New law protects subcontracted and temp workers in CA

Q: I HAVE worked at XY Company, a big processing plant in the Inland Empire, for many years. My direct employer is really ABC LLC, which subcontracts labor to XY Company. My coworkers and I often work more than 8 hours per day, 6 to 7 days per week at XY Company but we are not paid overtime. When we asked our supervisor about overtime pay, we were told that if we were paid overtime, ABC LLC will become bankrupt and will have to lay off people. Any thoughts regarding our situation?
A: California law prohibits employers in some industries from entering into a contract for labor or services with contractors when the employer knows, or should have known, that the agreement does not include sufficient funds for the contractor to, among other things, pay proper wages or purchase workers compensation insurance for its workers.
The current law, however, is not enough to protect most workers who work in what’s variously known as the “underground,” “subcontracted,” or “outsourcing” economy. These types of workers are often found in “staffing agencies,” “temp firms,” or “subcontractors.” They generally work for little more than minimum wage, with few (if any) benefits, and even less hope of advancing in the ranks. They can be “temp workers” at the same job for many years.
If these workers attempt to seek monetary remedies, one likely outcome is that their “staffing agency” will simply fold up, close its business, and reorganize elsewhere with a different name, leaving the worker unpaid, possibly injured, and definitely worse off. Meanwhile the big company employer that supposedly has no employees, will go on with business as usual, simply moving on to the next staffing/temp agency or subcontractor for labor or services.
Some California lawmakers saw this gap in the law that left vulnerable workers unprotected, and they worked to close it. Their efforts culminated last month, with Gov. Jerry Brown signing AB 1897, a new law designed to extend liability to employers in nearly all industries for their labor contractor’s failure to pay wages, or provide adequate workers compensation benefits, to workers.
The new law defines a “Client employer” as a business entity that obtains or is provided workers to perform labor within the usual course of its business from a labor contractor (such as XY Company in the above inquiry). A “Labor contractor” is an individual or entity that supplies workers, either with or without a contract, to a “Client employer” to perform labor within the client employer’s usual course of business (such as ABC LLC in the above inquiry).
Some important points in this new law are as follows:
A Client employer is now required to share with a Labor contractor all civil legal responsibility and civil liability, for all workers supplied by that Labor contractor, for the payment of wages and the failure to obtain valid workers’ compensation coverage. This means companies can now be held accountable when their subcontractors or temp agencies violate labor/employment laws.
A Client employer is prohibited from shifting to the Labor contractor legal duties or liabilities under workplace safety provisions with respect to workers provided by the Labor contractor.
The new law applies to businesses with more than 25 workers, regardless of whether the workers are hired directly by the Client employer or obtained from, or provided by, a Labor contractor.
This new law will go into effect on January 1, 2015. In the meantime, workers with questions regarding how this new law affects their current working conditions, are encouraged to consult with knowledgeable employment attorneys.

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The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost.  Atty. Sayas’ Law Office is located at 500 N. Brand Blvd. Suite 980, Glendale, CA 91203. You can contact the office at (818) 291-0088 or visit  www.joesayaslaw.com. 

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C. Joe Sayas, Jr., Esq. is trial attorney who has obtained several million dollar recoveries for his clients against employers and insurance companies. He has been selected as a Super Lawyer by the Los Angeles Magazine, featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements, and is a member of the Million Dollar-Advocates Forum.