For California’s Temporary Staffing Agencies, Trust is Not Enough

Nearly all of us are workers. Some of us are employers. All of us are customers or clients. So, when we ask, “whose job is it to protect workers?” The answer is simple: it’s everyone’s job. 

That truth was underscored for me at an anti-fraud conference where the keynote speaker, Frank Abagnale, delivered his simple and urgent message: “verification must replace trust.”

For generations, we’ve operated from a baseline of trust. We trust that our employer is legitimate. We trust that if something goes wrong—an injury, a missed paycheck, a denied benefit— someone will be accountable on the other end. That assumption is no longer viable.

In today’s economy, shaped by artificial intelligence, digital identities, and complex corporate structures, fraud is more sophisticated—and more scalable. Bad actors hide behind shell companies and fabricated identities. They appear legitimate, operate quickly, and disappear before anyone can react. One truly insidious form of fraud that hasn’t yet made the lengthy list of schemes being uncovered by journalists and public officials is prevalent in California, and it has been propagating under the radar with scary speed for years: temporary staffing fraud. 

Nearly two million Californians work through staffing agencies annually.  For many, that means dealing with little more than a company name, a phone number, and a website. But ask a simple question: who owns and runs the company?  The answer is often unclear, which prevents accountability and erodes trust.

There is no meaningful requirement for staffing agencies to disclose ownership, to verify compliance with employment laws, or to demonstrate financial responsibility. You can confirm a business exists. You might find reviews. But none of that tells you who is actually responsible—the individuals making decisions and controlling compliance. No individual means no accountability.

When things go wrong, that lack of transparency becomes devastating.

Imagine you’re injured on the job and discover there’s no workers’ compensation insurance. Or you lose your job, and your unemployment or disability claim is denied because payroll taxes were never properly paid. The company where you worked says it’s the staffing firm’s responsibility. The staffing firm says it’s someone else’s.

This isn’t a bureaucratic inconvenience—it’s a financial crisis. 

Who is accountable?

Too often, no one.  The staffing company has dissolved, relocated, or reappeared under a new name, targeting new employers and workers.  

The costs don’t go away. What the cheaters avoid, compliant companies pay.

Compliant businesses pay more to cover the losses created by bad actors. They’re forced to compete against companies that undercut them by 30 to 50 percent because they’re cheating. Workers are left exposed. Public safety nets are strained. Taxpayers ultimately pick up the tab.

Fraud is not a victimless crime. It erodes the entire economic ecosystem. There aren’t enough investigators, prosecutors, or courtrooms to keep up with its scale.

What we’re doing isn’t working.

The solution: eliminate opportunities for fraud on the front end, which starts with real transparency: clear registration requirements, ownership disclosure, and verifiable compliance standards in industries where exploitation thrives.

This session, Senator Eloise Reyes (D-Colton) has introduced SB 1032, a good first step in tackling this expanding problem

We must embrace a culture of verification. Not paranoia—awareness. Trust but verify. Ask basic questions: Who am I working for? Is this company properly registered? If something goes wrong, who is accountable?

These are not unreasonable demands. They are minimum standards that legitimate businesses already meet.

Protecting workers is a shared responsibility. Employers must vet their partners. Workers must stay informed. Clients and customers must choose verified vendors.

The distinction between worker, employer, and customer is often blurred. Most of us occupy more than one of these roles. Fraud thrives in the gaps between the roles, obscured from direct responsibility and accountability

Closing those gaps is how we fight back.

By adopting a “trust but verify” mindset, individually and collectively, we reduce the opportunity for bad actors to hide and make it easier for compliant businesses to compete.

We won’t just protect workers. We will protect everyone.