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ARTICLE · 15 OCTOBER 2014

Thinking About Outsourcing? Think Again. (AB 1897)

Fox Rothschild LLP
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Many businesses are likely wondering whether the new law, California Labor Code § 2810.3, will increase their liability when they subcontract work.

United StatesEmployment and HR
Connie Chen
Connie Chen
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Since Governor Brown signed AB 1897 on September 28, 2014, many businesses are likely wondering whether the new law, California Labor Code § 2810.3, will increase their liability when they subcontract work. The answer depends on whether the work is within the company's usual course of business.

The new law requires a business to automatically share liability with a "labor contractor," such as a temporary staffing agency, if the agency fails to pay wages or provide workers' compensation insurance to its employees who are assigned to work at the business. Cal. Lab. Code § 2810.3(b). Before this legislation, temporary employees had the burden of proving that the businesses they were assigned to were "joint employers" with the staffing agencies.

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