BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: June 27, 2012 2011-2012 Regular
Session
Consultant: Gideon L. Baum Fiscal:Yes
Urgency: No
Bill No: AB 1744
Author: Lowenthal
As Introduced/Amended: March 29, 2012
SUBJECT
Employee compensation: itemized statements.
KEY ISSUE
Should the Legislature require temporary services employers to
report the name and address of the legal entities that have
requested the temporary workers, as well as report the hours
worked for each entity?
PURPOSE
To increase payroll reporting requirements for temporary
services employers and protect temporary workers from wage
theft.
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.
(Labor Code �201.3/Unemployment Insurance Code �606.5)
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.
(Labor Code �226)
Existing law also:
i. Exempts the state or a city, county, city and county,
district, or other governmental entity from the above
provisions; and
ii. 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.
(Labor Code � 226)
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. (Labor Code � 226)
This bill would require that the payroll statement include, if
the employer is a temporary services employer, the name and
address of the legal entities that secured the services of the
employer and total hours worked for each legal entity.
COMMENTS
1. A Brief Discussion on Temporary Services Employers and
Existing Law:
According to the author, the percentage of Californians whose
jobs are temporary has nearly quadrupled in the past 30 years.
The author 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, listing the legal entities who secure the
employee's services and the hours worked will bring clarity to
Hearing Date: June 27, 2012 AB 1744
Consultant: Gideon L. Baum Page 2
Senate Committee on Labor and Industrial Relations
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 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% of the industry's revenues came
from clerical positions; 65% 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.
AB 1744 would apply the same provisions currently in place for
farm labor contractors to temporary services employers.
2. The Wage Theft Prevention Act of 2011 and Possible Amendments:
AB 469 (Swanson), Statutes of 2011, Chapter 655, requires 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.
For temporary services employers and professional employer
Hearing Date: June 27, 2012 AB 1744
Consultant: Gideon L. Baum Page 3
Senate Committee on Labor and Industrial Relations
organizations, the template requires specific information on
the legal entity for whom the employee is providing work.
This information would be due with the start of each new
assignment, and could be reflected on a timely pay stub or
notice of such changes can be provided in another writing
required by law within 7 calendar days.
While this requirement on the template is almost certainly
allowed due to the broad mandate given to the Labor
Commissioner in AB 469, it is not explicitly allowed under
existing law. In order to avoid confusion on the matter, the
Committee may wish to clarify existing law with the following
amendment:
On page 4, between lines 19 and 20, insert the following:
SECTION 2. Section 2810.5 of the Labor Code is amended, to
read:
2810.5. (a) (1) At the time of hiring, an employer shall
provide each employee a written notice, in the language the
employer normally uses to communicate employment-related
information to the employee, containing the following
information:
(A) The rate or rates of pay and basis thereof, whether
paid by the hour, shift, day, week, salary, piece, commission,
or otherwise, including any rates for overtime, as applicable.
(B) Allowances, if any, claimed as part of the minimum
wage, including meal or lodging allowances.
(C) The regular payday designated by the employer in
accordance with the requirements of this code.
(D) The name of the employer, including any "doing business
as" names used by the employer.
(E) The physical address of the employer's main office or
principal place of business, and a mailing address, if
different.
(F) The telephone number of the employer.
(G) The name, address, and telephone number of the
employer's workers' compensation insurance carrier.
(H) Any other information the Labor Commissioner deems
material and necessary.
(2) The Labor Commissioner shall prepare a template that
Hearing Date: June 27, 2012 AB 1744
Consultant: Gideon L. Baum Page 4
Senate Committee on Labor and Industrial Relations
complies with the requirements of paragraph (1). The template
shall be made available to employers in such manner as
determined by the Labor Commissioner.
(3) If the employer is a temporary staffing employer,
staffing agency, or professional employer organization, the
template must also include the name, physical address of main
office, mailing address, telephone number of the entity for
whom the employee will perform work, and any other information
the Labor Commissioner deems material and necessary.
(b) An employer shall notify his or her employees in
writing of any changes to the information set forth in the
notice within seven calendar days after the time of the
changes, unless one of the following applies:
(1) All changes are reflected on a timely wage statement
furnished in accordance with Section 226.
(2) Notice of all changes is provided in another writing
required by law within seven days of the changes.
(c) For purposes of this section, "employee" does not
include any of the following:
(1) An employee directly employed by the state or any
political subdivision thereof, including any city, county,
city and county, or special district.
(2) An employee who is exempt from the payment of overtime
wages by statute or the wage orders of the Industrial Welfare
Commission.
(3) An employee who is covered by a valid collective
bargaining agreement if the agreement expressly provides for
the wages, hours of work, and working conditions of the
employee, and if the agreement provides premium wage rates for
all overtime hours worked and a regular hourly rate of pay for
those employees of not less than 30 percent more than the
state minimum wage.
3. Proponent Arguments :
Proponents argue that argues that AB 1744 will ensure 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
Hearing Date: June 27, 2012 AB 1744
Consultant: Gideon L. Baum Page 5
Senate Committee on Labor and Industrial Relations
tasks or sites. Proponents believe that this modest bill
provides essential protection to temporary workers and will
modernize labor law to reflect the growing form of alternate
employment.
4. Opponent Arguments :
The American Staffing Association (ASA) and the California
Staffing Professionals (CSP) argue that there has been no
demonstrated need for this bill. ASA and CSP note that
employees are given the name and address of the client and a
description of the work they will be performing when they
accept an assignment. In addition, ASA and CSP write that
this bill would add time, expense, and possible
reconfiguration of the software needed to generate the
paycheck.
Other opponents, such as the Chamber of Commerce, believe
that, by tying the reporting requirements to the payroll
statement, AB 1744 opens businesses up to litigation risks.
5. Prior Legislation :
AB 469 (Swanson), Statutes of 2011, Chapter 655, was discussed
above.
AB 243 (Alejo), Statutes of 2011, Chapter 671, creates the
requirement that farm labor contractors list the entity for
whom the employee performs work.
SUPPORT
California Conference Board of the Amalgamated Transit Union
California Labor Federation
California Rural Legal Assistance Foundation
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore & Warehouse Union
Professional & Technical Engineers, Local 21
Hearing Date: June 27, 2012 AB 1744
Consultant: Gideon L. Baum Page 6
Senate Committee on Labor and Industrial Relations
UNITE HERE
United Food and Commercial Workers Union, Western States Council
Utility Workers Union of America, Local 132
Warehouse Workers United
OPPOSITION
American Staffing Association
California Association for Health Services at home
California Chamber of Commerce
California Grocers Association
California Independent Grocers Association
California Staffing Professionals
National Federation of Independent Business
Plumbing-Heating-Cooling Contractors Association of California
TrueBlue, Inc.
Western Electrical Contractors Association, Inc.
Hearing Date: June 27, 2012 AB 1744
Consultant: Gideon L. Baum Page 7
Senate Committee on Labor and Industrial Relations