Bill Increases Contractors’ Responsibility

A bill that would hold construction companies responsible for the safety and wages of temp workers on job sites is moving through the state Legislature, one of several labor-backed bills that tackle the increasing use of third-party agents to hire blue-collar workers.

Construction unions say the proposed law would improve safety for all workers, and some major con tractor groups agree. But employment agencies are opposed. They say the bill--AB 1679--could put them out of business.

Temporary employment agencies are increasingly supplying blue-collar workers to factories, warehouses and construction sites. Unions and some labor attorneys say the practice blurs the lines of responsibility between workers and employers, leaving workers open to abuse.

The bill would automatically make the construction contractor the “employer of record” when it comes to workers’ compensation insurance and wage, hour and safety laws. Currently, the staffing agencies--such as Manpower and Labor Ready--are considered primary employers and provide workers’ compensation insurance.

Ambiguities in the three-way relationship have led to disputes when workers are injured or underpaid. Some employees have bounced between contractors and temp agencies, with no one taking responsibility, said Scott Wetch, a lobbyist for the state Building Trades Council.

Also, he said, a contractor is less motivated to keep temp workers safe if its workers’ compensation insurance premium isn’t affected by injuries. “We don’t think it’s fair for a contractor to tell a worker to go up on a bridge and not be the one financially responsible if that worker falls and dies,” Wetch said.

The high-risk construction industry is heavily regulated through the licensing of contractors. The ultimate penalty for violations of safety, wage and workers’ compensation laws is the loss of a license. Wetch said that because employment agencies are not licensed, they risk little if they violate the law.

In construction, injury rates are far higher for some temporary agencies, including Labor Ready and Manpower, than the average for construction, according to reports on file with Cal/OSHA.

But other staffing services have better-than-average safety records, and they say they would be punished unfairly by the proposed law.

“We do job-site visits regularly. We won’t work for a contractor that has unsafe work sites,” said Noel Wheeler, owner of CLP Resources, California’s largest construction-only staffing service.

“In any industry there are good and bad practitioners,” Wheeler said. “I support health and safety as a goal. My concern is that this bill doesn’t address that issue. It simply says that the contractor has to employ the worker. . . . And the unintended consequence is that it jeopardizes businesses such as ours. We hired 6,196 construction workers last year, more than half of them minorities.”

Wheeler is negotiating with the building trades to craft a compromise he could live with, but the two parties cannot agree on the workers’ compensation issue.

Wheeler said he wants to retain the ability to employ the worker and provide workers’ compensation, which is a major selling point for his agency and others. “They come to us because they want an employer, not a referral service,” he said. “We would have to fundamentally change our business model to comply.”

The bill is scheduled to go before the Senate Appropriations Committee today, and if it clears that panel a full Senate vote is expected by the end of the week. The legislation would then move to the Assembly and would require Gov. Gray Davis’ signature to become law.

The bill is one of several labor-backed proposals in Sacramento that address the growing use of temp agencies, contractors and other middle agents to hire blue-collar workers.

This month, Davis signed two bills that substantially increased penalties for farm-labor contractors, as well as growers, who violate wage, hour and safety laws. The legislation, proposed by the United Farm Workers union three years ago, sought to make growers jointly responsible for violations by contractors they hired to supply labor.

Legislation pushed by the janitors union, the Service Employees International Union, would require building owners to retain janitors for 90 days when they switch contractors. The bill, SB 20, is moving through the Assembly.

Most building managers contract out for janitorial services rather than hire the workers directly. Proponents say the bill would protect janitors who are suddenly thrown out of work when managers switch to lower-bidding contractors. Opponents, including the Building Owners and Managers Assn., say they could be saddled with poor-performing workers.

Under the bill, the janitors could petition for union representation during the time building owners would be required to retain them.