BILL ANALYSIS                                                                                                                                                                                                    





          SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
                             Senator Tony Mendoza, Chair
                                2015 - 2016  Regular 

          Bill No:               AB 1066      Hearing Date:    June 29,  
          2016
           ----------------------------------------------------------------- 
          |Author:    |Gonzalez                                             |
          |-----------+-----------------------------------------------------|
          |Version:   |June 22, 2016                                        |
           ----------------------------------------------------------------- 
           ----------------------------------------------------------------- 
          |Urgency:   |No                     |Fiscal:    |Yes              |
           ----------------------------------------------------------------- 
           ----------------------------------------------------------------- 
          |Consultant:|Alma Perez-Schwab                                    |
          |           |                                                     |
           ----------------------------------------------------------------- 
          
             Subject:  Agricultural workers:  wages, hours, and working  
                                     conditions


          KEY ISSUE
          
          Should the Legislature remove an exemption in current law that  
          would extend the payment of overtime compensation to  
          agricultural employees after 8 hours of work in a day or 40 in a  
          week - which a majority of employees in other industries already  
          receive? 


          ANALYSIS
          
           Existing law: 

             1)   Defines a full workday as 8 hours, and 40 hours as a  
               workweek. Overtime wage rates must be paid for any time  
               worked beyond 8 a day and 40 a week. (Labor Code 510) 

             2)   Requires, with some exceptions, the payment of overtime  
               compensation as follows: 

                           Any work in excess of 8 hours in one workday,  
                    any work in excess of 40 hours in any one workweek,  








          AB 1066 (Gonzalez)                                      Page 2  
          of ?
          
                    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. 

             1)   Provides that the payment of overtime compensation  
               requirements do not apply where:

                           An employee submits a written request to make  
                    up work time in the same workweek in which the work  
                    time was lost.  
                           An alternative workweek schedule adopted  
                    pursuant to Labor Code Section 511.
                           Employees have adopted an alternative workweek  
                    schedule pursuant to a collective bargaining  
                    agreement, as specified.  
                           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.

             1)   Requires, with certain exemptions, that all employees  
               receive a meal break of 30 minutes before the start of the  
               5th hour of work, as specified. If more than 10 hours are  
               worked, a second meal period of 30 minutes must also be  
               granted. 

             2)   Specifies that every person employed in any occupation  
               of labor is entitled to one day's 
          rest therefrom in seven and no employer shall cause his/her  
          employees to work more than six days in seven.  

             3)   Employers who violate these provisions are guilty of a  
               misdemeanor. (Labor Code 553)








          AB 1066 (Gonzalez)                                      Page 3  
          of ?
          
             4)   Exempts any person employed in an agricultural  
               occupation from all these provisions.   (Labor Code 554)
                                          
             5)   Establishes the Industrial Welfare Commission (IWC) to  
               adopt or amend working condition orders with respect to  
               break periods, meal periods, and days of rest for any  
               workers in the State consistent with the health and welfare  
               of those workers.  
               (Labor Code 516)
           
              6)   Under the IWC Wage Order 14, employees working in an  
               agricultural occupation, as defined, are entitled to  
               overtime compensation as follows: 

                           Any work in excess of 10 hours in any one  
                    workday or more than 6 days in any workweek, and the  
                    first 8 hours worked on the 7th day must be paid at 1  
                     times the employee's regular rate of pay;

                           All hours worked over 8 on the 7th day of work  
                    must be paid at double the employee's regular rate of  
                    pay.  
           

          This Bill  would remove the exemption for agricultural employees  
          regarding hours, meal breaks, and other specified working  
          conditions and would enact the Phase-In Overtime for  
          Agricultural Workers Act of 2016, as specified.  

          Specifically, this bill: 

             1.   Provides that, beginning January 1, 2019, any person  
               employed in an agricultural occupation shall not be  
               employed more than 9  hours in any one workday or more  
               than 55 hours in any one workweek, unless he/she receives 1  
                times that employee's regular rate of pay for all hours  
               worked over 9  in a workday or over 55 in a week. 


             2.   Provides that, beginning January 1, 2020, any person  
               employed in an agricultural occupation shall not be  
               employed more than 9 hours in any one workday or more than  
               50 hours in any one workweek, unless he/she receives 1   
               times that employee's regular rate of pay for all hours  
               worked over 9 in a workday or over 50 in a week.







          AB 1066 (Gonzalez)                                      Page 4  
          of ?
          


             3.   Provides that, beginning January 1, 2021, any person  
               employed in an agricultural occupation shall not be  
               employed more than 8  hours in any one workday or more  
               than 45 hours in any one workweek, unless he/she receives 1  
                times that employee's regular rate of pay for all hours  
               worked over 8  in a workday or over 45 in a week.


