BILL ANALYSIS SB 1121 Page 1 Date of Hearing: June 23, 2010 ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT Sandre Swanson, Chair SB 1121 (Florez) - As Introduced: February 18, 2010 SENATE VOTE : 23-12 SUBJECT : Overtime wages: agricultural workers. SUMMARY: This bill deletes the overtime pay and meal period exemptions for agricultural workers. Specifically, this bill deletes the provision of the Labor Code that exempts agricultural employees from the following: 1)Overtime compensation when an individual works in excess of eight hours in one workday or work in excess of 40 hours in any one workweek: 2)A mandatory 30 minute meal break before the start of the fifth 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. 3)A second mandatory 30 minute meal break after ten hours of work that can be waived by the mutual consent of the employer and employee, if the work period is no more than 12 hours, and the first meal period was not waived. EXISTING FEDERAL LAW : 1)Establishes the Fair Labor Standards Act (FLSA), which sets minimum wage, overtime pay, recordkeeping, and youth employment standards affecting full-time and part-time workers in the private sector and federal, state and local governments. a) Exempts, from minimum wage and overtime pay requirements, farm workers employed by anyone who used no more than 500 "man-days" of farm labor in any calendar quarter of the preceding calendar year. b) Exempts farm workers from overtime pay. 2)Establishes the Migrant and Seasonal Agricultural Worker SB 1121 Page 2 Protection Act to protect migrant and seasonal agricultural workers in their interactions with farm labor contractors, agricultural employers, agricultural associations and providers of migrant housing. EXISTING STATE LAW exempts persons employed in an agricultural occupation, as defined in the Industrial Welfare Commission Order number 14-80 (Revised), from overtime pay and meal period requirements. FISCAL EFFECT : Unknown COMMENTS : In 1941 the state Legislature exempted all agricultural employees from the statutory requirements of overtime, in a manner similar to the FLSA. For the succeeding 58 years, this overtime exemption remained largely unchanged until it was indirectly extended to meal periods in 1999. The current exemption, however, did not prohibit the Industrial Welfare Commission (IWC) from legally instituting overtime provisions that allow employees to work beyond the eight-hour day limit. Currently, IWC Wage Order number 14-80 (wage order 14-80), revised January 1, 1998, requires the payment of overtime wages when an agricultural employee works longer than 10 hours in a single day, and no more than six days during any workweek.. Wage order 14-80 also requires a meal period after the fifth hour of work, but unlike statute is silent on a second meal period after the tenth hour of work. According to a 1998 California Research Bureau (CRB) report entitled "Farm Workers in California" (CRB Report), California is the nation's largest agricultural state, producing more than 250 different crops valued at nearly $25 billion dollars. While farm workers play a significant role State's most important industries, they also face difficult working conditions including low earnings, poor or no health benefits, substandard housing, physically taxing and sometimes unsafe work conditions, and long hours. The CRB Report notes that the majority of farm workers work nine or more months during the year and work 46 hours or more per week. SB 1121 Page 3 Agricultural Worker Income According to California's Agricultural Employment, a report produced by the Employment Development Department (EDD Report) in 2008, California's agricultural labor force was is comprised of 372,600 workers. The EDD Report states that 48.6 percent of those workers reported annual family income of less than $35,000. One out of every eight agricultural workers reported annual income of less than $15,000. In contrast, the EDD Report notes, 21 percent of nonagricultural workers reported an annual family income of less than $35, 000 and only 5.6 percent, or one in 20, reported annual family income of less thank $15,000. The EDD Report states that over 61.8 percent of California's agricultural workers earned $10 an hour or less in 2008; with 37.6 percent earning the State's $8 minimum wage. The report also notes that 23.8 percent of agricultural workers earned between $10.1 and $15 an hour, 14.4 percent earned more than $15 an hour, and 8.6 percent earned more than $20 per hour. Between 2006 and 2008, the minimum wage rose from $6.75 an hour to $8 an hours. According to the EDD Report, farm laborers tend to be the lowest paid agricultural workers. In 2008, 86.7 percent of California agricultural workers who earned $10 or less worked in farming, fishing, and forestry occupations. In 2001, the National Agricultural Workers Survey notes that 30 percent of all farm workers have family incomes below the poverty line. The average individual income range was $10,000 to $12, 499 while the average family income range was between $15,000 and $17,499. ARGUMENTS IN SUPPORT : In support of the bill, the California Applicants' Attorneys Association argues that the current exemption from overtime pay is based on an obsolete 70 year old federal provision. They assert that this bill is a simple matter of fundamental fairness. The California Labor Federation writes that California has long supported its agricultural industry with considerable public subsides and investment. They assert that it is time for the State to support the people whose work in the fields makes the California agricultural industry among the SB 1121 Page 4 world's most productive and profitable. The California Rural Legal Assistance Foundation writes that this bill will extend to farm workers the same overtime protections enjoyed by millions of other California workers and provide, for the first time, weekly day of rest requirement. They state that this bill will bring and end to a sorry chapter of agricultural exceptionalism in California law as it relates to wage and hour conditions that affect hundreds of thousands of farm workers. ARGUMENTS IN OPPOSITION : 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. REGISTERED SUPPORT / OPPOSITION : Support California Applicants' Attorneys Association California Communities United Institute California Conference Board of Amalgamated Transit Union California Conference of Machinists California Employment Lawyers Association California Labor Federation, AFL-CIO California Nurses Association/ National Nurses Organizing Committee California Rural Legal Assistance Foundation California Teamsters Public Affairs Council Consumer Attorneys of California Engineers & Scientists of California, IFPTE, Local 20 Food Empowerment Project SB 1121 Page 5 International Longshore & Warehouse Union Jockeys' Guild Numerous Individuals Professional & Technical Engineers, IFPTE, Local 21 United Food & Commercial Workers Western States Council UNITE-HERE Utility Workers Union of America, Local 132 Opposition Agricultural Council of California Alliance of Western Milk Producers Allied Grape Growers California Association of Nurseries and Garden Centers California Association of Wheat Growers California Association of Winegrape Growers California Bean Shippers Association California Chamber of Commerce California Citrus Mutual California Farm Bureau Federation California Grain and Feed Association California Grape and Tree Fruit League California Pear Growers Association California Producer Handler Association California Seed Association California State Floral Association California Warehouse Association California Women for Agriculture Family Winemakers of California Grower-Shipper Association of Central Californoa Grower-Shipper Vegetable Association of Santa Barbara and San Luis Obispo Counties Nisei Farmers League Pacific Coast Renderers Association Pacific Egg & Poultry Association Rockview Dairy Ventura County Agricultural Association Western Agricultural Processors Association Western Growers Western United Dairymen Wine Institute Analysis Prepared by : Shannon McKinley / L. & E. / (916) 319-2091