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 begin delete amend Section 2810 of end delete begin insert add Section 2810.3 to end insert the Labor Code, relating to begin insert private end insert employment.

LEGISLATIVE COUNSEL’S DIGEST

AB 1897, as amended, Roger Hernández. begin delete Employment. end delete begin insert Labor contracting: client liability. end insert

begin insert

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.

end insert begin insert

This bill would require a client employer, as defined, to share with a labor contractor all legal responsibility and liability for the payment of wages, the failure to report and pay all required employer contributions, worker contributions, and personal income tax withholdings, and the failure to obtain valid workers’ compensation coverage. The bill would define a client employer as an individual or entity that receives workers to perform labor or services within the usual course of business of the individual or entity from a labor contractor. The bill would define a labor contractor as an individual or entity that supplies workers, by contract or otherwise, to perform labor or services within the usual course of business for a client employer. The bill would specify that it does not prohibit client employers and labor contractors from mutually contracting for remedies, including indemnification, for violations of its provisions by the other party. The bill would require a client employer or labor contractor to provide to a requesting agency or department, and make available for copying, information required to verify compliance with applicable state laws. The bill would authorize the Labor Commissioner and the Division of Occupational Safety and Health 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.

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Existing law prohibits a person or entity from entering into a contract or agreement for labor or services with specified types of contractors, including warehouse contractors among others, if the person or entity knows or should know that the contract or agreement does not include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided.

end delete begin delete

This bill would make nonsubstantive changes to these provisions.

end delete

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

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

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begin insert SECTION 1. end insert   

end insert

begin insert Section 2810.3 is added to the end insert begin insert Labor Code end insert begin insert , to
read: end insert

begin insert

begin insert 2810.3. end insert   

(a) As used in this section:

(1) “Client employer” means an individual or entity that
receives workers to perform labor or services within the usual
course of business of the individual or entity from a labor
contractor.

(2) “Labor contractor” means an individual or entity that
contracts with a client employer to supply workers to perform
labor or services within the usual course of business or otherwise
provides workers to perform labor or services within the usual
course of business for the client employer.

(3) “Wages” has the same meaning provided by Section 200
and all sums payable to an employee or the state because of any
failure to pay wages, as may be required by law.

(4) “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.

(b) A client employer shall share with a labor contractor all
legal responsibility and liability for the following:

(1) The payment of wages to workers provided by a labor
contractor.

(2) The failure to report and pay all required employer
contributions, worker contributions, and personal income tax
withholdings as required by the Unemployment Insurance Code.

(3) Failure to obtain valid workers’ compensation coverage as
required by law.

(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.

(d) The provisions of subdivisions (b) and (c) are in addition
to, and shall be supplemental of, any other liability or requirement
established by statute or common law.

(e) This section does not prohibit a client employer from
establishing, exercising, or enforcing by contract any remedies
against a labor contractor, including, but not limited to,
indemnification for liability created by acts of a labor contractor.

(f) This section does not prohibit a labor contractor from
establishing, exercising, or enforcing by contract any remedies
against a client employer, including, but not limited to,
indemnification for liability created by acts of a client employer.

(g) Upon request by a state agency or department, a client
employer or a labor contractor shall provide to the agency or
department any information 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.

(h) The Labor Commissioner and the Division of Occupational
Safety and Health may adopt regulations and rules of practice and
procedure necessary to administer and enforce this section.

(i) A waiver of this section is contrary to public policy, and is
void and unenforceable.

end insert

begin delete

SECTION 1.  

Section 2810 of the Labor Code is amended to read:

2810.  

(a) A person or entity shall not enter into a contract or
agreement 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 funds sufficient to allow the contractor
to comply with all applicable local, state, and federal laws or
regulations governing the labor or services to be provided.

(b) There is a rebuttable presumption affecting the burden of
proof that there has been no violation of subdivision (a) if the
contract or agreement with a construction, farm labor, garment,
janitorial, security guard, or warehouse contractor meets all of the
requirements in subdivision (d).

(c) Subdivision (a) does not apply to a person or entity who
executes a collective bargaining agreement covering the workers
employed under the contract or agreement, or to a person who
enters into a contract or agreement for labor or services to be
performed on his or her home residences, provided that a family
member resides in the residence or residences for which the labor
or services are to be performed for at least a part of the year.

(d) To meet the requirements of subdivision (b), a contract or
agreement with a construction, farm labor, garment, janitorial,
security guard, or warehouse contractor for labor or services shall
be in writing, in a single document, and contain all of the following
provisions, in addition to any other provisions that may be required
by regulations adopted by the Labor Commissioner from time to
time:

(1) The name, address, and telephone number of the person or
entity and the construction, farm labor, garment, janitorial, security
guard, or warehouse contractor through whom the labor or services
are to be provided.

