BILL ANALYSIS Ó Senate Committee on Labor and Industrial Relations Ted W. Lieu, Chair Date of Hearing: June 27, 2012 2011-2012 Regular Session Consultant: Martha Gutierrez Fiscal:Yes Urgency: No Bill No: AB 1675 Author: Bonilla As Introduced/Amended: March 20, 2012 SUBJECT Farm labor contractors: licenses: civil penalty KEY ISSUE Should farm labor contractors have to pay civil penalties if they are found to be operating without a license? PURPOSE To establish civil penalties for farm labor contractors who are found to have violated license requirements. ANALYSIS Existing law defines a "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: furnished board, lodging. or transportation for those workers as specified. (Labor Code § 1682) Existing law includes within the definition of farm labor contractor the inclusion of a "day hauler." Day hauler is any person who is employed by a farm labor contractor to transport, for a fee, by motor vehicle, workers to render personal services in connection with the production of any farm products, under the direction of a third person. (Labor Code § 1682.3) Existing law requires farm labor contractors to be licensed by the Labor Commissioner and to comply with specified employment laws applicable to farm labor contractors. To obtain a license the person has to deposit with the Labor Commissioner a security bond in the amount based on the size of the person's annual payroll for all employees. The person must also take a written examination; and must correctly answer at least eighty five percent (85%) of the questions posed within the four hour time period allotted. This examination will ensure that the person has knowledge in current laws regarding wages, hours, and working conditions, penalties, employee housing and transportation, collective bargaining, field sanitation and safe work practices relating to pesticide use, field reentry regulations and symptoms and appropriate treatment of pesticide poisoning. In addition, the person has to enroll and participate in at least eight hours of relevant, educational classes each year. The classes shall be chosen by the Labor Commissioner. (Labor Code § 1684) Existing law specifies that when a person is found to be in violation of farm labor contractor requirements they can receive a misdemeanor punishable by specified fines, or imprisonment in the county jail for not more than six months, or both. (Labor Code § 1697) This Bill would establish civil penalties for failure to obtain the required farm labor contractors license. Specifically, this bill: 1. Makes a person who acts as a farm labor contractor without a license from the Labor Commissioner subject to a civil penalty as follows: a) The initial citation for a person who violates this section is subject to a citation of, one hundred dollars ($100) for each farmworker employed by the unlicensed person, plus one hundred dollars ($100) for each calendar day that a violation occurs, for a total penalty not to Hearing Date: June 27, 2012 AB 1675 Consultant: Martha Gutierrez Page 2 Senate Committee on Labor and Industrial Relations exceed ten thousand dollars ($10,000). b) The second citation shall be, two hundred dollars ($200) for each farmworker employed by the unlicensed person, plus two hundred dollars ($200) for each calendar day that a violation occurs, for a total penalty not to exceed twenty thousand dollars ($20,000). c) The third or subsequent citation, five hundred dollars ($500) for each farmworker employed by the unlicensed person, plus five hundred dollars ($500) for each calendar day that a violation occurs, for a total penalty not to exceed fifty thousand dollars ($50,000). 1. Requires the labor Commissioner to issue a citation if, upon inspection determines that a person has violated the license requirements. 2. Requires civil penalties collected from this section to be deposited into the Farmworker Remedial Account. 3. Specifies that the civil penalties provided in this section are in addition to any other penalty provided by current law. 4. Specifies that the required "license" under this section includes a letter of authorization by the labor Commissioner to legally operate as a farm labor contractor. COMMENTS 1. Need for this bill? Currently, farm labor contractors are required to obtain a license from the Labor Commissioner in order to legally operate in the state. The person must take a written examination and must correctly answer at least eighty five Hearing Date: June 27, 2012 AB 1675 Consultant: Martha Gutierrez Page 3 Senate Committee on Labor and Industrial Relations percent (85%) of the questions posed within the four hour time period allotted. This examination will ensure that the person has knowledge in current laws regarding wages, hours, and working conditions, penalties, employee housing and transportation, collective bargaining, field sanitation and safe work practices relating to pesticide use, field reentry regulations and symptoms and appropriate treatment of pesticide poisoning. In addition, the person has to enroll and participate in at least eight hours of relevant; educational classes each year to ensure education continues. Unfortunately, heat-related deaths are a reminder that agriculture is one of the few industries in this state and country where a person can be worked to death. Those who survive heat illness can still develop serious conditions, including heart, liver, kidney, and muscle damage, nervous system problems, and blood disorders. For these reasons it is important that employers are adequately educated