BILL ANALYSIS                                                                                                                                                                                                    






                 Senate Committee on Labor and Industrial Relations
                               Mark DeSaulnier, Chair

          Date of Hearing: April 29, 2009              2009-2010 Regular  
          Session                              
          Consultant: Alma Perez                       Fiscal:Yes
                                                       Urgency: No
          
                                   Bill No: SB 677
                                     Author: Yee
                      Version: As introduced February 27, 2009
          

                                       SUBJECT
          
               Workers' compensation: exclusions: farming operations. 


                                      KEY ISSUE

          Should a certain industry be exempt from having to comply with  
          the workers' compensation requirements if its only employees are  
          specified family members? 
          

                                       PURPOSE
          
          To exempt specified farming operations from the requirement of  
          having to provide workers' compensation insurance for specified  
          family members.


                                      ANALYSIS
          
           Existing law  requires employers to secure the payment of  
          workers' compensation for injuries incurred by their employees  
          that arise out of, or in the course of, employment.  Workers'  
          compensation insurance provides six basic benefits which include  
          medical care, temporary disability benefits, permanent  
          disability benefits, supplemental job displacement benefits or  
          vocational rehabilitation and death benefits.  Failure to  
          maintain workers' compensation coverage can result in an order  
          prohibiting the employer from using employee labor, liability  
          for employee benefits, and assessments of other penalties. 
           
          Under existing law,  employers are required to secure the payment  









          of workers' compensation insurance either by being insured by  
          one or more insurers duly authorized to write compensation  
          insurance in this state or by securing from the Director of  
          Industrial Relations a certificate of consent to self-insure.   
          The Self Insurance Plans (SIP) program, within the Department of  
          Industrial Relations (DIR), authorizes qualified employers to  
          provide their own coverage for workers' compensation  
          liabilities.  

           Existing law  , however, excludes various persons from the  
          definition of employee for purposes of securing the payment of  
          workers' compensation.  Some of the workers excluded from  
          workers' compensation requirements include:

                 Any person employed by the owner or occupant of a  
               residential dwelling whose duties are incidental to the  
               ownerships, maintenance, or use of the dwelling, including  
               the care and supervision of children, or whose duties are  
               personal and not in the course of the trade, business,  
               profession, or occupation of the owner or occupant.  This  
               includes any person who is employed by his or her parent,  
               spouse, or child;  
                 Self-employed persons;
                 Volunteers for a public agency or a private, nonprofit  
               organization and certain recreational camps, except certain  
               public safety personnel;
                 Deputy clerk, sheriffs or constable appointed for their  
               own convenience without compensation;
                 Ski-lift operators participating in recreational  
               activities and uncompensated ski patrol;
                 Participants in sports/athletics without compensation,  
               students in amateur sporting events and certain sports  
               officials at nonprofessional events;
                 Persons performing services in return for aid from  
               religious, charitable or relief organizations;
                 Certain out-of-state law enforcement personnel deputized  
               to work or acting as peace officers in California; and 
                 Independent contractors. 

          
          This Bill  would add to the list of those excluded from workers'  
          compensation requirements any person employed by his or her  
          Hearing Date:  April 29, 2009                            SB 677  
          Consultant: Alma Perez                                   Page 2

          Senate Committee on Labor and Industrial Relations 
          








          registered domestic partner, or by the spouse or registered  
          domestic partner of his or her parent or child -- adding to the  
          current exclusion applying to a person employed by a parent,  
          spouse, or child -- in a farming operation that is registered  
          with the director or the director's designee and meets specified  
          conditions.

          Specifically, this bill would:

                 Apply to farming operations wholly owned by one or more  
               of the family members described and conducted on land that  
               is owned by, or leased to, the same owners.  Eligibility is  
               limited to farms whose taxable income does not exceed  
               $10,000 per year.

                 Require the owner(s) of the farming operation to provide  
               health insurance for all family members working on the  
               farm. 

                 Allow the farming operation to register with the  
               director of DIR for a one year period of exclusion and  
               require that they provide to the director, among other  
               things, proof of the health insurance being provided, of  
               the owner(s) taxable income, the names and ages of all  
               persons employed on the farm, and proof that the owner(s)  
               cannot afford the workers' compensation policy premium. 