             4.   Provides that, beginning January 1, 2022, any person  
               employed in an agricultural occupation shall not be  
               employed more than 8 hours in any one workday or more than  
               40 hours in any one workweek, unless he/she receives 1   
               times that employee's regular rate of pay for all hours  
               worked over 8 in a workday or over 40 in a week.


             5.   Provides that the term "employed in an agricultural  
               occupation" has the same meaning as the term found in the  
               IWC wage order for Agricultural Occupations.


             6.   Provides that, beginning January 1, 2022, any person  
               employed in an agricultural occupation who works in excess  
               of 12 hours in one day shall be compensated at the rate of  
               no less than twice the employee's regular rate of pay.


             7.   Provides that all other provisions of existing law  
               regarding compensation for overtime work shall apply to  
               workers in an agricultural occupation beginning January 1,  
               2019.


             8.   Authorizes the Governor to temporarily suspend the  
               scheduled phase-in of overtime requirements set forth above  
               if the Governor suspends scheduled minimum wage increases  
               for specified "economic conditions" under provisions of law  
               enacted this year pursuant to Senate Bill 3 (Leno), Chapter  
               4, Statutes of 2016.  


             9.   If the Governor makes such a determination, all  
               implementation dates shall be postponed by an additional  







          AB 1066 (Gonzalez)                                      Page 5  
          of ?
          
               year. This authority shall end upon the final phase-in of  
               overtime provisions, but not later than January 1, 2022. 


             10.  Requires the Department of Industrial Relations to  
               update Industrial Welfare Commission Wage Order 14 to be  
               consistent with the requirements in this bill, except that  
               any existing provisions providing greater protections or  
               benefits to agricultural employees shall continue in full  
               force and effect.


             11.  Makes related legislative findings and declarations.



          COMMENTS
          
          1.  Background on Agricultural Workers and Overtime:

            In 1938, Congress passed the Fair Labor Standards Act (FLSA),  
            which established minimum requirements for labor laws in all  
            states.  The FLSA establishes minimum wage, overtime pay,  
            recordkeeping, and youth employment standards affecting  
            employees in the private sector and in Federal, State, and  
            local governments. The overtime provisions of the FLSA were  
            not extended to agricultural employees.  However, as with all  
            provisions with the FLSA, states are allowed to exceed the  
            requirements laid out in the federal law.

            The issue of overtime for agricultural employees in California  
            was first dealt with in 1941.  Previously, the law had been  
            silent on this subject.  But in 1941 the Legislature exempted  
            all agricultural employees from the statutory requirements of  
            overtime, similar to the FLSA.  This statutory exemption was  
            retained when the eight-hour day was codified in 1999. 

            This statutory exemption, however, did not prohibit the  
            Industrial Welfare Commission (IWC) from legally promulgating  
            overtime provisions beyond the traditional eight-hour standard  
            of California law.  Currently, the applicable wage order for  
            agricultural employees requires the payment of overtime wages  
            when an agricultural employee works longer than 10 hours in a  
            single day, and more than six days during any workweek.








          AB 1066 (Gonzalez)                                      Page 6  
          of ?
          
            With respect to meal periods, the applicable wage order  
            provides that every employer shall "authorize and permit"  
            agricultural employees to take a meal period after five hours  
            of work.  This language differs from the statutory meal period  
            language applicable to other employees that prohibits an  
            employer from employing a worker longer than five hours  
            without "providing" a meal period.  In addition, the wage  
            order does not require a second meal period after the tenth  
            hour of work (as the statute requires for other employees).
           
           2.  Existing Overtime Provisions: comparison among occupations

            Pay overtime equal to 1  times the regular rate of pay: 
                     For most occupations, all hours over 8 in one day or  
                 over 40 in one week, and for the first eight hours of  
                 work on the seventh day of work in a work week.

                     For personal attendants (specified domestic  
                 workers), all hours over 9 in one day or over 45 in one  
                 week.

                     For farmworkers, all hours over 10 in one day or  
                 over 60 in one week, and for the first eight hours of  
                 work on the seventh day in a workweek. 

            Pay double time:
                     For most occupations, all hours over 12 in one day  
                 or over eight on the seventh day of work in a workweek.

                     For farmworkers, all hours over eight on the seventh  
                 day of work in a workweek. 

          3.  Need for this bill?

            According to the California Research Bureau (CRB), California  
            remains the largest overall producer of agricultural goods by  
            value in the country, and is one of the largest agricultural  
            producing regions in the world. (CRB, Farmworkers in  
            California: A Brief Introduction, Oct. 2013)  Unfortunately,  
            despite the success of the industry, the farmworkers that make  
            much of the production possible face a number of disadvantages  
            compared to California's population as a whole. According to  
            CRB, farmworkers are at higher risk for living in poverty, are  
            less likely to have health insurance, and typically lack the  
            resources necessary to change their situation. According to  







          AB 1066 (Gonzalez)                                      Page 7  
          of ?
          
            the US Department of Labor - Bureau of Labor Statistics, the  
            median annual wage for agricultural workers was $20,090 in May  
            2015.  In California, the median wage for farmworkers in 2015  
            was $19,102 annually. The vast majority, 92 percent, of  
            farmworkers in California were Latino. 

