AB1066 (Gonzalez)Page 1 of 2

SENATE COMMITTEE ONLABOR AND INDUSTRIAL RELATIONS

SenatorTony Mendoza, Chair

2015 - 2016 Regular

Bill No: AB1066Hearing Date: June 29, 2016

Author: / Gonzalez
Version: / June 22, 2016
Urgency: / No / Fiscal: / Yes
Consultant: / Alma Perez-Schwab

Subject: Agricultural workers: wages, hours, and working conditions

KEY ISSUE

Should the Legislature remove an exemption in current law that would extend thepayment of overtime compensation toagricultural employees after 8 hours of work in a day or 40 in a week – which amajority of employees in other industries already receive?

ANALYSIS

Existing law:

1)Defines a full workday as 8 hours, and 40 hours as a workweek. Overtime wage rates must be paid for any time worked beyond 8 a day and 40 a week. (Labor Code §510)

2)Requires, with some exceptions, the payment of overtime compensation as follows:

  • Any work in excess of 8 hours in one workday, any work in excess of 40 hours in any one workweek, and the first eight hours worked on the seventh day of work in any one workweek shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee;
  • Any work in excess of 12 hours in one day shall be compensated at the rate of no less than twice the regular rate of pay for an employee;
  • Any work in excess of eight hours on any seventh day of a workweek shall be compensated at the rate of no less than twice the regular rate of pay of an employee.

3)Provides that the payment of overtime compensation requirements do not apply where:

  • An employee submits a written request to make up work time in the same workweek in which the work time was lost.
  • An alternative workweek schedule adopted pursuant to Labor Code Section 511.
  • Employees have adopted an alternative workweek schedule pursuant to a collective bargaining agreement, as specified.
  • An alternative workweek schedule is inapplicable because the work relates to cases of emergency or the protection of life or property, to the movement of trains, or to certain hardship exceptions as specified.

4)Requires, with certain exemptions, that all employees receive a meal break of 30 minutes before the start of the 5th hour of work, as specified. If more than 10 hours are worked, a second meal period of 30 minutes must also be granted.

5)Specifies that every person employed in any occupation of labor is entitled to one day’s

rest therefrom in seven and no employer shall cause his/her employees to work more than six days in seven.

6)Employers who violate these provisions are guilty of a misdemeanor. (Labor Code §553)

7)Exempts any person employed in an agricultural occupation from all these provisions. (Labor Code §554)

8)Establishes the Industrial Welfare Commission (IWC) to adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in the State consistent with the health and welfare of those workers.

(Labor Code §516)

9)Under the IWC Wage Order 14, employees working in an agricultural occupation, as defined, are entitled to overtime compensation as follows:

  • Any work in excess of 10 hours in any one workday or more than 6 days in any workweek, and the first 8 hours worked on the 7th day must be paid at 1 ½ times the employee’s regular rate of pay;
  • All hours worked over 8 on the 7th day of work must be paid at double the employee’s regular rate of pay.

This Bill would remove the exemption for agricultural employees regarding hours, meal breaks, and other specified working conditions and would enact the Phase-In Overtime for Agricultural Workers Act of 2016, as specified.

Specifically, this bill:

  1. Provides that, beginning January 1, 2019, any person employed in an agricultural occupation shall not be employed more than 9 ½ hours in any one workday or more than 55 hoursin any one workweek, unless he/she receives 1 ½ times that employee's regular rate of pay for all hours worked over 9 ½ in a workday or over 55 in a week.
  2. Provides that, beginning January 1, 2020, any person employed in an agricultural occupation shall not be employed more than 9 hours in any one workday or more than 50 hoursin any one workweek, unless he/she receives 1 ½ times that employee's regular rate of pay for all hours worked over 9 in a workday or over 50 in a week.
  3. Provides that, beginning January 1, 2021, any person employed in an agricultural occupation shall not be employed more than 8 ½ hours in any one workday or more than 45 hoursin any one workweek, unless he/she receives 1 ½ times that employee's regular rate of pay for all hours worked over 8 ½ in a workday or over 45 in a week.
  4. Provides that, beginning January 1, 2022, any person employed in an agricultural occupation shall not be employed more than 8 hours in any one workday or more than 40 hoursin any one workweek, unless he/she receives 1 ½ times that employee's regular rate of pay for all hours worked over 8in a workday or over 40 in a week.
  5. Provides that the term “employed in an agricultural occupation” has the same meaning as the term found in the IWC wage order for Agricultural Occupations.
  6. Provides that, beginning January 1, 2022, any person employed in an agricultural occupation who works in excess of 12 hours in one day shall be compensated at the rate of no less than twice the employee's regular rate of pay.
  7. Provides that all other provisions of existing law regarding compensation for overtime work shall apply to workers in an agricultural occupation beginning January 1, 2019.
  8. Authorizes the Governor to temporarily suspend the scheduled phase-in of overtime requirements set forth above if the Governor suspends scheduled minimum wage increases for specified "economic conditions" under provisions of law enacted this year pursuant to Senate Bill 3 (Leno), Chapter 4, Statutes of 2016.
  9. If the Governor makes such a determination, all implementation dates shall be postponed by an additional year. This authority shall end upon the final phase-in of overtime provisions, but not later than January 1, 2022.
  10. Requires the Department of Industrial Relations to update Industrial Welfare Commission Wage Order 14 to be consistent with the requirements in this bill, except that any existing provisions providing greater protections or benefits to agricultural employees shall continue in full force and effect.
  11. Makes related legislative findings and declarations.