                 Specify that the owner(s) of the farming operation must  
               be in compliance with all other applicable provisions of  
               the Labor Code; violations of the code and specified  
               requirements would deem the farming operation as failing to  
               secure the payment of workers' compensation and would  
               subject the farm to applicable penalties. 

                 Provide that violations of specified conditions  
               constitute good cause for the director or the director's  
               designee to cancel the farming operation's registration.  

          Lastly, the bill would provide that the information required  
          from the owner(s) of the farming operation for registration with  
          the director or the director's designee shall become public  
          record, with the exception of tax returns and social security  
          Hearing Date:  April 29, 2009                            SB 677  
          Consultant: Alma Perez                                   Page 3

          Senate Committee on Labor and Industrial Relations 
          








          numbers.  


                                      COMMENTS
          
          1.  Need for this bill?

            The workers' compensation insurance system was created to  
            provide employees with medical treatment in the event that a  
            worker suffers an on-the-job injury.  Existing law requires  
            that employers secure the payment of workers' compensation  
            insurance; however, there are several exclusions to this  
            requirement including, among others, those who are  
            self-employed, volunteers, or persons employed by the owner or  
            occupant of a residential dwelling.  This includes any person  
            employed by a parent, spouse or child.  This bill would add a  
            farming operation employing immediate family members,  
            including the registered domestic partner or the spouse or  
            registered domestic partner of his or her parent or child, to  
            the list of those excluded from having to provide workers'  
            compensation.  

            According to the UC Cooperative Extension, in 2005 and 2008,  
            individual Hmong and Hispanic farmers were fined between  
            $14,000 and $26,000 each for not complying with the workers'  
            compensation law.  The UC Cooperative Extension declares that  
            a small farmer can purchase a simple workers' compensation  
            policy for as little as $460 to provide coverage for their  
            employees, and to forestall the $1,000 per worker fine for not  
            having a policy in place. However, a recent article cited that  
            the income of minority farmers in Fresno County, for example,  
            averages somewhere between $10,000 and $15,000.  This bill  
            would help those small farming operations avoid further  
            citations for non compliance with the workers' compensation  
            law if they operate with the help of their immediate family  
            members, as specified, and can meet specific requirements. 

          2.  Proponent Arguments  :
            
            According to proponents, Fresno County is home to over 6,081  
            farms, with about 3,760 of those farms grossing less than  
            $100,000.  As indicated by the author, a 2004 multi-agency  
          Hearing Date:  April 29, 2009                            SB 677  
          Consultant: Alma Perez                                   Page 4

          Senate Committee on Labor and Industrial Relations 
          








            enforcement sweep of Southeast Asian growers in the Fresno  
            area resulted in some farmers being fined between $14,000 and  
            $25,000 for various violations, including the failure to  
            secure the payment of workers' compensation insurance.   
            Proponents claim that many refugee farmers grow on rented land  
            and cannot often afford to hire outside labor, therefore  
            having to rely on immediate and extended family for assistance  
            in gathering the crops without getting paid for their work.  

            Proponents of the measure argue that farmers can't afford the  
            coverage of workers' compensation and are often unaware of the  
            regulations until they are hit with big fines.  According to  
            the author, after the 2004 sweep nearly 50 Hmong farmers  
            stopped working their farms for fear of being fined.   
            Proponents argue that minimally, the cost for workers'  
            compensation insurance for a small farming operation can be  
            $600, but it can run into the thousands of dollars, a cost  
            that these very small farms cannot afford.  The author argues  
            that these small family operated farms need to be excluded  
            from workers' compensation insurance requirements that they  
            cannot afford to pay. 

            The author states that of the state's 81,000 farms only 7,000  
            earn less than $10,000 which would qualify them for the  
            exclusion provided in this bill.  The author estimates that  
            the actual number of farm owner(s) who would likely sign up  
            for the exclusion would likely be much lower, in Fresno county  
            alone about 600 Southeast Asian growers would probably  
            consider the program.  

          3.  Neutral Position Arguments  :

            Several groups have taken a neutral position on the bill  
            arguing that, although they generally oppose any exemption  
            from an employer's obligation to procure workers' compensation  
            insurance for employees, that they appreciate the fact that  
            the author of this bill drafted language carefully in order to  
            address several concerns raised to ensure both sufficient  
            worker protections and a very limited and narrow scope.    