            The author of the measure argues that on a daily basis,  
            farmworkers endure extreme working conditions and weather for  
            low pay and believes it is time for the Legislature to remove  
            the exemption for agricultural workers that excludes them from  
            the daily overtime requirements. This bill would remove the  
            exemption for agricultural employees regarding hours, meal  
            breaks, and other working conditions, including specified wage  
            requirements, and would create a schedule that would phase in  
            overtime requirements for agricultural workers, as defined,  
            over the course of 4 years, from 2019 to 2022. 

          4.  Proponent Arguments  :
            
            The author of the measure argues that even though California's  
            farmworkers perform some of the most physically-demanding jobs  
            with pay and working conditions at levels that most Americans  
            would not tolerate, they continue to be excluded from overtime  
            laws enjoyed by most American workers. There are very few  
            occupations that are as physically demanding and exhausting as  
            agricultural work. Proponents argue that this exclusion can no  
            longer be justified or tolerated.  They believe that by  
            ensuring that farmworkers are no longer excluded from overtime  
            laws, poverty among this population and the communities they  
            live in will be reduced. 

            Proponents argue that California agriculture is a wealthy,  
            mature industry that benefits from this unfair overtime  
            exclusion subsidy that is no longer justified.  They note that  
            in its 2014 ag industry report, the California Department of  
            Food and Agriculture found that the state's 76,000+ farms and  
            ranches had combined revenue of approximately $54 billion. The  
            CDFA's Crop Year Report noted that this total represented a  
            substantial increase over 2013, and stated that California is  
            the leading US state in cash farm receipts with combined  
            commodities representing nearly 13 percent of the US total. 

            Proponents argue that the agricultural industry has been  
            profitable despite the fact that farmworkers are earning an  
            annual average salary of $14,000, and roughly 30 percent of  







          AB 1066 (Gonzalez)                                      Page 8  
          of ?
          
            households with farmworker income are below the poverty line  
            and 73 percent earn less than 200 percent of poverty (a  
            threshold used in many public assistance programs). Overall,  
            proponents believe it is time for California to support and  
            extend fair overtime compensation to hundreds and thousands of  
            agricultural workers.

          5.  Opponent Arguments  :

            A coalition of California agricultural producers are opposed  
            to the measure, noting that the previous bill (AB 2757) was  
            defeated in the Assembly and argue the following:

                     This bill will reduce the annual take home pay for  
                 most agricultural employees. The average annual pay for a  
                 milker on a California dairy will be reduced by 33% while  
                 other seasonal agricultural employees could see earnings  
                 decline by as much as 28%. 

                     Farmers in California must compete with farmers in  
                 other states and countries that already have far lower  
                 wage costs.  They argue that their buyers - big box and  
                 traditional grocery and restaurant chains - set the price  
                 they will pay, and if our farmers cannot meet these  
                 prices, they will purchase from other states and  
                 countries. 

                     California is already at a competitive disadvantage  
                 as it is one of only a few states that require any  
                 overtime pay for agricultural workers, and our  
                 requirement for daily overtime is already the most  
                 expensive.  This bill will exacerbate this disadvantage.   


            Opponents also note that this bill cannot be viewed in  
            isolation and argues that California saddles its farmers with  
            the highest regulatory costs and compliance burdens in the  
            nation. Among others, they state the following:
                     Electricity costs for industrial users that are  
                 63.4% higher than the national average. 
                     The highest workers' compensation premium rates in  
                 the nation.
                     California-only restrictions on use of approved crop  
                 protection tools that increase the risk of crop loss due  
                 to pests and disease. 







          AB 1066 (Gonzalez)                                      Page 9  
          of ?
          
                     Water supply costs driven by regulatory loss of  
                 surface water supplies, forcing farmers to drill new and  
                 deeper wells, pay more for energy to pump, and scramble  
                 to purchase expensive water (if it can be found and  
                 conveyed) from others. 

            According to opponents, this legislation will end up hitting  
            many agricultural workers in their wallet as farmers may be  
            forced to pay higher overtime costs during peak harvest, but  
            for the tens of thousands of workers who are employed year  
            round (thinning trees, preparing ground for planting, etc.)  
            the pressures of cost avoidance will translate to fewer hours  
            worked as farmers add additional employees to avoid overtime  
            costs.  

