BILL ANALYSIS Senate Committee on Labor and Industrial Relations Mark DeSaulnier, Chair Date of Hearing: April 28, 2010 2009-2010 Regular Session Consultant: Gideon L. Baum Fiscal:No Urgency: No Bill No: SB 1121 Author: Florez Version: As Introduced February 18, 2010 SUBJECT Overtime wages: agricultural workers. KEY ISSUE Should the Legislature require that agricultural employees are eligible for overtime after the 8th hour in a workday and ensure the provision of meal periods? PURPOSE To withdraw the exemption on agricultural workers from overtime and meal period requirements. ANALYSIS Existing law, with certain exceptions, defines a day's work as eight hours of labor. Any additional hours worked in excess of eight hours in one day, or a 40-hour workweek, must be compensated with the payment of overtime. Under existing law, the payment of overtime compensation is as follows: Any work in excess of eight 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. Existing law provides that the standard requirements for the payment of overtime compensation do not apply where: a) An employee submits a written request to make up work time that would be lost as a result of a personal obligation of the employee if the make-up work time is performed in the same workweek in which the work time was lost. Such make-up work time may not be counted towards computing the total number of hours worked in a day. b) An alternative workweek schedule has been adopted pursuant to Labor Code Section 511. Under this procedure, an employer may propose an alternative workweek for no longer that 10 hours per day within a 40-hour workweek and, if it is approved, the employer is not required to pay overtime compensation for such a work schedule. The employer must specify the workers in a work unit and conduct a secret ballot election. If two-thirds of the workers approve, the new workweek is deemed adopted. The employer is required to make a reasonable effort to find a work schedule not to exceed eight hours for a worker unable to work the alternative schedule. c) Employees have adopted an alternative workweek schedule pursuant to a collective bargaining agreement if the agreement expressly provides for wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage. Hearing Date: April 28, 2010 SB 1121 Consultant: Gideon L. Baum Page 2 Senate Committee on Labor and Industrial Relations d) 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 by the Chief of the Division of Labor Standards Enforcement. Existing law requires, with certain exemptions, that all employees receive a meal break of 30 minutes before the start of the 5th hour of work, unless the work period is no more than six hours and both the employer and the employee choose to waive the meal period by mutual consent. Existing law requires that if the work period is more than ten hours, a second meal period of 30 minutes must also be granted to an employee. This second meal period can be waived by the mutual consent of the employer and employee, but only if the work period is no more than 12 hours, and the first meal period was not waived. Existing law exempts employers of agricultural workers from these requirements. This bill would require that employers of agricultural workers must follow these requirements. COMMENTS 1. Legislative Background and Regulatory Requirements for Agricultural Workers: In 1938, Congress passed the Fair Labor Standards Act (FLSA), which set statutory minimum requirements for labor laws in all states. The FLSA includes, among other requirements, overtime provisions, but these provisions were not extended to agricultural workers. However, as with all provisions with the FLSA, states are allowed to exceed the requirements laid out in the FLSA. Hearing Date: April 28, 2010 SB 1121 Consultant: Gideon L. Baum Page 3 Senate Committee on Labor and Industrial Relations The issue of overtime for agricultural workers in California law was first dealt with in 1941. Previously, the Labor Code had been mute on agricultural employees, but in 1941 the Legislature chose to exempt all agricultural employees from the statutory requirements of overtime, similar to the FLSA. Subsequently, the statutory overtime exemption has largely remained unchanged, and was indirectly extended to meal periods in 1999. This statutory exemption, however, did not prohibit the Industrial Welfare Commission (IWC) from legally promulgating overtime provisions that were applicable beyond the 8-hour timeframe. Currently, the applicable wage order requires the payment of overtime wages when an agricultural worker works longer than 10 hours in a single day, and no more than six days during any workweek . Similarly, the applicable wage order requires a meal period after the 5th hour of work, but unlike statute is silent on a second meal period after the 10th hour of work. Similarly, this statutory construct would not prevent an employer from agreeing to pay overtime wages before the 10th hour. Such an agreement could be structured through a company policy or through a contract, such as a collective bargaining agreement. 2. Proponent Arguments : Proponents argue that agricultural workers face increasingly difficult working conditions for very low pay. Proponents note that agricultural employees are completely dependent on their employers for the provision of bathrooms and clean water, and the agricultural workers frequently work in incredibly hot weather conditions, yet can only receive overtime after they work 10 hours in a workday, or sixty hours in a workweek. Proponents believe that agricultural employees should not be treated in a unique or distinct way, and that the two-tiered overtime provisions are antiquated and should be abolished. 3. Opponent Arguments : Hearing Date: April 28, 2010 SB 1121 Consultant: Gideon L. Baum Page 4 Senate Committee on Labor and Industrial Relations Opponents note that agriculture is critically affected and dependent on weather conditions and the seasonality of agricultural production, and opponents argue that this requires greater flexibility in scheduling work than other industries, which is currently reflected in both federal and state labor laws. Opponents also argue that California already has the nation's most progressive labor protections for agricultural production, and that no other state currently requires overtime once agricultural workers have exceeded the 40 hour work week. Moreover, opponents argue that due to razor-thin profit margins, farmers will be forced to cut hours and layoff employees if they face an increase in labor costs. Opponents believe that this will hurt the California economy, as agriculture has aided the state's recovery during the current economic downturn, as well as place the state's agricultural industry at a competitive disadvantage. 4. Prior Legislation : AB 841 (Dickey), Statutes of 1941, Chapter 1264, originally created the overtime exemption for agricultural workers. SUPPORT California Applicants' Attorneys Association California Commission on the Status of Women California Communities United Institute California Employment Lawyers Association "CELA" California Labor Federation California Rural Legal Assistance Foundation OPPOSITION Agricultural Council of California Alliance Western Milk Producers Allied Grape Growers California Association of Nurseries & Garden Centers California Association of Wheat Growers California Association of Winegrape Growers Hearing Date: April 28, 2010 SB 1121 Consultant: Gideon L. Baum Page 5 Senate Committee on Labor and Industrial Relations California Bean Shippers Association California Chamber of Commerce California Citrus Mutual California Cotton Ginners & Growers Association California Farm Bureau Federation California Grain & Feed Association California Grape and Tree Fruit League California Pear Growers Association California Seed Association California State Floral Association California Warehouse Association California women for Agriculture Family Winemakers of California Grower-Shipper Association of Central California Grower-Shipper Vegetable Association of Santa Barbara and San Luis Obispo Counties Nisei Farmers League Pacific Coast Renderers Association Pacific Egg & Poultry Association Ventura County Agricultural Association Western Agriculture Processors Association Western Growers Western United Dairymen Wine Institute 14 Individuals * * * Hearing Date: April 28, 2010 SB 1121 Consultant: Gideon L. Baum Page 6 Senate Committee on Labor and Industrial Relations