes."
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 5/10/13)
California Labor Federation (co-source)
California Professional Firefighters (co-source)
Consumer Federation of California (co-source)
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore & Warehouse Union
Professional & Technical Engineers, Local 21
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UNITE HERE!
United Food and Commercial Workers Union, Western States Council
Utility Workers Union of America, Local 132
OPPOSITION : (Verified 5/10/13)
Associated General Contractors
Building Owners and Managers Association of California
California Ambulance Association
California Business Properties Association
California Chamber of Commerce
California Chapter of American Fence Association
California Employment Law Council
California Fence Contractor's Association
California Hospital Association
California Manufacturers and Technology Association
California Restaurant Association
California Trucking Association
Civil Justice Association of California
CSAC Excess Insurance Authority
Engineering Contractor's Association
Flasher Barricade Association
International Council of Shopping Centers
International Franchise Association
International Warehouse Logistics Association
Marin Builders Association
Messenger Courier Association of America
NAIOP of California, the Commercial Real Estate Development
Association
National Federation of Independent Business
Personal Insurance Federation of California
Rural County Representatives of California
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT : According to the author and proponents,
companies are routinely hiring through third party
intermediaries, such as labor contractors or temporary staffing
agencies. Arrangements that they argue, separate the company at
the top from the workers at the bottom and shielding from
liability the company that is calling the shots. They argue
that some workers are not even told who their real employer is;
giving them fewer tools to ensure their rights are not violated.
For example, hotel workers are sometimes hired by the hotel but
paid by a subcontractor who is the employer of record.
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Proponents argue that subcontracting also has implications for
consumers and the public because many times consumers don't even
know what entity they are actually doing business with, or who
is in charge if something goes wrong. In addition, they argue
that when workers enter a home or have access to personal
information the consumer should have the right to know if this
is a city employee, a known company employee, a temporary or
contracted out employee, or an independent contractor.
ARGUMENTS IN OPPOSITION : Opponents write, "SB 556 would
completely ignore the legal significance of the independent
contractor relationship, and impose liability against the
contracting entity for any damages caused by the contractor or
contractor's employees, solely on the basis that the contractor
or its employees wore a uniform that was substantially similar
to that of the contracting entity or displayed a logo on its
vehicle of the contracting entity that made the public believe
such individuals were employees of the contracting entity. To
our knowledge, it is unprecedented to extend liability for wage
and hour violations or intentional conduct to a third party
solely on the basis of appearances."
"There is no evidence that any member of the public is confused,
harmed, or damaged in any way based upon a mistaken belief that
the independent contractor is an employee of the company.
Specifically, there is no proof that any company has refused to
stand behind the services provided or resolve a customer
complaint on the basis that the individual performing the
services was an independent contractor versus an employee.
There is also no evidence that any member of the public was
harmed based upon a mistaken belief as to the employment
relationship between an individual and the contracting company."
AL:ej 5/10/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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