You’ve Just Become Your Brother’s Keeper

On September 28, 2014, the Governor signed AB 1897, which imposes on employers who obtain or are provided workers to perform labor within the employer’s usual course of business from a labor contractor  (referred to as a “client employer”), civil liability for wages unpaid by the labor contractor or for the failure of the labor contractor to secure workers compensation coverage.  Employers with a workforce of less than 25 workers, including workers obtained from a labor contractor, and employers with five or fewer workers supplied by labor contractors are exempt. Exempt executive, administrative and professional employees are not counted or protected by AB 1897, though other exempt employees (such as outside salespersons) are both counted and covered.

An exemption for the “use of an independent contractor other than a labor contractor” seems to prevent AB 1897 from being applied to contracting with a licensed subcontractor by another licensed contractor to perform work on a  construction project.   There is no question, however, that AB 1897 applies to employers, including construction employers, using staffing agencies to provide regular or temporary workers.  This is not limited to office administrative staff but could include onsite construction staffing if an employee is paid by the staffing agency under a temporary staffing, employee leasing or similar arrangement.  AB 1897 prevents employers from obtaining a waiver of this requirement in the staffing agreement.

It is interesting that construction contractors lined up on both sides of this bill.  The Air Conditioning and Refrigeration Contractors Association, Air Conditioning Sheet Metal Association and California Chapters of the National Electrical Contractors Association supported AB 1897, while AGC, ABC and certain others opposed it.