California employers can now be liable for state labor and wage violations, including violations of wage and hour, workers' compensation and safety laws. Signed by Governor Jerry Brown on September 28, 2014, AB 1897 adds Section 2810.3 to the California Labor Code. The bill requires a client employer to share all civil legal responsibility and liability with the labor contractor and allows the temporary employees to sue the employer directly (with 30 days notice). Notably, the bill prohibits a client employer from shifting worker safety requirements to the labor contractor. This appears to pose a problem for employers who have arrangements with temporary services agencies in which the agency provides basic safety and health training and/or PPE while the employer provides site-specific training and/or PPE.

The bill exempts from the definition of labor contractor certain nonprofit, community-based organizations; labor organizations, apprenticeship or hiring hall programs; motion picture payroll service companies, and certain third-parties to leasing arrangements.

As a result of this change, employers who utilize the services of temporary workers should, at a minimum, reevaluate their labor contractors' compliance with wage and hour, workers' compensation and health and safety laws and review the indemnity provisions of their contracts to ensure that they are covered in the event the labor contractor fails to comply.