Yes, that heading is true. Here’s an example of how this can happen.
Suppose you hire a janitorial service firm to come in after hours, empty the wastebaskets, dust the bookshelves, clean the employee kitchen area, and do the other things that janitorial service firms typically do.
You do not have a written contract with the janitorial service firm, and the relationship has been in place for years without there being any problem.
But unknown to you, the guy who owns the janitorial service firm runs into personal problems, and he fails to pay his employees everything they are owed, even though you have paid that service firm every penny you owe them.
Many of you readers are probably muttering to yourself at this point: “I paid them everything I owed, and don’t owe them a cent.”
Here is what California Labor Code §2810(a) has to say about that:
2810 (a) A person or entity shall not enter into a contract or agreement for labor or services with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor, where the person or entity knows or should know that the contract or agreement does not include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided.
The bottom-line consequences of this law are that your business may automatically share liability with a “labor contractor” such as those listed in the law, if that contractor fails to pay wages or workers’ compensation insurance to its employees who were assigned to work at your business.
Is there any reasonable low-cost way to protect yourself against this type of exposure? Your best defense is probably to take pains to deal only with reputable well-established relatively-large contracting firms which in most circumstances are far more likely to know about and conform with their own legal requirements, so that those requirements don’t at some later date cause problems for your firm.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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