The California Supreme Court’s 2006 decision in Smith v. Superior Court (L’Oreal) caused a big stir in the temporary staffing industry (see CWHA August 2006 and June 2008). The court held that final wages under California Labor Code Sections 201 and 203 must be paid immediately upon “discharge,” which includes “when an employer releases an employee after completion of the specific job assignment or time duration for which the employee was hired.” It remained unclear, though, how the ruling was meant to apply to temp agencies. Did the agencies owe waiting-time penalties if they failed to pay final wages immediately at the end of a temporary assignment? Or was the normal end of a temporary assignment not considered a discharge?
Governor Schwarzenegger has now signed S.B. 940, a measure that clears the confusion in the aftermath of L’Oreal by implementing special pay rules for temporary employees whose assignments end.
New Pay Rules for Temps
S.B. 940, which adds Section 201.3 to the Labor Code, specifies that “temporary services employers” (see below) must pay wages at least weekly to employees who are assigned to work for a client or a customer regardless of when an assignment ends. Work performed during a calendar week must be paid no later than the regular payday of the following calendar week. Likewise, a temp employee who completes an assignment must be paid by the regular payday of the next workweek. The statute doesn’t apply in situations in which an employee of a temporary services employer is assigned to work for a client or more than 90 consecutive calendar days, unless the temp employer pays the employee weekly as described above.
There are several exceptions to the weekly pay requirement, as follows:
Day-to-day assignments. Wages must be paid at the end of each workday if the temp is assigned to a client on a day-to-day basis, but only if: the temp’s work doesn’t qualify as clerical or satisfy the executive, administrative, or professional overtime exemptions; the temp reports to or assembles at the office of the temporary services employer; and the temp is dispatched to the client worksite each day and returns to or reports to the temp agency at the end of the daily assignment.
Trade disputes. Wages must be paid daily if the temp works for a client engaged in a trade dispute.
Discharge or quit. If a temp is discharged by the client or temp agency, wages are due immediately. If the temp quits employment with the temp agency, wages are due in 72 hours.
S.B. 940 specifies that ‘temporary services employers’ must pay wages at least weekly to employees who are assigned to work for a client or a customer, regardless of when an assignment ends
Definition of Temporary Services Employer
The new law applies only to employees of temporary services employers. These businesses contract with clients or customers to supply workers to perform services for the clients or customers; negotiate with clients/customers for matters such as the time and place where services are to be provided, type of work, working conditions, and quality and price of the services; determine assignments, (even if workers have the right to refuse an assignment); set employee pay rates and pay workers directly from their own accounts; and retain the authority to hire, assign, reassign, and discharge workers.
Certain employers are excluded from the definition of temporary services employer, including: nonprofits that provide temps to clients; certain farm labor contractors; and garment manufacturing employers.
Penalties
Employers that don’t follow these pay rules for temps may have to pay waiting-time penalties. Additionally, initial violations carry a $100 fine for each failure to pay each employee. The fine for subsequent violations or any willful violation is $200 per employee plus 25 percent of the amount illegally withheld.
You can link to the new bill online at www.leginfo.ca.gov/bilinfo.html.