Janitorial Companies Must Register with California Labor Commissioner Starting July 1, 2018 and Begin Distribution of Sexual Harassment Materials to All Employees and Contractors
With little fanfare, the California Property Service Workers Act (“Act”) went into effect in January 1, 2017. Significant portions of the Act take effect on July 1, 2018 and require the immediate attention of any businesses that provide janitorial services or that contract for such services. In particular, starting July 1, 2018, such businesses must register with the California Labor Commissioner’s Division of Labor Standards Enforcement (“DLSE”). The DLSE will maintain a publicly accessible online registry of all janitorial services businesses and contractors.
The Act, which was intended to combat harassment and wage theft in the janitorial services industry, has three key components — record keeping, registration and sexual harassment training — all of which go into effect at different times. Businesses that fail to comply with the Act, including the registration and sexual harassment requirements, will be subject to significant fines and penalties.
Registration with the DLSE Required for “Covered Employers” in the Janitorial Industry
While certain local ordinances and airport rules have implemented reporting requirements for service workers for some time, the DLSE program is much broader.
All covered employers are required to complete DLSE registration by July 1, 2018. A covered employer may not conduct any business without registering. DLSE will maintain a public database of registration status.
An “employer” is broadly defined as “any person or entity that employs at least one employee AND one or more covered workers AND that enters into contracts, subcontracts, or franchise arrangements to provide janitorial services.”
Under this broad definition, any organization that employs an individual to perform janitorial services becomes a covered employer, even if the organization’s primary purpose is non-janitorial. That is, even a property management company may arguably meet the definition if they have one janitorial worker and enter into contracts for janitorial services.
A “covered worker” includes anyone performing janitorial services, regardless of whether that person is an employee, independent contractor, or franchisee.
DLSE Registration Process and Requirements
The DLSE has established a website for registrations here, but has yet to open the online registration process.
Importantly, the DLSE will not approve the registration of any employer until certain conditions are satisfied. Registration requires the following, among other things:
- $500 application fee (annual renewal will also be $500)
- The name of the business entity and, if applicable, its fictitious or “doing business as” name.
- The form of the business entity and, if a corporation:
- The date of incorporation.
- The state in which incorporated.
- If a foreign corporation, the date the articles of incorporation were filed with the California Secretary of State.
- Whether the corporation is in good standing with the Secretary of State.
- The federal employer identification number (FEIN) and the state employer identification number (SEIN) of the business.
- The address of the business, the telephone number, and, if applicable, the addresses and telephone numbers of any branch locations.
- The names, residential addresses, telephone numbers, and social security numbers of the following persons:
- All corporate officers, if the business entity is a corporation.
- All persons exercising management responsibility in the applicant’s office, regardless of form of business entity.
- All persons, except bona fide employees on regular salaries, who have a financial interest of 10 percent or more in the business, regardless of the form of business entity, and the actual percent owned by each of those persons.
- The policy number, effective date, expiration date, and name and address of the carrier of the applicant business’ current workers’ compensation coverage.
- Whether the employer and any persons named above:
- Owe any unpaid wages.
- Have unpaid judgments outstanding.
- Have any liens or suits pending in court against himself or herself.
- Owe payroll taxes, or personal, partnership, or corporate income taxes, Social Security taxes, or disability insurance.
- Whether the employer and any persons named above have ever been cited or assessed any penalty for violating any provision of the Labor Code.
- Other information as the DLSE requires.
Sexual Harassment Training and Information Required Under the Act
In addition to registering with the DLSE, starting July 1, 2018, all businesses covered by the Act must provide all covered workers a copy of the Department of Fair Employment and Housing pamphlet DFEH-185, Sexual Harassment, available here.
Starting January 1, 2019, covered employers will be required to provide in-person “sexual violence and harassment prevention training” every two years. Specific parameters of this training have not yet been defined by the DLSE.
Recordkeeping Requirements Under the Act
In addition to the registration requirements, all covered employers must keep accurate records of the following as of January 1, 2017:
- The names and addresses of all employees engaged in rendering actual services for any business of the employer.
- The hours worked daily by each employee, including the times the employee begins and ends each work period.
- The wage and wage rate paid each payroll period.
- The age of all minor employees.
- Any other conditions of employment.
Notably, the recordkeeping requirements apply only to employees. Businesses are not required to maintain such records for independent contractors.
While the DLSE regulations require that these records be kept for three years, it is strongly recommended that covered employers keep them for four years. This is because the statute of limitations for related employment claims is often up to four years.
Significant Penalties for Noncompliance
The consequences for failure to comply with the new law are significant. For example, if a janitorial company fails to register, it faces penalties of $100 for each day it fails to register, up to $10,000.
Moreover, any business that contracts with an unregistered janitorial company is subject to a fine ranging from $2,000 to $10,000 for the initial violation, and $10,000 to $25,000 for a subsequent violation. Accordingly, a business could be fined for contracting with any janitorial service provider that is unregistered, according to the DLSE database.
Organizing Opportunities Created by the Act
The registration process, public data, and the potential for penalties may provide opportunities for monitoring of janitorial contractors by third parties. In the case of a non-union janitorial firm, this might invite union organizing opportunities as well as legal claims relating to the workplace.
Given the steep penalties and the tide of the #MeToo movement, businesses would be wise to seek legal counsel in navigating the requirements of Act. For more information concerning the Act, including its registration and sexual harassment training obligations, contact one of the authors or your trusted counsel at AALRR.