Outsourced Labor? Temps? - New Statutory Liability in California for Companies Using Contract Workers

By: Sandra K. McIntyre

On January 1, 2015, California Labor Code section 2810.3 became operative.  It imposes civil liability on companies utilizing non-exempt workers provided by contractors to perform the regular and customary work of the company if the contractor fails to pay the worker’s wages or provide workers’ compensation coverage.  Legal responsibility for wages and workers’ compensation coverage is now shared regardless of whether the company had knowledge of the violations. 

Moreover, the provisions of the statute cannot be waived and the worker is not required to first seek relief from the contractor.  However, the worker must give the company at least 30 days’ notice of the violations before filing a civil action against it.  The practical effect of this new statute is that a company is no longer able to deny liability for unpaid wages and/or the failure to provide workers’ compensation coverage by asserting it is not the employer of workers provided by a contractor.

Some businesses are exempt – the statute does not apply to: 1) a business with a workforce of less than 25 workers, including those provided by the contractor; 2) a business with five or fewer workers supplied by a contractor at any given time; or 3) the state or any political subdivision of the state, including any city, county, or special district.   Additionally, it does not apply to workers supplied by nonprofit, community-based organizations that provide services to workers, hiring halls, labor organizations or apprenticeship programs that operate pursuant to a collective bargaining agreement, or a motion picture payroll service company.

To address the new legislation, companies utilizing non-exempt contract workers should ensure their agreements specifically require the contractor to properly pay workers in accordance with California law and maintain valid workers’ compensation insurance coverage.  Those agreements should also require the contractor to defend and indemnify the company for any such failure.


New Rules for Broker-Dealer Confidentiality Provisions

Outsourced Labor? Temps? - New Statutory Liability in California for Companies Using Contract Workers

Paradise Lost? Cruise Lines Can Be Sued for Medical Malpractice

Bart Gary's Updated 2015 Georgia Construction Law Handbook Available

Learn more about FMG

CGL and Business Liability

Commercial and Complex Litigation

Construction and Design Law

Financial Services and Securities

Insurance Coverage & Bad Faith

Government Law

Labor and Employment Law

Professional Liability / Errors and Omissions

Freeman Mathis & Gary, LLP
100 Galleria Parkway
Suite 1600
Atlanta, Georgia 30339-5948

Tel: 770.818.0000 / Fax: 770.937.9960


Copyright © 2016 Freeman Mathis & Gary, LLP Click here to print the article.