Business Liability for Labor Contractors

On September 28, 2014, California Governor Jerry Brown signed into law Assembly Bill 1897, which created a new Labor Code section. The new law affects businesses that obtain or are provided workers to perform labor from a labor contractor. Once AB 1897 becomes effective, private employers can be held liable for labor contractor’s failure to pay all required wages or to secure valid workers’ compensation coverage for contract workers.

Under AB 1897, a business can be found liable for any contracting entity’s wage-and-hour law violations, lack of workers’ compensation coverage, and failure to remit employee contributions. The business could be held liable even if there is no evidence the contracting entity controlled the working conditions or wages of the contractor’s employees.

Since the new law is being codified as part of the California Labor Code, any violation of it will cause a potential representative action under the Labor Code Private Attorney General Act (PAGA) as well as the Labor Code, compounding the risk of burdensome litigation.

If you are concerned about AB 1987 and whether or not it will affect your business and potential liability, consider contacting an attorney who can give you a detailed analysis on your potential exposure and ways to ensure compliance and mitigate against violations and litigation.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

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