Bill Would Require Temp Agencies to Disclose Fees
A controversial state Senate bill to require temporary-employment agencies to disclose how much they are charging their clients faces a second committee hearing Monday after passing the Senate’s Industrial Relations Committee late last month--and both sides will be out in force.
The bill is strongly opposed by the state’s temp agencies, which have been vital in helping California businesses hire temporary full- and part-time workers as the economy has revived and expanded. Agencies operating in California have reported annual growth rates of up to 25% a year for the last three years.
The agencies contend that SB 1743 would devastate their industry by making them less competitive if they are required to disclose how much they charge customers. They argue the bill is part of organized labor’s effort to create ill will among temp workers in order to unionize them.
Indeed, the California Labor Federation was instrumental in persuading Sen. Patrick Johnston (D-Stockton) to propose the legislation. The federation contends that just as a real estate broker discloses the commission he or she makes when selling a home, so too should those acting as agents for manpower. The bill would subject agencies failing to disclose such information to fines up to $1,000 per employee for repeat violations.
“If employees knew what the agency was taking off the top, they could shop around, comparable to consumers shopping for HMOs,” said Tom Rankin, president of the California Labor Federation and a chief labor lobbyist. All people who work have a right to know the amount of their user fee, he said.
Temp agencies bear the cost of recruiting, pay overhead expenses associated with their place of business, take care of employees’ various taxes, and supply workers on short notice, representatives say.
“It is none of the employees’ business to know what our customers are willing to pay for their services,” said Penny Lee, whose family has owned Calabasas-based Valley Temp Inc. in the San Fernando Valley for 30 years. Calling it “a privacy issue,” she compares her right not to disclose with a department store’s right not to print on its labels what it cost to make the product hanging on the rack.
That’s a common theme among those who own temp agencies. “Is there anything you buy where the window sticker says exactly what the material cost is?” asked Ray Soll, who runs a chain of nine Primary Source temp agencies in Los Angeles and San Bernardino counties.
But temp services that do disclose how much they’re making by renting out workers suggest another motive.
“In some cases, temp agencies will find it difficult to justify what they are doing,” said Berry Hermanson, who has run Hermanson Employment Services in San Francisco since 1980. What the agency charges a company can vary from 20% to 50% above what the temp worker actually earns.
“The temp industry is extremely secretive,” said Hermanson. Often two people do the same work for different wages, “based on their skills, their resume--and what the agency thinks it can get away with.”
Because of the potential that those wage differences could lead to work force disruption, some of the state’s largest temporary employers such as BankAmerica and Pacific Bell began more than a decade ago to require that they be informed of the agency’s actual pay rate, according to Hermanson.
BILL UPDATE: Millennium Bug’ Measure Is Defeated in the Legislature
Controversial legislation to limit damages against computer manufacturers if their hardware or software can’t handle the date change on Jan. 1, 2000, died in the Legislature this week.
AB 1710, proposed by Assemblyman Brooks Firestone (R.-Los Olivos), failed to clear the Assembly Judiciary Committee on Wednesday. The bill was defeated last month in the same committee, but was granted reconsideration. It was strongly opposed by trial attorneys.
Two other bills dealing with the so-called millennium bug remain alive, however. SB 2000, by Sen. Bruce McPherson (R-Santa Cruz), would establish immunity from liability for government agencies and employees for any harm caused by the year-2000 date change. The bill is scheduled for a hearing Tuesday.
Most observers looking for legislative solutions to the year-2000 problem, however, are placing bets on Assemblyman Mike Honda (D.-San Jose).
Honda’s AB 1934 is expected to have the best chance of clearing the Democratic-controlled Legislature. Honda’s bill is very much a work in progress, aides say, as the assemblyman’s office is busy negotiating with all sides to reach a consensus that could help win passage. As it reads now, the bill proposes tax credits to help businesses fix their year-2000 problems.
