California Labor Code Section 2810.3: Client Employer Wage and Safety Liability

If your California business brings in workers through a staffing agency or labor contractor, California Labor Code Section 2810.3 can hold you jointly liable for the client employer’s share of unpaid wages and any workers’ compensation coverage the contractor fails to maintain. The liability is shared with the contractor, not transferred, and no contract can waive it. What you can do is screen contractors carefully, verify coverage, and act fast when a pre-suit notice arrives.

Does the Law Apply to Your Business

Two definitions decide whether you are exposed. You are a “client employer” if you are a business, in any form, that obtains workers from a labor contractor to perform work within your usual course of business.¹ Usual course of business means the regular and customary work of the business, performed within or on your premises or worksite.

That phrase does real work. Hiring a plumber to fix a burst pipe at your warehouse is not your usual course of business. Bringing in workers through a staffing agency to pick and pack orders in that warehouse is. A labor contractor is any person or entity supplying workers to do that core work, and no written contract is required for the designation to apply.¹

Workers who are exempt from overtime under California’s executive, administrative, or professional exemptions are not covered. The statute’s protections target hourly and non-exempt workers.¹

When Your Business Is Not a Client Employer

The statute carves out several categories:

A business with fewer than 25 total workers, counting both direct employees and workers obtained from any labor contractor.
A business using five or fewer workers supplied by labor contractors at any given time.
The state and all political subdivisions, including cities, counties, and special districts.
Individual homeowners receiving labor or services at their home, and owners of home-based businesses receiving labor at the home.

Some entities you contract with are also excluded from the “labor contractor” definition, which means using them does not trigger shared liability under this section: bona fide community-based nonprofits providing services to workers; labor organizations, apprenticeship programs, and hiring halls operating under collective bargaining agreements; motion picture payroll companies as defined under the Unemployment Insurance Code; and third parties in certain employee leasing arrangements, but only where the arrangement contractually obligates the client employer to assume all civil legal responsibility and liability.¹

What You Are Liable For

Wages, Penalties, and Interest

A client employer shares civil legal responsibility and liability with the labor contractor for the payment of wages to all supplied workers.¹ If the staffing agency fails to pay overtime or skips meal break premiums, the worker can pursue the full amount from either party or both.

“Wages” is broader than many businesses expect. The statute adopts the Labor Code Section 200 definition and adds all sums payable to the worker or the state based on any failure to pay wages. The DLSE regulations implementing the statute confirm that shared liability includes minimum wages, regular wages, overtime, other premium pay, and any damages, penalties, and interest flowing from a failure to pay.² Waiting time penalties, pay stub violation penalties, and statutory interest are all in scope. Businesses often assume shared liability covers only the raw unpaid amount, not the cascading penalties California attaches to wage violations. It covers both.

Workers’ Compensation Coverage

If the labor contractor fails to maintain valid workers’ compensation coverage required by Labor Code Section 3700, the client employer shares legal responsibility for that failure.¹ Section 3700 requires every employer, other than the state, to secure coverage through authorized insurance or by obtaining a certificate of consent to self-insure from the Director of Industrial Relations.³

A worker injured on the job who discovers the contractor let its policy lapse does not absorb that loss. The client employer is liable for the gap. Verify coverage before any contracted worker steps on-site, and verify again periodically throughout the engagement.

Workplace Safety Cannot Be Shifted

Subdivision (c) prohibits a client employer from shifting to the labor contractor any legal duties or liabilities under Division 5 of the Labor Code, beginning at Section 6300, which governs Cal/OSHA workplace safety.¹ A contract clause assigning all safety compliance to the staffing agency does not work. If contracted workers are injured because of unsafe conditions on your worksite, the liability is yours.

Waivers Are Void, but Indemnification Is Not

Any waiver of Section 2810.3 is contrary to public policy and void. You cannot sign away shared liability through your contract with the contractor, and the contractor cannot require workers to waive their right to pursue you. Subdivision (f) also confirms that shared liability under this section is supplemental to any other theories of liability under statute or common law, so workers can stack claims rather than choose between them.¹

What you can do is allocate the risk between yourself and the contractor after the fact. Subdivision (g) permits a client employer to establish and enforce contractual remedies against a labor contractor for liability the contractor’s actions created, and subdivision (h) gives contractors the same right against client employers for liability the client employer caused.¹ Indemnification clauses still matter. They just do not shield you from the worker’s claim; they give you a path to recover from the contractor after you have paid out. Whether that path is worth anything depends on the contractor’s finances, which is why screening before signing matters more than contract language after.

The 30-Day Notice Before Suit

Before a worker files a civil lawsuit against a client employer under this section, the worker or their representative must give at least 30 days’ written notice of the alleged violations.¹ Treat the notice as an emergency when it lands. Investigate immediately, contact the labor contractor, and determine whether the alleged violation actually occurred. Resolving a legitimate wage claim in that window is almost always cheaper than litigating, and it demonstrates good faith if the dispute proceeds.

Two limits on the notice provision are worth knowing. It applies to civil actions against the client employer specifically, not to wage claims filed with the Labor Commissioner or other administrative remedies. And ignoring the notice does not pause liability; it just burns through your best opportunity to limit exposure.

Cooperation With State Enforcement

When a state enforcement agency requests information, both the client employer and the labor contractor must provide any information in their possession needed to verify compliance with applicable labor laws, and records must be made available promptly for inspection and copying.¹ Build the ability to produce those records into your contract and your own file-keeping from day one.

What to Do Before Hiring a Labor Contractor

Compliance starts before the first contracted worker arrives. A few concrete steps keep you out of the worst outcomes.

Verify the contractor’s workers’ compensation policy is current, not expired, lapsed, or pending renewal. Request a certificate of insurance and confirm it with the carrier.
Request documentation showing the contractor’s compliance with California wage and hour laws, including payroll practices.
Investigate the contractor’s track record. Prior wage claims, licensing issues, or bonding problems are warning signs. A rate well below the market usually reflects corners being cut on overtime or meal breaks, and those corners become your problem.
Include an indemnification provision in your staffing contract so you have a contractual path to recover costs when the contractor’s violations create liability for you.
Re-verify coverage and compliance periodically during the engagement, not just at the start.

The statute leaves you fully exposed to the worker regardless of what your contract says. The work of limiting that exposure happens upstream, in who you pick and what you require of them, and downstream, in how fast you respond when something goes wrong.

1
California Legislative Information. California Labor Code LAB 2810.3
2
Department of Industrial Relations. DLSE Final Regulations Under Labor Code Section 2810.3
3
California Legislative Information. California Labor Code LAB 3700