A new California law that will go into effect on January 1, 2015 adds a new provision to the California Labor Code, Section 2810.3 that says a company using a third party to provide its workers will share civil legal responsibility and liability for failure to pay wages or secure workers’ compensation insurance for those workers.
Under the new Section 2810.3 provision, potential liability is not unlimited. It applies only to companies that rely on third parties as a workforce source in the “usual course of business” at their offices or on other worksites. The provision does not apply to:
- Companies with 25 workers or less;
- Companies that only use 1-5 subcontracted workers
- Administrative, executive and professional employees who are exempt from overtime
- Certain telecom service technicians, motor carriers and employee leasing arrangements
The new Section 2810.3 provision only applies to the recovery of wages — including overtime pay, incentive pay, bonuses, commissions and premium pay for missed work and meal breaks — and not to business expenses that have not been reimbursed.
If your company relies on workers for their daily business that are provided by a third party, you could be an unwilling partner to a wage-and-hour lawsuit brought by a third party’s subcontractors. To help manage this risk, consult with legal counsel on updating insurance, indemnity and termination provisions in service agreements and putting processes in place to ensure third party providers are complying with California labor laws.
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