AB 1978, the Property Service Worker Protection Act, is the most important new legislation to impact the janitorial industry in California. It is the latest California law designed to move the janitorial industry into a modern and transparent service industry. Servicon Systems supported AB 1978 not only because it encourages a fairer marketplace of janitorial services, but because it fits with our mission of changing the face of the cleaning industry by protecting the safety and interests of janitorial workers. Servicon Systems was included in drafting discussions of the rules, and our Chairman, Michael Mahdesian, publicly spoke about the benefits of the rules to our industry.
So, what is AB 1978 and how does it move the janitorial industry forward?
Beginning in 2015, the California Legislature and the Labor Commission enacted new laws and procedures focused on “up-the-chain” liability for the end-users and customers of janitorial services. Specifically, a 2015 law strengthens employer liability between contractors and subcontractors, and a 2016 law holds contractors and end-users of janitorial services jointly liable for wage thefts. The stated goals by the Labor Commissioner of these “up-the-chain” rules are to incentivize customers to hire “honest” janitorial companies and encourage a fairer marketplace for janitorial services so that "bad actors" do not price out “honest” companies.
AB 1978 is the next logical step to accomplish these goals. It is comprised of three main legal mechanisms: (1) a public registry of janitorial employers, (2) sexual violence and harassment prevention training, and (3) successor liability.
Public Registry (Labor Code §1423)
Beginning July 1, 2018, all janitorial employers that meet the definition under the rules must register annually with the Labor Commission. Importantly, the Labor Commission gave an extension to all janitorial employers until October 1, 2018, because the application process was delayed. To register, janitorial employers must submit documents and information, including valid and adequate workers’ compensation insurance, showing that the employer is qualified to perform janitorial services in California. By making the registry public, a customer can ensure they are contracting with a registered entity. In fact, penalties are as high as $25,000 for contracting with an unregistered janitorial entity. The Labor Commissioner suggested that customers should check the registry before engaging janitorial services, including any renewals, after October 1, 2018, to protect themselves from substantial fines. Please note, the rules define janitorial "employer" and janitorial "worker” extremely broad with the intent to include almost all janitorial services aside from a single residential cleaner, with few exceptions.
Sexual Violence and Harassment Prevention Training (Labor Code §1429.5)
Beginning January 1, 2019, all janitorial employers must provide biennial (every other year) in-person sexual violence and harassment prevention training to all janitorial workers. The protocols and requirements of the training will be established by the Labor Commission sometime before 2019. The purpose of this training is to provide knowledge and protections to janitorial workers who often work alone and at night.
Successor Liability (Labor Code §1434)
Under this rule, a successor employer can be liable for the former employer’s owed wages and penalties if they were essentially operating with the same company ownership or same site management. The purpose of this successor liability rule is to prevent “fly-by-night” janitorial entities that are essentially the same but reincorporate to evade unpaid wages and penalties. Please note, the successor liability rule specifically does not apply to the Displaced Property Service Employee Opportunity Act.
What business operations should change because of AB 1978?
Beginning on October 1, 2018, clients and end-users of janitorial services should check that their janitorial contractors in California are properly registered with the Labor Commission. This verification can be done by searching the database of registered janitorial employers hosted on the DIR website or by requesting a certification of registration from your janitorial service provider. Because of the back-log of registrations and the late application roll-out, you need not check before October 1, 2018. Thereafter, clients and end-users of janitorial services should verify registration for any new janitorial contract or contract renewal.
Importantly, janitorial service providers must also ensure that any subcontractors that provide janitorial workers are independently registered with the Labor Commission. This includes vendors that provide auxiliary services that fall within the broad definition of a janitorial worker. Service providers should contact each preferred vendor that falls within the regulations to ensure that they independently register by the deadline. There are a few notable exceptions to this rule, including window washers, housekeeper who primarily change linens, workers who primarily assemble and disassemble equipment, and workers who maintain sterile facilities.
The foregoing was written by Nick Rabinovitch, In-House Counsel for Servicon Systems. Please note, the information is not intended to constitute legal advice and should not be relied upon in lieu of consultation with appropriate legal advisors in your own jurisdiction.