BILL ANALYSIS Ó
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: June 29, 2011 20011-2012 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: AB 243
Author: Alejo
Version: As amended April 4, 2011
SUBJECT
Labor contractors
KEY ISSUE
Should the Legislature require that a Farm Labor Contractors
(FLC) disclose in an itemized statement the name and address of
the legal entity (farm/grower) that secured the services of the
employer?
PURPOSE
To add an additional requirement of information that employers
must include as part of an employee's itemized written
statement.
ANALYSIS
Existing law provides that every employer must furnish each of
his or her employees with an accurate itemized written statement
at the time of each payment of wages that shows, among other
things, the following:
1) Gross and net wages earned;
2) Total hours worked by the employee;
3) All deductions;
4) Name of the employee and the last four digits of
his/her social security number or employee identification
number; and
5) Name and address of the legal entity that is the
employer.
Additionally, existing law requires that employers keep for at
least three years, and make available for inspection, a copy of
the statements or records. Under existing law, a knowing and
intentional violation of these provisions is subject to civil
penalties per employee per violation. In addition, existing law
exempts the state or a city, county, city and county, district,
or other governmental entity from the above provisions.
Existing law prohibits a person from acting as a Farm Labor
Contractor until a license to do so has been issued by the Labor
Commissioner (LC). (Labor Code §1683) Existing law also
prohibits a person from knowingly entering into an agreement for
the services of a farm labor contractor who is not licensed.
Existing law defines "Farm labor contractor" as any person who,
for a fee, employs workers to render personal services in
connection with the production of any farm products to, for, or
under the direction of a third person, or who recruits,
solicits, supplies, or hires workers on behalf of an employer
engaged in the growing or producing of farm products, and who,
for a fee, provides in connection therewith one or more of the
following services: furnishes board, lodging, or transportation
for those workers; supervises, times, checks, counts, weighs, or
otherwise directs or measures their work; or disburses wage
payments to these persons. (Labor Code §1682)
This Bill would require 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 legal entity
that secured the employer's services.
This Bill would provide that the listing by an employer 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.
Hearing Date: June 29, 2011 AB 243
Consultant: Alma Perez Page 2
Senate Committee on Labor and Industrial Relations
COMMENTS
1. Need for this bill?
Historically, violations of wage, hour, and other provisions
of labor law have been found to be more prevalent in certain
industries, including the garment industry, the janitorial
industry, and the agricultural industry. The U.S. Department
of Labor and the California Department of Industrial Relations
have from time to time concentrated enforcement activities on
these industries. The author cites that in the California
agricultural industry, an estimated 60% to 80% of harvest work
is now done by labor contractors. The author also cites a
survey by the California Rural Legal Assistance Foundation
that found that 56% of central valley farm workers had not
been paid minimum wage when working on a piece rate, 31% had
not been paid all the overtime they were owed, and 42% had
unexplained deductions made from their pay. That survey also
showed that 70% could not identify the farm they were working
on.
The author and sponsor believe that knowing the identity of
the legal entities that stand behind the contractor is
important in case there are workplace problems. This bill is
needed to require 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 legal
entity that secured the employer's services.
2. Proponent Arguments :
According to the author, most growers do not hire their farm
workers directly. Instead, the author argues, much of
California's harvest workforce is supplied to growers by labor
contractors. The author contends that although farm labor
contractors are required to be licensed under state law, there
is no requirement that they disclose to farm workers the name
of the grower who is financially backing the contract for
their labor. According to the author and proponents, without
being able to readily identify the grower or other FLC who
hired the contractor, enforcement actions against the
Hearing Date: June 29, 2011 AB 243
Consultant: Alma Perez Page 3
Senate Committee on Labor and Industrial Relations
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.
Proponents argue that more than 40,000 California farms grow
fruits and vegetables on almost four million acres in this
state. Therefore, proponents state, it is not surprising that
a 2006 survey of over 1,000 Central Valley farm workers,
conducted by the California Rural Legal Assistance Foundation,
found that 70% could not identify the name of the farm they
were working on. According to proponents, it is important
that workers know the identity of the legal entities that
stand behind the contractor in case there are workplace
problems (such as failure to pay wages) where both the
contractor and the other entity have existing liability under
state laws.
According to proponents, current state law already requires
this information to be provided by garment contractors, 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. According to proponents,
recent amendments were taken to address the oppositions'
assertion that this bill creates new "joint liability" for
growers. The amendment states that the listing of the name
and address of the entity or entities that secured a farm
labor contractor's services on the pay stub of the FLC's farm
worker employee "shall not create any liability on the part of
that legal entity."
3. Opponent Arguments :
According to opponents, this bill would create joint liability
for any farmer that enters into a legal contract for services
with a Farm Labor Contractor (FLC). Opponents argue that this
bill is similar to bills that have been vetoed in years past
and contend that the plain purpose of this legislation is to
impose liability for the illegal acts of a farm labor
contractor on a farmer. According to opponents, they support
strong penalties for FLCs that choose not to abide by the law.
Hearing Date: June 29, 2011 AB 243
Consultant: Alma Perez Page 4
Senate Committee on Labor and Industrial Relations
Unfortunately, they argue, this bill fails to distinguish
between good and bad actors and creates new liability for all.
4. Prior Legislation :
AB 377 (Arambula) of 2007: Vetoed by the Governor
AB 377, similar to this bill ƯAB 243], would have required an
employer who is a farm labor contractor to disclose in the
itemized statement furnished to employees the name and address
of the legal entity that secured the employer's services.
In his veto message the Governor stated that, "Last year, I
vetoed similar legislation intended to help provide
farmworkers with better information about the companies with
which farm labor contractors are contracting. 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: Vetoed by the Governor
AB 2327, nearly identical to AB 377 of 2007, would have
required an employer who is a farm labor contractor to
disclose in the itemized statement furnished to employees the
name and address of the legal entity that secured the
employer's services.
In his veto message the Governor stated that, "I am concerned
that AB 2327 would have little practical effect in helping
farm workers secure unpaid wages. Too often, the wages owed
farm workers are owed by unlicensed farm labor contractors.
As these individuals have not bothered to register with the
state, it is highly unlikely they would bother to place
additional information on pay stubs, assuming they issue pay
stubs to employees in the first place. As such, I am
Hearing Date: June 29, 2011 AB 243
Consultant: Alma Perez Page 5
Senate Committee on Labor and Industrial Relations
concerned that the only practical effect of AB 2327 will be to
place an unnecessary and burdensome requirement on law-abiding
contractors and subject growers to additional liabilities
through no fault of their own."
SUPPORT
California Rural Legal Assistance Foundation - Sponsor
California Catholic Conference
California Labor Federation
California Teamsters Public Affairs Council
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
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
Hearing Date: June 29, 2011 AB 243
Consultant: Alma Perez Page 6
Senate Committee on Labor and Industrial Relations
Hearing Date: June 29, 2011 AB 243
Consultant: Alma Perez Page 7
Senate Committee on Labor and Industrial Relations