What CA Employers Need to Know About Using Foreign Labor Contractors

To combat the trafficking and exploitation of foreign workers, the California Legislature enacted SB 477 in 2014 to strengthen regulations on “foreign labor contractors” who recruit foreign workers to relocate to California. See Bus & P C §§9998–9998.11. The law put most of the compliance burden on the labor contractors, but there are implications for employers, too.

Starting last summer, SB 477 requires labor contractors to be registered with the Labor Commissioner and to comply with requirements designed to protect migrant workers, including the provision of certain essential information and a prohibition on charging workers recruitment fees. The Labor Commissioner must post on its website the names of all registered foreign labor contractors, as well as a list of the labor contractors who were denied renewal or registration.

Although some may consider SB 477 to be about foreign labor located in California, its reach actually goes beyond the border; it defines “foreign labor contracting activity” as “recruiting or soliciting for compensation a foreign worker who resides outside of the United States in furtherance of that worker’s employment in California, including when that activity occurs wholly outside the United States.” Bus & P C §9998.1(b) [emphasis added].

This broad reach has a notable limitation: it doesn’t include the recruitment of agricultural employees (because farm labor contractors are subject to other regulations).

And the law doesn’t include recruiting activities undertaken directly by the employer to locate workers for the employer’s own use. But even though the law focuses on foreign labor contractors rather than employers, it still has implications for employers:

  1. Employers must work with only registered contractors. Employers can’t knowingly enter into an agreement for the services of an unregistered foreign labor contractor. Bus & P C §9998.2(c). Although employers aren’t subject to the registration requirements for their direct recruitment efforts, and SB 477 specifically exempts from joint and several liability those employers who use a registered foreign labor contractor, this liability exemption for the contractor’s tortious activities only applies if the employer works with a registered foreign labor contractor.
  2. Employers have obligations to the Labor Commissioner. Employers using the services of a foreign labor contractor must disclose to the Labor Commissioner the contact information of the employer’s designated person to work with the foreign labor contractor, and submit a declaration consenting to jurisdiction if the employer’s contact person has left the jurisdiction or is unavailable. Bus & P C §9998.2(a).
  3. Employers can’t discriminate or retaliate. Employers must be mindful that Bus & P C §9998.6 prohibits any person from discriminating or retaliating against a foreign worker or their family members because they have exercised any rights under this law.

Information on this new law is just one of the many issues covered in chapter 1 on hiring guidelines and pitfalls in CEB’s Advising California Employers and Employees. And for guidance on immigration law requirements generally, turn to chap 4 of that book.

Other CEBblog™ posts you may find useful:

© The Regents of the University of California, 2017. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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