            Additional opposition from a coalition of suppliers and  
            consumers argues that cost and regulatory burdens of farming  
            are already much steeper than in other states and are on the  
            rise in response to the recent aggressive increase in the  
            State's minimum wage. They argue that it is likely that  
            reductions in acreage farmed and employee hours worked could  
            occur as farmers seek to manage rising costs in order to stay  
            competitive.  They believe this will impact suppliers and  
            purchasers who will be forced to look elsewhere for the  
            ingredients they need to manufacturer their consumer goods and  
            suppliers will have to scale back their own operations as  
            customer orders for services and goods decrease.

          6.  Prior Legislation  : 

            AB 2757 (Gonzalez) of 2016, was almost identical to this bill.  
             This bill (AB 1066) was amended to add co-authors and clarify  
            that any provisions of the existing IWC Wage Order for  
            Agricultural Occupations that provide greater protections or  
            benefits shall continue in full force and effect.  AB 2757  
            failed passage on the Assembly floor.

            AB 1313 (Allen) of 2012 and SB 1121(Florez) of 2010:  AB 1313  
            proposed to extend the 8-hour daily overtime rule to  
            agricultural employees.  However, AB 1313 failed passage on  
            concurrence on the Assembly Floor.  AB 1313 was similar to SB  
            1121 from 2010, which was vetoed by Governor Schwarzenegger.   
            The Governor's veto message stated (in part):  

               "Unfortunately, this measure, while well-intended, will not  







          AB 1066 (Gonzalez)                                      Page 10  
          of ?
          
               improve the lives of California's agricultural workers and  
               instead will result in additional burdens on California  
               businesses, increased unemployment, and lower wages.  In  
               order to remain competitive against other states that do  
               not have such wage requirements, businesses will simply  
               avoid paying overtime.  Instead of working 10-hour days,  
               multiple crews will be hired to work shorter shifts,  
               resulting in lower take home pay for all workers.   
               Businesses trying to compete under the new wage rules may  
               become unprofitable and go out of business, resulting in  
               further damage to our already fragile economy."



          SUPPORT
          
          United Farm Workers (Sponsor)
          Alameda Labor Council
          Alliance San Diego
          American Civil Liberties Union of California
          American Federation of State, County and Municipal Employees
          Asian Americans Advancing Justice - California
          California Catholic Conference
          California Employment Lawyers Association
          California Immigrant Policy Center
          California Labor Federation
          California Rural Legal Assistance Foundation
          California State Conference of the National Association for the  
          Advancement of Colored People
          California State Treasurer, John Chiang
          Center of Policy Initiatives
          Coalition for Humane Immigrant Rights of Los Angeles
          Consumer Attorneys of California
          Courage Campaign
          Dolores Huerta Foundation
          Don Saylor, Yolo County Supervisor
          Equality California
          Farmworker Justice
          Food Empowerment Project
          Kern, Inyo, and Mono Counties Central Labor Council
          La Cooperativa Campesina de California 
          Latino Coalition for a Healthy California
          League of United Latin American Citizens - California Chapter
          Mayor Eric Garcetti, City of Los Angeles 
          Mexican American Legal Defense and Education Fund







          AB 1066 (Gonzalez)                                      Page 11  
          of ?
          
          National Association of Social Workers - California Chapter
          Religious Action Center of Reform Judaism 
          Sacramento Central Labor Council
          Service Employees International Union
          United Food & Commercial Workers Union - Western States Council
          Western Center on Law and Poverty
          


          OPPOSITION
          
          Agricultural Council of California 
          Alhambra Chamber of Commerce
          Almond Hullers & Processors Association 
          Association of California Egg Farmers
          California Agricultural Aircraft Association 
          California Association of Nurseries & Garden Centers
          California Association of Wheat Growers 
          California Association of Winegrape Growers 
          California Blueberry Association 
          California Cattlemen's Association 
          California Chamber of Commerce 
          California Citrus Mutual
          California Cotton Ginners Association
          California Cotton Growers Association 
          California Dairies, Inc. 
          California Farm Bureau Federation 
          California Fresh Fruit Association 
                 California League of Food Processors
          California Manufacturers & Technology Association
          California Pear Growers Association 
          California Seed Association 
          California State Floral Association 
          California Tomato Growers Association 
          California Trucking Association
          Family Winemakers of California 
          Far West Equipment Dealers Association
          Gilroy Chamber of Commerce
          Lodi Chamber of Commerce
          Milk Producers Council
          National Federation of Independent Business
          Nisei Farmers League
          Western Agricultural Processors Association 
          Western Growers Association 
          Western Plant Health Association 







          AB 1066 (Gonzalez)                                      Page 12  
          of ?
          
          Western United Dairymen
          Wine Institute 



                                      -- END --