The deadline is approaching for Governor Jerry Brown to either veto or sign an important piece of legislation that is poised to have a damaging impact on how technology companies do business in California. Assembly Bill 1897 attempts to shift responsibilities in subcontractor relationships by unfairly holding the majority of California employers liable for wage and hour violations by other employers that are out of their control.
Ultimately, AB 1897 will hurt California’s innovators, including many who are leading the way in job creation, product deployment, sustainable economic development, and global competitiveness. The technology industry employs well over one million Californians and thrives in an economic environment that fosters innovation and productivity. AB 1897 threatens that landscape.
First, AB 1897 will not stop a labor violation from occurring; it just allows a bad actor employer to shift liability to an innocent employer that did not commit the violation, know of the violation, or have the ability to prevent the violation. It’s a basic principle that employers who commit labor abuses should be held accountable.
Second, AB 1897 allows an employee to file a lawsuit against the third-party company only, without first seeking to obtain relief from their actual employer for the alleged violations. Common sense dictates that the employer who committed the violation should be the first in-line of responsibility.
Third, AB 1897 impacts nearly every industry in California, such as technology, construction, agriculture, healthcare, security, foodservice, newspapers, manufacturers, retailers, and finance, among others.
TechNet is not alone in its opposition. Business leaders including the National Federation of Independent Business/California, California Asian Chamber of Commerce, California Retailers Association, California Manufactures & Technology Association, Latin Business Association, California Hispanic Chamber of Commerce, Wine Institute, Civil Justice Association of California, California Business Properties Association, and Western Growers Association also oppose this misguided bill.
The California Department of Finance is on record as well, noting that AB 1897 will result in unbudgeted costs to the state. The department added that the bill, “also exposes California employers to liability for Labor Code violations that are committed by other employers. This additional liability could diminish incentives for businesses to operate in California and therefore be a sole or contributing factor to a business’ decision to close or downsize. Such actions by California businesses would have state fiscal impacts, such as reduced tax revenues.”
Clearly, AB 1897 will do more harm than good. Instead, the current and sufficient worker protection laws should be fully enforced. As a champion for policies that foster a climate for innovation and economic competitiveness, TechNet urges Governor Brown to veto AB 1897.
Andrea Deveau is California Executive Director of TechNet, the national, bipartisan network of innovation economy CEOs and senior executives.