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CA: Temp Agencies Must Pay Cost of Workers' Comp for Employees Placed with Licensed Contractors

CA: Temp Agencies Must Pay Cost of Workers
  • October 3, 2002

On September 30, Governor Davis signed a bill that makes a temporary employment agency, referral service, or other labor contractor providing individuals to perform work for licensed contractors responsible for administering and paying the costs of workers' compensation for those workers.

California Assembly Bill 2816: Workers' compensation/contractors/temporary labor

Purpose: To require temporary employment agencies who place workers with licensed contractors to pay workers' compensation premiums, in accordance with specified criteria, and make temporary employment agencies responsible for the individual's workers' compensation.

Effective Date: January 1, 2003

Consequences: Requires temporary employment agencies to report to insurers certain information pertaining to these workers and the licensed contractors to whom these workers are provided, and allows temporary employment agencies to pass through costs incurred as a result of this bill to licensed contractors. This bill applies to licensed contractors and temporary employment agencies only and imposes new insurance premiums on agencies that provide workers to licensed contractors.

Public works projects: Requires the contractor to notify the temporary employment agency that it is supplying the temporary worker pursuant to these provisions when the temporary worker is being used on a public works project or the contractor reassigns the temporary worker to a position other than the classification to which the worker was originally assigned.

View full text of AB 2816

Statement issued by the Office of Governor Davis, 9/30/02

I am signing Assembly Bill 2816.

This bill requires that when a temporary agency enters into a contract with a licensed contractor to provide the licensed contractor with the services of an individual, the temporary agency must pay the workers' compensation premiums for that individual based on the experience modification of the licensed contractor. This bill also clarifies that the temporary agency shall be solely responsible for workers' compensation for that individual.

Any additional costs in workers' compensation premiums paid by temporary agencies will almost certainly be passed on to contractors with a history of unsafe working conditions. These additional costs to contractors will serve as a strong incentive to improve their worksite safety, thus leading to a subsequent reduction of those costs. For these reasons, I am supportive of this measure.

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