(2) A description of the labor or services to be provided and a
statement of when those services are to be commenced and
completed.

(3) The employer identification number for state tax purposes
of the construction, farm labor, garment, janitorial, security guard,
or warehouse contractor.

(4) The workers’ compensation insurance policy number and
the name, address, and telephone number of the insurance carrier
of the construction, farm labor, garment, janitorial, security guard,
or warehouse contractor.

(5) The vehicle identification number of any vehicle that is
owned by the construction, farm labor, garment, janitorial, security
guard, or warehouse contractor and used for transportation in
connection with any service provided pursuant to the contract or
agreement, the number of the vehicle liability insurance policy
that covers the vehicle, and the name, address, and telephone
number of the insurance carrier.

(6) The address of any real property to be used to house workers
in connection with the contract or agreement.

(7) The total number of workers to be employed under the
contract or agreement, the total amount of all wages to be paid,
and the date or dates when those wages are to be paid.

(8) The amount of the commission or other payment made to
the construction, farm labor, garment, janitorial, security guard,
or warehouse contractor for services under the contract or
agreement.

(9) The total number of persons who will be utilized under the
contract or agreement as independent contractors, along with a list
of the current local, state, and federal contractor license
identification numbers that the independent contractors are required
to have under local, state, or federal laws or regulations.

(10) The signatures of all parties, and the date the contract or
agreement was signed.

(e) (1) To qualify for the rebuttable presumption set forth in
subdivision (b), a material change to the terms and conditions of
a contract or agreement between a person or entity and a
construction, farm labor, garment, janitorial, security guard, or
warehouse contractor must be in writing, in a single document,
and contain all of the provisions listed in subdivision (d) that are
affected by the change.

(2) If a provision required to be contained in a contract or
agreement pursuant to paragraph (7) or (9) of subdivision (d) is
unknown at the time the contract or agreement is executed, the
best estimate available at that time is sufficient to satisfy the
requirements of subdivision (d). If an estimate is used in place of
actual figures in accordance with this paragraph, the parties to the
contract or agreement have a continuing duty to ascertain the
information required pursuant to paragraph (7) or (9) of subdivision
(d) and to reduce that information to writing in accordance with
the requirements of paragraph (1) once that information becomes
known.

(f) A person or entity who enters into a contract or agreement
referred to in subdivisions (d) or (e) shall keep a copy of the written
contract or agreement for a period of not less than four years
following the termination of the contract or agreement. Upon the
request of the Labor Commissioner, any person or entity who
enters into the contract or agreement shall provide to the Labor
Commissioner a copy of the provisions of the contract or
agreement, and any other documentation, related to paragraphs
(1) to (10), inclusive, of subdivision (d). Documents obtained
pursuant to this section are exempt from disclosure under the
California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).

(g) (1) An employee aggrieved by a violation of subdivision
(a) may file an action for damages to recover the greater of all of
his or her actual damages or two hundred fifty dollars ($250) per
employee per violation for an initial violation and one thousand
dollars ($1,000) per employee for each subsequent violation, and,
upon prevailing in an action brought pursuant to this section, may
recover costs and reasonable attorney’s fees. An action under this
section shall not be maintained unless it is pleaded and proved that
an employee was injured as a result of a violation of a labor law
or regulation in connection with the performance of the contract
or agreement.

(2) An employee aggrieved by a violation of subdivision (a)
may also bring an action for injunctive relief and, upon prevailing,
may recover costs and reasonable attorney’s fees.

(h) The phrase “construction, farm labor, garment, janitorial,
security guard, or warehouse contractor” includes any person, as
defined in this code, whether or not licensed, who is acting in the
capacity of a construction, farm labor, garment, janitorial, security
guard, or warehouse contractor.

(i) (1) The term “knows” includes the knowledge, arising from
familiarity with the normal facts and circumstances of the business
activity engaged in, that the contract or agreement does not include
funds sufficient to allow the contractor to comply with applicable
laws.

(2) The phrase “should know” includes the knowledge of any
additional facts or information that would make a reasonably
prudent person undertake to inquire whether, taken together, the
contract or agreement contains sufficient funds to allow the
contractor to comply with applicable laws.

(3) A failure by a person or entity to request or obtain any
information from the contractor that is required by an applicable
statute or by the contract or agreement between them, constitutes
knowledge of that information for purposes of this section.

(j) For the purposes of this section, “warehouse” means a facility
the primary operation of which is the storage or distribution of
general merchandise, refrigerated goods, or other products.

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