Wednesday, October 01, 2014

AB 1897 (Hernandez) Contractor Liability

On Sunday, Governor Brown signed AB 1897, the controversial contractor liability bill that was heavily opposed by business, despite the bill being significantly amended in the Senate and Assembly during the closing days of Session.  As amended, AB 1897 will do the following:  Defines "client employer" to mean a business entity with a workforce of 25 or more workers and at least 5 contract workers.  The term "individual" liability in the definition of "client employer" is deleted and replaced with the term "business entity."  The bill does not impose individual liability on a homeowner for labor or services received at the home or on the owner of a home-based business for labor or services received at the home.

The bill does not impose liability on a client employer for the use of a bona fide independent contractor and does not change the definition of independent contractor.

Employer opposition was concerned about the required disclosure of employer information as employers do not maintain personnel records of individuals that are not its employees and cannot force the "actual employer" to comply with an agency request.  The bill was amended to clarify that a client employer or labor contractor is only required to provide information within its possession, custody or control.  The bill does not require the disclosure of information that is not otherwise required to be disclosed by employers upon request by a state enforcement agency or department.

The amendments also added a narrowing definition of "usual course of business."  The bill imposes liability on a client employer for workers provided to perform labor or services within its "usual course of business" which is defined as "the regular and customary work of a business, performed within or upon the premises or worksite of the client employer."

It is interesting to note that the American Staffing Association and the California Staffing Professionals, the trade associations that represent the temporary staffing industry, removed their opposition to the bill with the inclusion of the amendments noted above.

Lori C. Kammerer
Kammerer & Company
1215 K Street, 17th Floor
Sacramento, CA 95814
Office: (916) 441-5674
Cell: (916) 716-5674

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA  94116

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