Contact: Anthony J. Amendola and Grant Goeckner-Zoeller; Mitchell Silberberg & Knupp LLP (Los Angeles, California, USA)
The California Legislature recently passed AB 1897, effective January 1, 2015, which adds Section 2810.3 to the Labor Code. This new law makes “client employers” jointly liable with “labor contractors” for the payment of wages and the failure to obtain valid workers’ compensation coverage.
A “client employer” is defined as any business entity “that obtains or is provided workers to perform labor within its usual course of business from a labor contractor.” The definition exempts small business entities with fewer than twenty-five (25) workers (counting both regular employees and leased workers) or with five (5) or fewer leased workers at a given time.
A “labor contractor” is broadly defined as any entity that supplies workers to perform labor, either with or without a contract. However, this definition does exclude some entities, including labor organizations, apprenticeship programs and hiring halls that supply labor pursuant to a collective bargaining agreement and motion picture industry payroll services companies.
AB 1897 makes the client employer jointly liable with the labor contractor for:
- The payment of wages; and
- The failure to secure valid workers’ compensation coverage.
As the new law defines “wages” to include “all sums payable to an employee or the state based upon any failure to pay wages,” it appears that all Labor Code penalties associated with the failure to pay wages are included.
