So you thought hiring a labor contractor to do your work instead of hiring your own employees would save you from some litigation problems?  Well, in California, think again.

Beginning January 1, 2015, under AB 1897, a client employer will share civil legal responsibility and civil liability for all workers supplied by a labor contractor for the payment of wages and the failure to obtain valid workers’ compensation coverage.

They define a “client employer” as a business entity that obtains or is provided workers to perform labor within its usual course of business from a labor contractor.

This does not apply to a business with less than 25 workers (including those hired directly by the client employer and workers from the labor contractor), or businesses with 5 or fewer workers supplied by a labor contractor at any given time.

What this new law says, is that the client employer jointly liable with the labor contractor for civil liability relating to the payment of wages and/or failure to provide workers’ compensation coverage.  However, the statue expressly permits client employers to include indemnification provisions in their service contracts and to enforce those provisions as a remedy against the labor contractor for liability created by acts of the labor contractor.  Labor Contractors by also contractually agree to indemnity provisions in their favor for acts on the part of the client employer that lead to liability.  The statute sets forth one exception to the ability of the parties to shift to the labor contractor any legal duties or liabilities under Cal-OSHA.

Under the new law, a worker or his representative must notify the client employer of violations at least 30 days prior to filing a civil action against the client employer.  It also states that you are not allowed to take adverse action against any employee for making claims or civil actions.

Please discuss these issues with your labor contractor to make sure you are comfortable that they are paying and protecting their employees according to the law.  Between this new law and the increased emphasis on independent contractors, you need to know the law and how to protect yourself.  As always, if you have any questions, please contact us with your questions…..Jeff at 559-625-2322.