BILL ANALYSIS Ó AB 243 Page 1 Date of Hearing: March 30, 2011 ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT Sandre Swanson, Chair AB 243 (Alejo) - As Proposed to be Amended: March 30, 2011 SUBJECT : Labor contractors. SUMMARY : 1)Requires an employer who is a farm labor contractor (FLC) to disclose on the itemized payroll statement furnished to employees the name and address of the grower or other FLC that secured the employer's services. 2)Provides that the listing by the FLC of the name and address of the legal entity that secured the services of the employer on the itemized payroll statement shall not create any liability on the part of that legal entity. EXISTING LAW : 1)Provides that every employer must furnish each employee with an itemized statement at the time of each payment of wages that shows, among other things, the name and address of the legal entity that is the employer. A knowing and intentional violation of this provision is a misdemeanor. 2)Exempts the state or a city, county, city and county, district, or other governmental entity from the above provisions. 3)Prohibits a person from acting as a FLC until a license to do so has been issued by the Labor Commissioner (LC). 4)Prohibits a person from knowingly entering into an agreement for the services of a FLC who is not licensed. 5)Requires all garment contractors provide the name of the garment manufacturer on an employee's payroll statement. FISCAL EFFECT : Unknown COMMENTS : According to the sponsor, California Rural Legal Assistance Foundation (CRLAF), more than 40,000 California farms AB 243 Page 2 grow fruits and vegetables on almost four million acres in this state. Therefore, CRLAF states that it is not surprising that a 2006 survey of Central Valley farm workers found that 70% could not identify the name of the farm they were working on. The same survey by CRLAF found that 56% had not been paid minimum wage when working by a piece rate; 31% had not been paid all the overtime they were owed; and that 42% had unexplained deductions made from their pay. Most growers do not hire their farm workers directly. Industry experts estimate that between 60% and 80% of harvest work is supplied to growers by FLC's. Without being able to readily identify the grower or other FLC who hired the contractor, enforcement actions against the contractor are unlikely to either make the worker whole for wages owed or to have any deterrent effect at all against a grower who may, under certain circumstances, share legal responsibility for the contractor's labor law violations. Finally, the sponsor states this bill simply requires a FLC to list on the farm workers' pay stub information about the grower or other FLC to whom the worker was furnished during the pay period. Current state law already requires this information to be provided by garment contractors since 2002, and some responsible FLC's already provide it on a voluntary basis suggesting it is already technically feasible to do so and also suggest that honest growers and FLC's have nothing to fear from providing the information. A coalition of agricultural groups opposes this measure, stating that it will impose joint liability for the illegal acts of a farm labor contractor on a grower. They support penalties for FLC's that choose not to follow the law, however, they argue this bill fails to distinguish the good from the bad creating new liabilities for all. The sponsor of this bill, CRLAF and the author, hope to address the oppositions concerns with the proposed amendment to be taken in Committee that the listing by the FLC of the name and address of the grower or other FLC that secured the services of the employer on the itemized payroll statement shall not create any liability on the part of that legal entity. PRIOR AND RELATED LEGISLATION : AB 243 Page 3 This bill is similar to AB 377 (Arambula) of 2007. AB 377 was vetoed by Governor Schwarzenegger his veto message stated, in part, "While I maintain my support for the concept of helping farmworkers secure all wages owed to them, I am still concerned that this bill does nothing to bring unlicensed farm labor contractors and others who flaunt the law into compliance. Those who have not bothered to obtain the necessary licensure required by the state or otherwise comply with labor laws are highly unlikely to comply with this new requirement. As such, the only practical effect of this bill is to impose a new liability on farmers and growers who have lawfully contracted with licensed contractors." AB 2327 (Arambula) of 2006 was nearly identical to this bill and was vetoed by the Governor. SB 101 (Battin), Chapter 103, Statutes of 2005, was a technical clean-up bill related to SB 1618 (Battin), Chapter 860, Statutes of 2004,which added the provision that only the last four digits of an employee's social security number shall appear on pay stubs no later than January 1, 2008. REGISTERED SUPPORT / OPPOSITION : Support California Catholic Conference, Inc. California Rural Legal Assistance Foundation (Sponsor) California Teamsters Public Affairs Council Northern California District Council of the International Longshore and Warehouse Union United Food and Commercial Workers-Western States Conference Opposition Agricultural Council of California Allied Grape Growers California Association of Winegrape Growers California Citrus Mutual California Chamber of Commerce California Cotton Growers California Cotton Ginners California Farm Bureau Federation California Grape and Tree Fruit League AB 243 Page 4 California Pear Growers California Seed Association California State Floral Association California Wheat Growers Association California Women for Agriculture Family Winemakers of California Grower-Shipper Association of Central California Nisei Farmers League Ventura County Agricultural Association Western Agricultural Processors Association Western Growers Association Western Pistachio Association Wine Institute Analysis Prepared by : Lorie Erickson / L. & E. / (916) 319-2091