COMMENTS

1.Background on Agricultural Workers and Overtime:

In 1938, Congress passed the Fair Labor Standards Act (FLSA), which established minimum requirements for labor laws in all states. The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.The overtime provisions of the FLSAwere not extended to agricultural employees. However, as with all provisions with the FLSA, states are allowed to exceed the requirements laid out in the federal law.

The issue of overtime for agricultural employees in California was first dealt with in 1941. Previously, the law had been silent on this subject. But in 1941 the Legislature exempted all agricultural employees from the statutory requirements of overtime, similar to the FLSA. This statutory exemption was retained when the eight-hour day was codified in 1999.

This statutory exemption, however, did not prohibit the Industrial Welfare Commission (IWC) from legally promulgating overtime provisions beyond the traditional eight-hour standard of California law. Currently, the applicable wage order for agricultural employees requires the payment of overtime wages when an agricultural employee works longer than 10 hours in a single day, and more than six days during any workweek.

With respect to meal periods, the applicable wage order provides that every employer shall "authorize and permit" agricultural employees to take a meal period after five hours of work. This language differs from the statutory meal period language applicable to other employees that prohibits an employer from employing a worker longer than five hours without "providing" a meal period. In addition, the wage order does not require a second meal period after the tenth hour of work (as the statute requires for other employees).

2.Existing Overtime Provisions: comparison among occupations

Pay overtime equal to 1 ½ times the regular rate of pay:

  • For most occupations, all hours over 8 in one day or over 40 in one week, and for the first eight hours of work on the seventh day of work in a work week.
  • For personal attendants (specified domestic workers), all hours over 9 in one day or over 45 in one week.
  • For farmworkers, all hours over 10 in one day or over 60 in one week, and for the first eight hours of work on the seventh day in a workweek.

Pay double time:

  • For most occupations, all hours over 12 in one day or over eight on the seventh day of work in a workweek.
  • For farmworkers, all hours over eight on the seventh day of work in a workweek.

3.Need for this bill?

According to the California Research Bureau (CRB), California remains the largest overall producer of agricultural goods by value in the country, and is one of the largest agricultural producing regions in the world. (CRB, Farmworkers in California: A Brief Introduction, Oct. 2013) Unfortunately, despite the success of the industry, the farmworkers that make much of the production possible face a number of disadvantages compared to California’s population as a whole.According to CRB, farmworkers are at higher risk for living in poverty, are less likely to have health insurance, and typically lack the resources necessary to change their situation. According to the US Department of Labor - Bureau of Labor Statistics, the median annual wage for agricultural workers was $20,090 in May 2015. In California, the median wage for farmworkers in 2015 was $19,102 annually. The vast majority, 92 percent, of farmworkers in California were Latino.

The author of the measure argues that on a daily basis, farmworkers endure extreme working conditions and weather for low pay and believes it is time for the Legislature to remove the exemption for agricultural workers that excludes them from the daily overtime requirements. This bill would remove the exemption for agricultural employees regarding hours, meal breaks, and other working conditions, including specified wage requirements, and would create a schedule that would phase in overtime requirements for agricultural workers, as defined, over the course of 4 years, from 2019 to 2022.

4.Proponent Arguments:

The author of the measure argues that even though California’s farmworkers perform some of the most physically-demanding jobs with pay and working conditions at levels that most Americans would not tolerate, they continue to be excluded from overtime laws enjoyed by most American workers.There are very few occupations that are as physically demanding and exhausting as agricultural work. Proponents argue that this exclusion can no longer be justified or tolerated. They believe that by ensuring that farmworkers are no longer excluded from overtime laws, poverty among this population and the communities they live in will be reduced.

