CalChamber: California Employers, Employees Benefit from Temporary Workers

Policy Advocate Jennifer Barrera speaks to Assembly Labor and Employement Committee.
View entire hearing at The California Channel

(March 13, 2014) California employers have numerous reasons for making use of temporary workers and multiple levels of employee protections are already in place for any violations, California Chamber of Commerce Policy Advocate Jennifer Barrera explained to the Assembly Labor and Employment Committee during an informational hearing yesterday.

“For a small employer, who is in the business to operate their business, they don’t have a dedicated human resources department, they don’t have a dedicated legal department to sit there and navigate their way through the entire wage-and-hour obligations and all the employer mandates that we pass at the legislative level,” Barrera said. “They aren’t intentionally trying to harm their workers, but they just don’t know what they should know about how to comply with wage-and-hour laws.”

The committee was convened to discuss a spot bill by the committee chair, AB 1897 (Hernández; D-West Covina), sponsored by the California Labor Federation. The bill itself has no substantive language at this point. This procedure evades the deadline for introducing bills.

Proponents of the bill claim that the purpose of AB 1897 is to “ensure that when companies use staffing agencies and other labor contractors to supply workers, those workers are protected from wage theft and other abuses by holding the user employer accountable.”

Barrera explained that businesses’ reliance on temporary workers is driven largely by overwhelming mandates, California-only requirements, and rampant litigation.

“So what employers will do is hire…a temporary staffing agency, a professional employer organization who in the contract will agree and contract to take care of those responsibilities for the small employer, who’s trying to do right by their employee , but is still trying to operate the business and doesn’t know how to do both,” Barrera told the committee.

Why Employers Utilize Temporary Agencies

Employers use temporary agencies for a number of reasons:

  • To pre-screen employees;
  • To fill seasonal, short-term work, cover unpredictable work schedules;
  • Cover for other employees out on leaves of absences, and/or vacations, accommodate flexible schedules;
  • Protect core group of employees, avoid layoffs and/or reductions.

One of the many reasons employers use temporary staffing agencies is for prescreening of employees.

“It can be a daunting task for a small business that doesn’t have the necessary resources to navigate California’s numerous labor laws, especially when they’re focused on actually running their business,” Barrera told the committee.

Employers also use agencies to help them acquire temporary workers to cover seasonal and short-term work projects.

Barrera explained that for some companies, “it’s difficult to predict their workload and when they have a project that they know or a season when they know they’re going to need to staff up to get a lot of employees, that’s a cost that they may not be able to bear or they’re not able to ramp up as quickly as they need to so they turn to staffing agencies in order to address that problem. The staffing agencies are usually able to get a lot of employees quickly to those employers to address their business needs.”

California has numerous labor and employment regulations that far exceed those mandated at the federal level. A clear example of this is California’s multiple protected leaves of absences available to employees.

“When an employee is out on a protected leave of absence, this means the employer can’t replace the employee, they can’t hire anyone else; they have to make sure the position is open when they return. The employer is left still needing to run a company and the business needs haven’t changed just because the employee is out on protected leave. This leaves the employer with two choices: have existing employees to do the work, if that’s feasible for their work schedules and pay overtime, or the employer has to bring in temporary staff to address those needs so they can continue to run their business while the employee is out.”

Employers also use temporary agencies to evaluate employees to ensure a temporary worker is the right fit for their company. Barrera cited a federal study showing that in states where at-will employment has been eroded with mandates, employers will seek out temporary agencies, which have resources the employers don’t have, to help them find and test out workers because of the immense legal risk of hiring an employee and potentially needing to terminate the employee if he/she is not a good fit.

“Here in California, while we have an at-will employment policy, we have passed at the state level, legislation that has certainly eroded the at-will nature of employment in California where there is a risk of litigation if you terminate an employee. There are a lot of exceptions in California to the at-will policy and the study has linked these exceptions directly to the reason why employers utilize temporary staff agencies.”

With California’s economy still unstable, businesses can’t always predict their workforce and as a result, an employer may maintain a percentage of its workforce as temporary so as to protect core employees from layoffs.

“California employers are unsure, they’re concerned, they’re nervous about the economy still and unsure about bringing on numerous permanent employees and whether or not the economy is going to maintain the same level of growth that we’re experiencing,” Barrera said. “Therefore, employers utilize temporary staff agencies to protect their core employees so they don’t have to do a massive layoff if the economy takes another downturn.”

According to the American Staffing Association, temporary and contract work also provides an important “bridge” to permanent employment, something that is critical in the current economic downturn. The association reports that 77 percent of staffing employees say that temporary work is a good way to find a permanent job.

AB 1897

At this time, there is no actual language in the bill. In order to move forward in the legislative process the bill will need to be substantially amended at a later date with actual language.

Staff Contact: Jennifer Barrea