A new law went into effect as of the fi rst of this year requiring the issuance of weekly paychecks for most workers on temporary assignment with a client or customer. Although initially intended to apply only to the temporary services industry, as enacted, the law extends outside traditional notions of that industry.


Who is a Temporary Services Employer?

Labor Code section 201.3, as enacted, now applies to any “temporary services employer,” which is defi ned generally as any employer that contracts with clients or customers to supply workers to serve these clients or customers. This defi nition is the same as that used in Unemployment Insurance (UI) Code section 606.5, which has been applied broadly. When UI Code section 606.5 was enacted, it was intended to prevent both the person providing the workers, and the person using the workers’ services, from asserting that the workers were not their employees, and as a result having the workers end up as no one’s employee. It was not intended to address a situation such as professional employer organizations (PEOs), where the PEO agrees to treat the worker as its employee.

The statutory defi nition of temporary services employer includes any employer who does the following:

1. negotiates for the nature of services to be provided, including the time and place, type of work, conditions, quality and price of services;

2. determines the assignments or reassignments of workers;

3. assigns workers to perform services for clients or customers;

4. sets the rates of pay for its workers, whether or not through negotiation;

5. pays workers from its own accounts; and

6. retains the right to hire and fi re the workers


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