Proponents argue that California agriculture is a wealthy, mature industry that benefits from this unfair overtime exclusion subsidy that is no longer justified. They note that in its 2014 ag industry report, the California Department of Food and Agriculturefound that the state’s 76,000+ farms and ranches had combined revenue of approximately $54 billion. The CDFA’s Crop Year Report noted that this total represented a substantial increase over 2013, and stated that California is the leading US state in cash farm receipts with combined commodities representing nearly 13 percent of the US total.

Proponents argue that the agricultural industry has been profitable despite the fact that farmworkers are earning an annual average salary of $14,000, and roughly 30 percent of households with farmworker income are below the poverty line and 73 percent earn less than 200 percent of poverty (a threshold used in many public assistance programs). Overall, proponents believe it is time for California to support and extend fair overtime compensation to hundreds and thousands of agricultural workers.

5.Opponent Arguments:

A coalition of California agricultural producers are opposed to the measure, noting that the previous bill (AB 2757) was defeated in the Assembly and argue the following:

  • This bill will reduce the annual take home pay for most agricultural employees. The average annual pay for a milker on a California dairy will be reduced by 33% while other seasonal agricultural employees could see earnings decline by as much as 28%.
  • Farmers in California must compete with farmers in other states and countries that already have far lower wage costs. They argue that their buyers – big box and traditional grocery and restaurant chains– set the price they will pay,and if our farmers cannot meet these prices, they will purchase from other states and countries.
  • California is already at a competitive disadvantage as it is one of only a few states that require any overtime pay for agricultural workers, and our requirement for daily overtime is already the most expensive. This bill will exacerbate this disadvantage.

Opponents also note that this bill cannot be viewed in isolation and argues that California saddles its farmers with the highest regulatory costs and compliance burdens in the nation. Among others, they state the following:

  • Electricity costs for industrial users that are 63.4% higher than the national average.
  • The highest workers’ compensation premium rates in the nation.
  • California-only restrictions on use of approved crop protection tools that increase the risk of crop loss due to pests and disease.
  • Water supply costs driven by regulatory loss of surface water supplies, forcing farmers to drill new and deeper wells, pay more for energy to pump, and scramble to purchase expensive water (if it can be found and conveyed) from others.

According to opponents, this legislation will end up hitting many agricultural workers in their wallet as farmers may be forced to pay higher overtime costs during peak harvest, but for the tens of thousands of workers who are employed year round (thinning trees, preparing ground for planting, etc.) the pressures of cost avoidance will translate to fewer hours worked as farmers add additional employees to avoid overtime costs.

Additional opposition from a coalition of suppliers and consumers argues that cost andregulatory burdens of farming are already much steeper than in other states and areon the rise in response to the recent aggressive increase in the State’s minimum wage. They argue that it is likely that reductions in acreage farmed and employee hours worked could occur as farmers seek to manage rising costs in order to stay competitive. They believe this will impact suppliers and purchasers who will be forced to look elsewhere for the ingredients they need to manufacturer theirconsumer goods and suppliers will have to scale back their own operations as customer orders for services and goods decrease.

6.Prior Legislation:

AB 2757 (Gonzalez) of 2016, was almost identical to this bill. This bill (AB 1066) was amended to add co-authors and clarify that any provisions of the existing IWC Wage Order for Agricultural Occupations that provide greater protections or benefits shall continue in full force and effect. AB 2757 failed passage on the Assembly floor.

AB 1313 (Allen) of 2012 and SB 1121(Florez) of 2010: AB 1313 proposed to extend the 8-hour daily overtime rule to agricultural employees. However, AB 1313 failed passage on concurrence on the Assembly Floor. AB 1313 was similar to SB 1121 from 2010, which was vetoed by Governor Schwarzenegger. The Governor's veto message stated (in part):

"Unfortunately, this measure, while well-intended, will not improve the lives of California's agricultural workers and instead will result in additional burdens on California businesses, increased unemployment, and lower wages. In order to remain competitive against other states that do not have such wage requirements, businesses will simply avoid paying overtime. Instead of working 10-hour days, multiple crews will be hired to work shorter shifts, resulting in lower take home pay for all workers. Businesses trying to compete under the new wage rules may become unprofitable and go out of business, resulting in further damage to our already fragile economy."

SUPPORT

United Farm Workers (Sponsor)

Alameda Labor Council

Alliance San Diego

American Civil Liberties Union of California

American Federation of State, County and Municipal Employees

Asian Americans Advancing Justice-California

California Catholic Conference

California Employment Lawyers Association

California Immigrant Policy Center

California Labor Federation

California Rural Legal Assistance Foundation

California State Conference of the National Association for the Advancement of Colored People

California State Treasurer, John Chiang

Center of Policy Initiatives