Pub. 3 2014 Issue 2

20 San Diego Dealer Dealer Alert: California Employers Face Great Liability Under AB1897 By Sam Celly, MS JD CSP BACKGROUND: Many dealerships use a subcontractor on premises to wash automobiles and for other operations. Current law regulates the terms and conditions of employment and establishes specified obligations of employer and employees. Dealers can control the liability by having the subcontractor work under a written contract that indemnifies the dealership and also, provide the dealership with General Liability (GL) & Auto Insurance (dealer as additional insured) andWorkers’Compensation (WC) Insurance (with waiver of subrogation and dual employer endorse- ment). Dealers must maintain arm’s length distance with contractor operations so as to avoid active supervision. Also, liability accrues when the equipment provided by the dealership to the subcontractor, such as forklift or a ladder, is involved in an accident resulting in an injury to the contractor employee. NEW LAW AB 1897 EFFECT I VE JANUARY 1 , 2015 : The Legislative Counsel’s Digest for AB1897 is as follows:“This bill would require a client employer to share with a labor contractor all civil legal responsibility and civil liability for all workers supplied by that labor contractor for the payment of wages and the failure to obtain valid workers’ compensation coverage. The bill would prohibit a client employer from shifting to the labor contractor legal duties or liabilities under workplace safety provisions with respect to workers provided by the labor contractor. [...] The bill would authorize the Labor Commissioner, the Division of Occupational Safety and Health, and the Employment Development Department to adopt necessary regulations and rules to administer and enforce the bill’s provisions. The bill would provide that waiver of its provisions is contrary to public policy, void, and unenforce- able.” Bolded sections above added by the author of this Newsletter. Source: http://goo.gl/dQLNSn L I AB I L I TY L IABI L I TY FOR PAYMENT OF WAGES: Dealers have often been bruised by wage and hour violations of their own. To become liable under the new law for “all civil liability for all workers supplied by labor contractors for the payment of wages” when there is no control over the contractors’ books, time cards, or payroll is bound to result in a nosebleed. Proper wages are deemed to include withholdings and their submittal to the state! L I A B I L I T Y F OR FA I LU R E TO OBTA I N WOR K E R S ’ COMPENSAT I ON COVERAGE : If the subcontractor has not obtainedWC coverage, then the subcontractors’employee is free to pursue a claim against the dealership resulting from any injury incurred while working there. Dealerships’WC coverage for the dealer is not applicable here as the subcontractor employee is not a dealership employee. L E G A L L I A B I L I T Y F O R WO R K P L A C E S A F E T Y PROV I S I ONS : The bill prohibits a client employer from shifting to the labor contractor legal duties or liabilities under workplace safety provisions with respect to workers provided by the labor contractor. In