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
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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
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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
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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
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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
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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
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Senate Committee on Labor and Industrial Relations
OPPOSITION
United Farm Workers
Hearing Date: April 29, 2009 SB 677
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Senate Committee on Labor and Industrial Relations