Kimco Staffing Services, Inc. v. State

Plaintiffs and appellants Kimco Staffing Services, Inc. (Kimco), and KimstaffHR, Inc. (KimstaffHR) (collectively, plaintiffs), appeal a judgment of dismissal following an order sustaining without leave to amend a demurrer by defendants and respondents State of California, by and through California’s Department of Industrial Relations (Department) and Christine Baker, in her official capacity as Director of the Department (collectively, the State).

Labor Code section 3701.9 prohibits temporary services employers (TSE’s) and leasing employers (LE’s) from self-insuring their workers’ compensation liability. The essential issue presented on appeal is whether section 3701.9 violates equal protection because it treats TSE’s and LE’s differently from other employers, who are permitted to self-insure.

We conclude plaintiffs did not and cannot allege the statutory difference in treatment lacks a rational basis. As the trial court found, a rational basis exists for treating TSE’s and LE’s differently from other employers with respect to self-insurance. TSE’s and LE’s are in the business of providing employees to other businesses, so TSE’s and LE’s have an incentive to expand…