            Some were particularly concerned with the fact that regardless  
            of whether an employer was exempted from workers' compensation  
          Hearing Date:  April 29, 2009                            SB 677  
          Consultant: Alma Perez                                   Page 5

          Senate Committee on Labor and Industrial Relations 
          








            obligations, accidents would undoubtedly continue to occur,  
            particularly in an industry as inherently dangerous as  
            agriculture.  Accordingly it was imperative that health  
            insurance be provided by the employer, and that proof of such  
            insurance, along with proof of an accident free work place be  
            provided to DIR prior to the exemption being granted, and  
            annually by employers seeking to renew their exemption.   

            Additionally, some groups wanted to ensure that the bill was  
            limited in applicability only to truly small family farms,  
            employing only immediate family members.  This bill addresses  
            these concerns as well by limiting eligibility to farm  
            operations with $10,000 taxable income per year, by  
            enumerating the list of immediate family members which may be  
            employed on the farm, and by clarifying that no other  
            non-immediate family member employees may be employed by the  
            employer during the period of exemption. Finally, the bill  
            ensures that there is a review process to guarantee that  
            employers who are granted the exemption can be deemed  
            ineligible at anytime if any labor laws are violated or the  
            specified requirements are not met.  

          4.  Opponent Arguments  :

            According to opponents of the measure, farm workers toil in  
            some of the most dangerous conditions of any industry.  They  
            argue that a majority of the 80,000 farms in California are  
            family owned, and unfortunately, over half of all farm worker  
            protection violations have been found on these family owned  
            farms.  Opponents believe that all farm workers regardless of  
            race, ethnicity, religion, political asylum and refugee status  
            or family affiliation have the right to the protections under  
            the law. 

            Opponents argue that to provide no safety net for family  
            members working on the majority of California's farms means  
            that injured workers won't have access to medical treatment  
            free of out of pocket expenses or any form of wage replacement  
            if they cannot return to work.  They believe that this bill  
            allows current farm worker protections to be at the mercy of  
            the state's broken enforcement system, with no adequate  
            funding, placing more farm worker lives in danger of serious  
          Hearing Date:  April 29, 2009                            SB 677  
          Consultant: Alma Perez                                   Page 6

          Senate Committee on Labor and Industrial Relations 
          








            bodily harm and death.        

            Opponents argue that there is sufficient evidence that the  
            state does not have the funding necessary to enforce current  
            labor laws.  They argue that last year alone, six farm workers  
            lost their lives due to the state's lack of enforcement of the  
            heat regulation.  In addition, they cite that in 2007 alone,  
            for over 3 million employers, there were only 7,883 employer  
            inspections across the state and only 537 in the agricultural  
            sector.  With enforcement efforts already under funded,  
            opponents believe that this is not the time to be creating  
            loopholes and exemptions to the law.  
           
          5.  Prior Legislation  :

            SB 452 (Cogdill) of 2007: Hearing in Sen. Labor Committee  
            canceled at author's request. 
            This bill sought to exclude family members, including parents,  
            children, grandparents, aunts, or first or second cousins,  
            working on family-owned farms from workers' compensation  
            requirements under the law.  The bill limited eligibility to  
            farms generating less than $100,000 per year in total taxable  
            income.  

                                       SUPPORT
          
          Blong Xiong, City of Fresno Council Member, District 1 
          CAFF Community Alliance with Family Farmers
          Community Alliance with Family Farmers (CAFF) 
          Fresno County Farm Bureau (FCFB)
          Hmong Leadership Network of San Joaquin
          Individual signed forms 150 
          National Hmong American Farmers, Inc.
          National Immigrant Farming Initiative

                                       NEUTRAL

          California Labor Federation, AFL-CIO
          California Teamsters Public Affairs Council
          United Food and Commercial Workers Union, Western States Council
           

          Hearing Date:  April 29, 2009                            SB 677  
          Consultant: Alma Perez                                   Page 7

          Senate Committee on Labor and Industrial Relations 
          








                                      OPPOSITION
          
          United Farm Workers 






































          Hearing Date:  April 29, 2009                            SB 677  
          Consultant: Alma Perez                                   Page 8

          Senate Committee on Labor and Industrial Relations