What Are California Temp Workers?
California’s temporary employment landscape is a vital part of the state’s economy, serving as a crucial component in its diversified job market. Temporary employees are skilled professionals, often highly educated, who fill a wide range of jobs across sectors such as technology, engineering, education, healthcare, and finance, among others. The advent of staffing agencies has enabled California employers with the flexibility to hire temporary employees quickly, adapting to their ever-changing needs and demands.
While some may assume that temporary jobs only benefit those looking for a short-term placement, the truth is that this form of employment offers a substantial intellectual and skilled labor force in California, including scientists, software developers, and engineers . For both employers and employees, this flexible arrangement can be advantageous for many reasons. Employers can readily evaluate an employee’s skills, experience, and performance on the job over a short period, allowing them to make better hiring decisions on potential full-time positions. At the same time, employees can gain the interviewing experience needed to meet employer criteria and better understand how their skills align with the needs of various companies in the state.
However, these temporary employment arrangements pose unique legal challenges. Employers who fail to comply with relevant laws, rules and regulations governing their conduct as temporary employers may face liability if they do not follow specific requirements such as written employment contracts, payroll records, and minimum wage and overtime standards.
Basic Legal Glossary
California Labor Code § 3351 defines "temporary" employment status as follows: "Temporary employment" as used in this chapter means employment for a period of 90 calendar days or less during which the employee is performing one or more of the following: (1) Occasional, or otherwise irregular, repairs in the ordinary course of the employer’s business. (2) Seasonal work. (3) An emergency. (4) Occasioned by the illness or other absence of a regular employee."
California Department of Labor regulations further elaborate that "temporary employment" occurs when a hiring entity provides services for a limited period of time for a specific task, which must not be longer than 180 days. Title 8, California Code of Regulations § 10730. The regulating code section also explains certain exceptions. Neither a temporary employment permit nor student work permits are required when: "[A]n employer does not seek to replace a student from an accredited institution of learning beyond 50 working days; or any of the following: (1) Where employment is for fewer than 90 days. (2) Where such employment is authorized by written contract with the University of California, the State University or the Division of Apprenticeship Standards. (3) Where such employment is a sub-division of the employer’s business of regularly scheduled work required only on weekdays between the hours of six a.m. and ten p.m., except in the case of public utilities where such employment applies at all hours. (4) Where such employment is when unusually high absenteeism due to illness exists within the employer’s workforce. (5) Where such employment is for participation in a special training or skill study program which is sponsored by a nonprofit organization and is not mandated by any federal, state, or local law or ordinance. (6) Where such employment is for an employee who is a veteran of the Armed Forces of the United States, who was honorably discharged or released from active duty in the Armed Forces of the United States within the past four years and who is seeking employment in order to facilitate his or her reintegration into civilian life." With this legal definition in mind, we can now examine what distinguishes temporary employment from part time or full time employment under state law.
Temp Employee Rights and Protections
In California, while temporary employees do not have the same protections as regular employees, they are entitled to certain rights and protections. Employers must pay workers for overtime, at the same rate of pay, as regular employees. For example, if a client hires a temporary employee through a staffing company to drive truck during the day, a worker must be paid for overtime at the same rate of pay agreed upon for day hours.
Staffing companies or agencies must provide each worker with an itemized wage statement each pay period. Moreover, under California Labor Code Section 3364, as amended by SB 1093, employers may not have a temporary employee work more than six days in any workweek unless the employee is being paid daily. If the employee is paid daily, the employer must obtain the consent of the employee or temporary agency, unless the said employer has its own labeling requirements. In addition, the employer must keep a record of such consent for at least three years.
California law also protects temporary employees from unlawful retaliatory actions by employers. If a temporary worker is dismissed out of retaliation or in an attempt to discourage others from making a complaint, the employer is liable. Temporary employees are entitled to the same wage, hour, and working protections as regular employees, even if there is a contractual agreement between the agency and the employer.
Temp Agency Responsibility
Staffing agencies provide businesses with temporary employees on a contractual basis. Temporary employees supplied by a staffing agency are typically employed under a contract that states the period of time that the temp will be working for your company. Staff can be supplied on a short or long-term basis, depending on your business needs.
Since these staffing agencies are acting as your business’s employer, the burden of due diligence is on you to ensure that the agency’s temps are compliant with OSHA regulations, have the required skills, and are paid properly for their work.
