California Law Makes Companies Share Wage, Comp Liability with Labor Contractors
Calif. law makes companies share wage, comp liability with labor contractors
October 1, 2014 – 2:14 pm ET
“The law changes that,” said Mr. Newman. It says when you have this kind of situation the client business “also shares the liability” if workers are not paid appropriately under the wage and hour laws, or not provided with workers compensation coverage.
He said one section of the bill which may somewhat modify that requirement states that a client employer is not prohibited from “enforcing by contract any otherwise lawful remedies against a labor contractor for liability created by acts of labor contractor.”
Mr. Newman said he interprets that to mean a client employer could provide by contract for a situation where the staffing company agrees to indemnify the client company if the client company is found liable because of bad acts on the staffing company’s part.
He said this provision is likely to encourage companies to work with larger, more financially stable staffing companies.
Nevertheless, he said the law is a headache for companies that have built their business of using contract workers. “Suddenly, a huge amount of thought has to go into making sure those contract workers are being properly treated by the staffing company,” he said.
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