Staffing Agency Workers: Client Employer Liability in California
Often, yes. Under Labor Code section 2810.3, a California business that uses workers supplied by a staffing agency or other labor contractor shares civil liability for those workers’ unpaid wages and for the contractor’s failure to carry workers’ compensation insurance. It doesn’t matter that the agency ran payroll. The statute applies only when the work is within the client’s usual course of business, and smaller users are exempt. A contract can’t waive the liability, but it can shift the cost back to the agency.
What does section 2810.3 do?
It makes the client a co-defendant on wages. Labor Code section 2810.3(b) says that “A client employer shall share with a labor contractor all civil legal responsibility and civil liability for all workers supplied by that labor contractor” for “The payment of wages” and for failure to secure valid workers’ compensation coverage.
That’s a statutory rule, not a finding that the client is the workers’ employer. The client doesn’t have to control the workers’ pay, hours, or conditions for it to apply. If the agency underpays overtime, skips meal premiums, or pays final wages late, the workers can pursue the client for the wages owed.
Subdivision (f) adds that this liability is “in addition to, and shall be supplemental of, any other theories of liability” under statute or common law. A client that escapes section 2810.3 may still face a joint-employer claim on separate grounds, so the statute is a floor, not a ceiling.
Who counts as a client employer?
A business that gets workers from a labor contractor for its regular work. The statute defines a “Client employer” as “a business entity, regardless of its form, that obtains or is provided workers to perform labor within its usual course of business from a labor contractor,” according to section 2810.3(a)(1)(A).
The key phrase is defined too. “Usual course of business” means “the regular and customary work of a business, performed within or upon the premises or worksite of the client employer,” under subdivision (a)(6). A warehouse that staffs its own loading docks with agency workers fits that description. A law firm that brings in a temporary electrician to rewire its office probably doesn’t, because electrical work isn’t the firm’s regular business.
Which businesses are exempt?
Smaller users and some specific industries. A business isn’t a client employer if it has “a workforce of fewer than 25 workers,” counting both direct hires and contractor-supplied workers, or if it has “five or fewer workers supplied by a labor contractor or labor contractors to the client employer at any given time,” according to section 2810.3(a)(1)(B). Public entities are also excluded.
The statute also leaves out some workers and arrangements. Employees exempt from overtime under the wage orders’ white-collar exemptions aren’t “workers” under subdivision (a)(5). Bona fide nonprofit, community-based organizations that provide services to workers, bona fide labor organizations and union hiring halls, and certain employee leasing arrangements aren’t “labor contractors.” And subdivision (p) lists industry carve-outs, including some uses of motor carriers and household movers, and cable, satellite, and telephone companies that use contractors whose names appear on the contractor’s uniforms and vehicles.
Independent contractors are a separate question. Subdivision (o) says the section doesn’t impose liability “for the use of an independent contractor other than a labor contractor.” The firm’s post on the ABC test covers when a contractor is really an employee.
| Issue | Rule | Subdivision |
|---|---|---|
| What the client shares | Liability for wages and for missing workers’ comp coverage | (b) |
| Small-workforce exemption | Fewer than 25 total workers, or five or fewer supplied workers at a time | (a)(1)(B) |
| Notice before suit | 30 days’ notice to the client employer | (d) |
| Retaliation | Neither the client nor the contractor may take adverse action | (e) |
| Contract waiver | Void and unenforceable | (m) |
| Indemnity from the agency | Allowed by contract | (g) |
| Cal/OSHA duties | Can’t be shifted to the contractor | (c) |
Do workers have to give notice before suing the client?
Yes. Subdivision (d) says that “At least 30 days prior to filing a civil action against a client employer for violations covered by this section, a worker or the worker’s representative shall notify the client employer of violations under subdivision (b).”
That notice is the client’s first warning, and it’s worth treating as a deadline. The client should notify the agency, demand the payroll and timekeeping records, and check its indemnity rights right away. The firm’s post on employee demand letters covers responding to pre-suit notices in general.
Can the client make the agency pay?
