Assembly Bill 1897 Creates Greater Liability For Employers Who Use Labor Contractors/Staffing Agencies

On January 1, 2015 Assembly Bill 1897 goes into effect. AB 1897 amends Labor Code section 2810 by creating a new Labor Code section 2810.3.

The new law targets employers that use labor contractors (i.e. staffing agencies). Specifically, once AB 1897 becomes effective, private employers will be unable to deny liability for labor contractor’s failure to pay all required wages or to secure valid workers’ compensation coverage for contract workers.  Employers using the labor services will now “share with the labor contractor all civil legal responsibility and civil liability for all workers supplied” to the company.  Further, the statute expressly provides that it does not limit any other theories of liability or requirements established by other statutes or common law.

The statute exempts the following from coverage:

• A business with fewer than 25 workers (which includes “those hired directly by the client employer and those obtained from, or provided by, any labor contractor”);
• A business with five or fewer workers supplied by a labor contractor or labor contractors at any given time; and
• The state or any political subdivision of the state, including any city, county, city and county, or special district.