on all areas of potential farm work related hazards. Under existing law, a person who violates farm labor contractor requirements can be found guilty of a misdemeanor punishable by fines, or imprisonment in the county jail for not more than six months, or both. AB 1675 would assist the Labor Commissioner in its enforcement efforts by also imposing civil penalties for farm labor contractors operating without a license. This additional penalty will serve as a deterrent for those contractors disobeying the law. 2. Proponent Arguments : According to the author, this bill guarantees that bad actors are penalized for breaking the law. The penalty will serve as a deterrent for disobeying the law or to re-offend. They argue that this legislation will also assist the Division of Labor Standards Enforcement in its labor law enforcement efforts, and send a message to unlicensed farm labor contractors that the consequences of operating without a license now carry the likelihood of the imposition of stiff civil penalties. They further state that AB 1675 will also require that the Hearing Date: June 27, 2012 AB 1675 Consultant: Martha Gutierrez Page 4 Senate Committee on Labor and Industrial Relations civil penalties collected from unlicensed contractors be deposited in a pre-existing farm worker wage protection fund which ensures that unlicensed contractors help finance a system that has been making disbursements for farm workers cheated out of wages by unlicensed farm labor contractors (and which is currently funded by a portion of each licensed farm labor contractor's annual license fee). According to the sponsor of this bill, the California Rural Legal Assistance Foundation licensing violations are rarely, if ever, prosecuted, and leave the Labor Commissioner, without the legal weapons she has in other contexts, e.g. garment, car washing and construction contracting, to deter unlicensed contractor activities through assessment of civil penalties. They argue that, for example, A car wash employer who fails to register as a car wash establishment is subject to a civil penalty of one hundred ($100) per day, up to a maximum of ten thousand dollars ($10, 000), the employer conducts car washing and polishing while unregistered. A garment manufacturer who does not comply with their licensing requirements are subject to a civil penalty of one hundred dollars ($100) for each affected employee, for the initial violation, and two hundred dollars ($200) per employee for second or subsequent violations. A construction contractor who is found operating without a license is subject to a civil penalty of two hundred dollars ($200) per employee for each day of the contract. The civil penalties deter bad actors from breaking the law. This bill will allow the Labor Commissioner to issue a civil penalty for the first, second or third offence in graduated amounts is designed to deter future misconduct. 3. Opponent Arguments : None on file. 4. Prior Legislation : AB 243 (Alejo), Chapter 761, Statutes of 2011 Hearing Date: June 27, 2012 AB 1675 Consultant: Martha Gutierrez Page 5 Senate Committee on Labor and Industrial Relations Required an employer who is a farm labor contractor (FLC) to disclose on the itemized payroll statement furnished to employees the name and address of services. It also provided that the list by the FLC of the mane and address of the legal entity that secured the services of the employer on the itemized payroll statement that shall not create any liability on the part of that legal entity. SB 1514 (Solis), Chapter 875, Statutes of 1998 Imposed a $500 civil penalty on garment manufacturers, with no employed workers, who fail to register with the Labor Commissioner. The bill also eliminated the misdemeanor associated with this violation for these manufacturers. AB 1688 (Goldberg), Chapter 875, Statutes of 2003 Established a system to regulate the employment of workers in the car washing and polishing industry, including a civil fine structure for car wash establishments that fail to register with the Labor Commissioner. The bill also established the Car Wash Worker Restitution Fund and the Car Wash Worker Fund, the latter of which is partly funded by fines associated with violations of the labor law. SUPPORT Agricultural Council of California American Pistachio Growers California Chamber of Commerce California Association of Nurseries and Garden Centers California Bean Shippers Association California Catholic Conference California Cherry Export Association California Citrus Mutual California Communities United Institute California Conference Board of the Amalgamated Transit Union California Conference of Machinists California Cotton Ginners Association California Farm Bureau Federation California Grape and Tree Fruit League California Labor Federation California Pear Growers Association California Rural Legal Assistance Foundation Hearing Date: June 27, 2012 AB 1675 Consultant: Martha Gutierrez Page 6 Senate Committee on Labor and Industrial Relations California Seed Association California State Floral Association California Teamsters Public Affairs Council Engineers and Scientists of California International Longshore & Warehouse Union Nisei Farmers League Professional and Technical Engineers, Local 21 UNITE HERE United Food and Commercial Workers Union, Western States Council Western Agricultural Processors Association Western Growers Wine Institute OPPOSITION None on file. Hearing Date: June 27, 2012 AB 1675 Consultant: Martha Gutierrez Page 7 Senate Committee on Labor and Industrial Relations