California bill would regulate staffing firms, bring $5,000 fee

Craig Johnson | February 18, 2026

California would regulate staffing firms under newly proposed legislation.

It would require staffing firms to register annually with the California Labor Commissioner, provide proof of both workers’ compensation coverage and financial capacity, pay a $5,000 fee, and submit the names and addresses of the staffing firm’s owners or “profit sharers,” according to a write-up of the bill.

The “Staffing Agency Fair Employment Act,” or SAFE Act, was proposed Feb. 10 by California Sen. Eloise Gómez Reyes, D-Colton.

A list of registered staffing firms would be posted online, and businesses would be prohibited from using a staffing firm without first verifying that it is registered. The legislation would also authorize registered staffing firms to bring action against unregistered staffing firms or businesses that use unregistered firms.

“The SAFE Act seems to be an attempt to increase enforcement of existing laws applicable to employers of record while adding special provisions like ‘financial capacity,’” said Tim Szuhaj, legal research analyst, Americas, at SIA. “This will likely increase administrative loads for California’s temporary staffing firms.”

Workers’ compensation coverage is already required, but the bill brings a new twist.

“It strengthens that requirement but the other thing it does is put the onus on clients to work with a staffing firm that has the coverage,” Toby Malara, VP of government relations at the American Staffing Association, said in an interview with SIA.

The ASA is still analyzing the bill and its chances of becoming law. However, some points have already come up. For example, while other states have licensing requirements, the $5,000 fee in the California bill is much higher than others’. More often, fees are in the $1,000 to $2,000 range.

“We’re concerned that could be a barrier for entry to someone starting a staffing firm,” Malara said. “It’s cost prohibitive.”

The California Chamber of Commerce is also still reviewing the newly released legislation, according to a note to SIA.

Sen. Reyes said it provides accountability for staffing firms.

“California’s fragmented labor enforcement system leaves workers and families exposed,” Reyes said in a press release announcing the bill. “This bill establishes clear oversight, real accountability, and upfront verification so staffing agencies are complying with the law before harm can occur.”

Reyes announced the legislation has the support of some unions.

“The lack of oversight in the temporary staffing industry has led to some bad actors taking advantage of a system that allows them to misclassify workers and harm workers,” Amber Parrish, executive director of the United Food and Commercial Workers Western States Council, said in a press release.

Reyes’ announcement noted California has the largest temporary staffing market in the US and estimates that firms in the state generate $41 billion in annual revenue. She notes that other industries that place or manage workers are already regulated. Examples include farm labor contractors, janitorial services providers and talent agencies.

Reyes’ office has been contacted for more information.

Also backing the bill is the Partnership Organization for Workplace Ethics and Reform, or Power; its website says fraudulent staffing firms are stealing wages and dodging taxes while costing workers, businesses and taxpayers. The website includes a chatbot for reporting staffing fraud and providing information.

“Temporary staffing plays a vital role in California’s economy, but oversight has not kept pace with the scale and complexity of third-party employment,” Power Spokesperson Dan Kramer said in a press release. “The SAFE Act introduces commonsense verification standards that help ensure workers are protected, businesses compete fairly, and public systems are not forced to absorb avoidable costs.”

Power is based in Folsom, California.

(This article first appeared in SIA’s Global Daily News on Feb. 3.)

Source: This article was originally published by Staffing Industry Analysts on StaffingIndustry.com.
Original article:
https://www.staffingindustry.com/editorial/healthcare-staffing-report/california-bill-would-regulate-staffing-firms-bring-5-000-fee