By Steve Smith, California Labor Federation
The new law simply requires that companies securing workers through labor contractors or temp agencies must take responsibility to ensure that workers are getting paid, that they have a safe work environment, and that the contractor is paying state and federal taxes. Given the recent explosion of temp work, this law provides a measure of protection to workers that often are vulnerable to exploitation.
Last night’s signing was hailed as a monumental victory by California Labor Federation Executive Secretary-Treasurer Art Pulaski: AB 1897 is a historic new law that holds corporations accountable when workers hired using labor contractors are cheated out of wages or forced to work in unsafe conditions. By holding corporations jointly liable with subcontractors and staffing agencies, the governor closed a loophole in the law that many big companies were using to violate the basic rights of workers with impunity.
This new law will serve as a model to other states grappling with the negative effects of business outsourcing. When workers are hired through labor contractors to perform core functions of a business, it creates an unequal playing field in the workplace that often leads to abuses of basic worker rights.
In the outsourced economy, it’s not unusual for two workers doing the same job at the same company to be compensated vastly unequally. Subcontracted workers are often paid far less than their non-contracted peers, ranging from a 7 percent “wage penalty” in janitorial wages, to 30 percent in port trucking, to 40 percent in agriculture, according to a recent National Employment Law Project report. Adding insult to injury, labor violations are routine in the low-wage sectors that service the outsourced economy: 25 percent of low-wage workers experience minimum wage violations, and more than 70 percent of those who work overtime don’t receive overtime pay.
With AB 1897 on the books, workers like Jose Gonzalez at Taylor Farms in Tracy will have an important new tool to fight back when labor law is violated by unscrupulous labor contractors.
Over the course of many months, California unions including the Labor Federation, Teamsters, UNITE HERE and others brought countless stories to members highlighting the need for the law. Hundreds of temporary workers flooded the Capitol to share those powerful stories in person, which, at the end of the day, proved more persuasive than the intense lobbying against the bill waged by corporate interests.
Assemblymember Roger Hernandez (the bill’s author): In recent years, we have seen a growing trend across many industries to shift what used to be good paying, middle class jobs to this ‘subcontracted’ employment model. This model erodes our middle class and disproportionately affects minority and immigrant workers. AB 1897 is also good for business. Legitimate employers cannot compete against unscrupulous actors who seek to cheat and exploit their workers. This measure levels the playing field for good actors and makes bad contractors follow the letter of the law.