One of the most notable recent trends in workplace staffing has been the increasing use by employers of temporary staffing agencies to fulfill their workforce requirements. Unfortunately, temporary workers (or "temps") often earn lower wages and have fewer benefits.
More troubling, the use of temp agencies can hinder the enforcement of labor laws, including overtime, minimum wage, and meal and rest break protections by creating legal separation between the company and the employee. For example, if a manufacturer hires a staffing agency to supply temps for its warehouse, but the staffing agency fails to pay the worker’s overtime, the staffing agency is liable for the unpaid overtime (plus interest and related penalties). But what happens if the staffing agency becomes insolvent? Are the temps simply without recourse?
Effective January 1, 2015, AB 1897 (codified at California Labor Code §2810.3) makes certain employers liable for the payment of wages owed by labor contractors that they retain. The law exempts business entities with a workforce of less than twenty-five (25) workers (including workers hired directly by the company and workers hired by the labor contractor) and businesses with five (5) or fewer workers supplied by a labor contractor. This new law should help facilitate the recovery of unpaid wages for temps whose employers have failed to abide by California’s labor laws.