The New Year Brings New Employer Liabilities with AB 1897

The New Year Brings New Employer Liabilities with AB 1897

AB 1897 was signed into law by California’s Governor Brown and became effective on January 1, 2015. This new legislation creates additional financial and legal liabilities when an employer contracts for labor. All employers need to understand the implications of this legislation in terms of staffing, financial obligations, and legal responsibilities.

Three Things You Need to Know about AB 1897

  1. When you enter into a labor contract with a contractor or temp agency, you may become legally liable for any wage-and-hour violations committed by the labor contractor for the employees supplied to you.
  2. Should the labor contract fail to secure valid workers’ compensation insurance for the supplied employees, you become legally responsible for this insurance coverage.
  3. As an employer, you are still responsible for complying with all safety laws that may apply to the supplied employees. You cannot shift this responsibility to the labor contractor.

References for Further Details and Analysis:

Five Steps Employers Should Take Now 

  • Become familiar with this law and determine whether it pertains to your organization.
  • Work with your HR professional and/or your employment attorney to find out how AB 1897 applies to your specific operations, especially when you are about to enter into a labor service agreement.
  • Be careful when selecting an organization to provide contract labor. Before you sign the contract, you need to understand what you are about to take on.
  • Know that contract labor isn’t necessarily an easier way to acquire staff, nor is it just a way to lower your employee costs and employer responsibilities.
  • Vet the labor contractor to confirm their operations are compliant, and be assured they have the financial stability to perform their obligations under this new law.

If you have operations in other States, there may be similar laws that apply to these types of relationships. So, be sure to obtain advice from a knowledgeable professional before proceeding.

For further assistance about this and other risk management/insurance matters, reach out to me.

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Tom Bone
Risk Insurance Advisor
ISU Insurance Services
2266 Lava Ridge Court
Roseville, California 95661
Phone 916.960.8758 or 800.823.4852 ext. 8758
Fax 916.773.4484
Mobile 925.285.6790
License #0306692