California law-Cal. Labor Code § 201.3-states that if a staffing agency discharges an employee who has worked for its clients for 90 days, the temp has the right to be compensated by the staffing agency for his or her "involuntary" termination. The staffing agency is responsible for paying out the final paycheck, but the actual client company can be liable for penalty damages in addition to the amount that already has been paid out.
Note that while California regulations require that staffing agencies issue the final paycheck, they can request that the client company issue the paycheck to the temp employee directly; the staffing agency, however, is still responsible for the wages and penalties.
California Labor Code and the Temporary Worker
California has very specific laws regarding temporary employees. These laws apply not only to traditional employment agencies, but also to staffing agencies, as well as companies that hire workers directly for short-term projects. Many of the requirements in these sections apply to the temporary employees, even if the employee had a direct contract with the company rather than using a staffing agency. The Labor Code does carve out some areas where specific sections do not apply to companies that directly hire the temporary employees. In addition, under the Federal Fair Labor Standards Act (FLSA), most of the regulations under the federal law apply to temporary employees regardless of whether they are hired through an agency or directly by the company .
In California, Labor Code section 201 applies to termination and quits of employment. Subdivision (b) is a "special requirement" for terminations and quits for all employers in California that require payment of compensation due to the employee "not more than 72 hours" after the employee is discharged, but with exceptions especially for vacation time upon termination. Subdivision (a) requires payment of all wages earned due to termination immediately for employees who quit without giving 72 hours notice.
Again, being familiar with California’s Labor Code requirements is not only important for any employer in California, but also for any outside organization that has people working within California.
Violation of the Law and its Consequences
California temporary employee laws are continually evolving, and businesses found in violation of these laws may face significant penalties. In most cases, fines for violations of these laws will be assessed per violation. For example, if an employer violates multiple laws for the same temporary workers, the fines can add up quickly. For this reason, your business needs to take steps to ensure compliance with all laws governing California temporary workers.
Here is a sampling of the potential consequences for noncompliance with the expanded California temporary worker laws:
• Employers who do not comply with any provision of AB 5 may be subject to the following penalties:
o $200 for each aggrieved employee for each pay period for failure to present a worker with written notice of rights
o $200 for each aggrieved employee for each pay period for failure to maintain a pay data log
o $100 for each aggrieved employee for each pay period for failure to provide a copy of the pay data log to a requesting employee
o $1,000 for each violation for failure to provide pay data to a requesting employee
o $100 to $1,000 per violation for wage theft
o $100 per aggrieved employee in pay period for failure to include contract worker in specified information provided to Employment Development Department
o $200 per aggrieved employee for failure to maintain records of individuals employed as labor contractors
o $15,000 for knowingly misrepresenting employment status of a worker
• Reclassification from exempt to non-exempt worker could trigger entitlement to overtime and potentially other penalties.
• If violations of AB 5 are found, staffing agencies and businesses could be exposed to lawsuits and liabilities under the Labor Code Private Attorneys General Act (PAGA). Under PAGA, private parties bring action on behalf of themselves and other "aggrieved employees" and seek penalties for decline in enforcement of the Labor Code. Some legislative sources established $5,000.00 penalty for each employee named in the lawsuit, plus $1000 for the first aggrieved employee.
Temp Employee Law Developments
In recent years, California has taken significant steps to regulate the temporary employment industry. One pivotal measure is Assembly Bill 3222 which previously required third party employers to disclose the actual hourly rate of pay for employment positions. New legislation amended the section requiring the posting of all nonexempt job classifications and their substantially equivalent wage rates. Under the bill, the third party employer must make the job classifications available to clients so that clients do not post incorrect job classifications when making recruitment decisions. Clients must post job classifications when advertising jobs with temporary labor hired from a third party employer.
Mandatory workers’ compensation coverage and anti-retaliation provisions specific to temporary labor has caused a significant reduction in such employment since the 2010 reforms. Moreover , litigation and legal rights of action regarding wage and hour violations have increased in the past decade as a result of the insertion of individual personal liability. Some anticipate further developments in liability by allowing for "statutory damages" without need for finding intentional violations of wage and hour claims by temporary labor employers. Lawsuit settlements are also increasing due to the growing amount of attorneys’ fees awarded to a successful plaintiff. This aspect of litigation is anticipated to deter even further the growth of temporary employment in California.