By contract, yes. The liability itself can’t be waived. Subdivision (m) says “A waiver of this section is contrary to public policy, and is void and unenforceable.” But subdivision (g) says the section doesn’t stop a client employer from “establishing, exercising, or enforcing by contract any otherwise lawful remedies against a labor contractor for liability created by acts of a labor contractor.”
In practice, that means the staffing agreement is the client’s main defense tool. A useful agreement requires the agency to comply with California wage law, defend and indemnify the client for the agency’s wage violations, carry workers’ compensation and adequate insurance, and produce payroll records on request. An indemnity clause is only as good as the agency’s ability to pay, so the client should also check the agency’s financial strength and insurance.
Do safety obligations shift to the agency?
No. Subdivision (c) says “A client employer shall not shift to the labor contractor any legal duties or liabilities under Division 5 (commencing with Section 6300) with respect to workers supplied by the labor contractor.” Division 5 is the Cal/OSHA statute, so the client keeps its own workplace safety obligations for agency workers on its site.
Do client employers really get named?
Yes, including in Labor Commissioner citations. In Jaime Zepeda Labor Contracting, Inc. v. Department of Industrial Relations (Cal. Ct. App. 2021, No. D078062), the Labor Commissioner cited a farm labor contractor and two of its grape-grower clients over late final wages. The opinion noted that the growers, as client employers, were “subject to potential liability for wage violations pursuant to section 2810.3.” The Court of Appeal affirmed a judgment granting a writ that directed the Labor Commissioner’s division to dismiss the minimum wage citations, holding that paying final wages late wasn’t a minimum wage violation when the workers were paid at least the minimum wage by payday.
For clients, the case shows two things. Agencies and the businesses they supply can be named together. And the client’s defenses depend on records the agency keeps, which is why access to payroll data should be in the contract. The firm’s post on waiting time penalties covers the final pay rules at issue there.
After a wage claim involving agency workers
- Preserve the staffing agreement and its amendments, the agency’s invoices, the client’s own sign-in records and schedules, and the emails and texts with the agency about the workers.
- Calendar the 30-day notice period and any response deadline, and check for an arbitration agreement, an indemnity clause, and an employment practices liability (EPLI) policy with notice terms.
- Identify the site supervisors who directed the agency workers, and make sure no one takes action against a worker that could look like retaliation for the claim.
- Pull the agency’s payroll and timekeeping records under the staffing contract, along with proof of its workers’ compensation coverage.
- Get legal advice before tendering the claim to the agency or its insurer, and before responding to the workers or the Labor Commissioner.
The firm handles these claims as part of its practice in employer defense in California employment cases, including tenders to staffing agencies and their insurers.
Client employer questions businesses ask
Are we liable if we didn’t know the agency was underpaying?
Generally yes, for the wages. Section 2810.3 doesn’t require knowledge or fault by the client. It shares civil liability for wages owed to supplied workers. What the client’s knowledge can affect is the strength of other claims, like a separate joint-employer theory, and the client’s recovery against the agency under the contract.
Does the statute cover penalties as well as wages?
The statute defines “Wages” to include sums payable “based upon any failure to pay wages, as provided by law,” according to subdivision (a)(4). Whether a given penalty falls within that definition depends on the statute that creates it. Employers should assume a plaintiff will argue for the broadest reading and draft the indemnity clause to cover penalties as well as wages.
Can we retaliate against a worker who complains to us?
No. Subdivision (e) says “Neither the client employer nor the labor contractor may take any adverse action against any worker for providing notification of violations or filing a claim or civil action.” Ending a worker’s assignment right after a complaint is the kind of decision that should get a second look from counsel.
Do we have to give the Labor Commissioner records?
Yes, if asked. Under subdivision (i), a client employer or a labor contractor has to provide information within its possession, custody, or control that a state agency requests to verify compliance. Clients that don’t hold the payroll records should make sure the contract gives them quick access.
If your company is facing a wage claim over agency workers
If your company has received a notice, citation, or lawsuit over workers a staffing agency supplied, the staffing contract and the agency’s payroll records usually decide how much of the claim is real. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving staffing agency workers and client employer liability. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statute is Labor Code section 2810.3. The case is Jaime Zepeda Labor Contracting, Inc. v. Department of Industrial Relations (Cal. Ct. App. 2021, No. D078062).
This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.