Fresno Court Declines to Invalidate Piecerate Safe Harbor
July 25, 2016
Bryan Little, Farm Employers Labor Service
piecerate safe harbor, and allowing employers until July 28, 2016 to file for the safe harbor. The original deadline had been July 1, 2016.
The safe harbor was created by AB 1513, legislation passed by the California Legislature that became effective on January 1, 2016. The safe harbor was intended to protect employers from liability for failing to properly compensate employees for rest periods and other non-productive time in the wake of appellate court decisions in 2013 in the Gonzalez and Bluford cases that held that employers must separately compensate employees for rest and other non-productive time.
The Superior Court was not persuaded by allegations raised in the underlying lawsuit by Nisei Farmers League which questioning the legal validity of several features of AB 1513, in particular the meaning of the phrases "other non-productive time" and "directly related" in the context of activity directly related to the production of piece-rate compensated work. Nisei successfully sought a temporary restraining order against the operation of the AB 1513 safe harbor deadlines and requested a preliminary injunction prohibiting the Department of Industrial Relations from enforcing the July 1 sign-up deadline; the December 15, 2016 back wage payment deadline, and any requirements included in AB 1513 dependent on the phrases "other non-productive time" or "directly related."
FELS subscribers and clients should be advised that the piecerate safe harbor and AB 1513 as a whole remain in place. The deadline for employers to file for the safe harbor remains July 28, 2016.
You can find further AB 1513/Safe Harbor resources at this link.
National Agricultural Workers Survey Coming Soon
The U.S. Department of Labor's National Agricultural Workers Survey (NAWS) will be conducting interviews over the next few months in the following counties:
JBS International has been conducting the NAWS since 1989 as a contractor to the US Department of Labor’s Employment and Training Administration. JBS’ trained interviewers contact agricultural employers to request permission to conduct interviews with their workers at times convenient to the employer. Each interviewed worker receives a $20 honorarium.
JBS follows strict protocols to protect the privacy of both employers and workers. It is a felony for interviewers to share information about employers involved in the survey.
The survey’s main objective is to identify trends in the make-up of the hired farm workforce. The information obtained helps agricultural employers and their associations stay informed about the characteristics of the hired farm workforce and helps public and private agencies better plan programs for farm workers. Survey information also can inform legislators and policymakers about issues important to the future of the industry. For more information about NAWS, visit http://www.doleta.gov/agworker/naws.cfm.
NAWS Frequently Asked Questions for Agricultural Employers
1. What is the NAWS?
NAWS is the only nationwide survey of crop workers (including year-round or permanent, migrant, seasonal and nursery workers) in the United States. The survey describes the characteristics and employment profiles of crop workers, and trends in the hired farm labor market.
2. How is the information used?
The information helps agricultural employers and their organizations stay informed about the characteristics of the hired farm workforce and helps public and private agencies better plan programs for farm workers.
3. What is in it for the agricultural employer?
Agricultural employers and their organizations use NAWS data to stay informed about important evolving trends in the make-up of the hired farm workforce and assess the availability of labor.
4. Is it mandatory to participate?
Participation is not mandatory. However, your participation will ensure that information used by agricultural associations, legislatures, and program planners is accurate.
5. Can I see a copy of the survey?
You were randomly selected from a list of agricultural employers in your county.
7. Who qualifies?
Any employer who hires labor for crop-related work at farms, orchards, groves, greenhouses, and nurseries is qualified.
8. Who is JBS International Inc.?
JBS is a research firm that brings a 30-year history of work with Federal, State, private firms, and community agencies.
9. Are you Department Of Labor?
No, we are an independent research firm contracted by the Department of Labor.
10. Does survey staff work for the government?
No, survey staff work for JBS International, Inc. JBS International is contracted by the United States Department of Labor (US DOL) to conduct the NAWS.
FELS Publishes AB 1513 Piece-rate Wage Resources
NEW!: Employees seeking payment of back wages from the Unclaimed Wages Fund (UWF) can claim those wages through the procedure described in this document provided by the Department of Industrial Relations.
FELS has published frequently asked questions (FAQs) about AB 1513, legislation passed in 2015 that became effective on January 1, 2016. AB 1513 established minimum standards for compensation of rest and recovery time during periods when employees are compensated on a piece-rate basis, and for compensation of time during which employees are not producing income-generating pieces due to the employer's actions or directions (for example, during safety trainings). AB 1513 also provided an optional "safe harbor" under which an employer who may not have compensated piece-rate employees as required by the Bluford and Gonzales court decisions from 2013 may obtain an affirmative defense against any related civil claim by paying employees back wages according to one of two methods specified by AB 1513.
Both the rules for piece-rate compensation as of January 1, 2016 and the "safe harbor" rules have proved to be complicated and confusing to many employers. The Division of Labor Standards Enforcement, Department of Industrial Relations (DLSE) has provided useful guidance, but questions have continued.
For farm employers preparing letters to employees to whom they are making back-wage payments tp purchase the protection of AB 1513's safe harbor, the following language tracks closely with Labor Code Section 226.2, subdivision (b)(5), which specifies the safe-harbor back wage payment procedure:
Pursuant to Labor Code section 226.2, XXXXXX is making the [enclosed, attached, or accompanying] payment to you. This payment was determined based on the formula in Labor Code section 226.2, subdivision (b)(1)(B). The calculations that were made to determine the total payment are as follows:
(Date) to (Date) Hours worked Gross Wages Paid 4% of Gross Wages Paid
XX to && 33 $1000 $40
previous payment for other non-productive time previous payment for rest and recovery periods
$12 (66 minutes @ $10/hour) $16 (2 hours @ $8/hour)
total back wages paid
OC Register on Fowler-Gerawan Piece-rate Suit
The Orange County Register editorialized on February 24, 2016 about the pending lawsuit brought by Fowler Packing and Gerawan Farming Company seeking to invalidate provisions of piece-rate legislation passed by the California Legislature that were designed to specifically to exclude Fowler and Gerawan from taking advantage of the AB 1513 safe harbor:
"We are a nation built on equal protection under the law. The Legislature was established to serve all Californians, not to serve as the attack dog for special interests. Legislative carve-outs like those in AB1513 are an affront to those noble ideals and should be swiftly struck down by the courts."
You can read the entire editorial at this link.
Lawsuit to Invalidate ALRB Trespass-Access Rule
The Pacific Legal Foundation (PLF) announced a lawsuit against the California Agricultural Labor Relations Board (ALRB) to invalidate the long-standing Board regulation giving unions the right to trespass on farmers' property in union campaigns.
PLF Principal Attorney Joshua P. Thompson announced at a press conference Wednesday at the World Ag Expo in Tulare, CA: "This case is about basic protections for everyone who owns property,” said PLF Principal Attorney Joshua P. Thompson. “Nothing is more fundamental for any property owner than being able to keep trespassers out. Bureaucrats can’t cancel that right - especially not as a favor to organized labor.
"CAUSE" Calls for "Farm Worker Bill of Rights"
The Central Coast Alliance for a Sustainable Economy, or CAUSE, make headlines recently in Santa Barbara County with it's call for a "farm worker bill of rights." CAUSE, a self-described social justice advocacy organization, grew out of "living wage" movements in Santa Barbara and Ventura counties in the early 2000s.
CAUSE's call for action by Santa Barbara County demands the county undertake a number of new responsibilities, like creating a special coordinator in the District Attorney's office for sexual assaults of farmworker, a county-run inspection program for field sanitation facilities, and grants from the county to farm worker service organizations to provide training to farm workers.
Some of CAUSE's demands are already covered by California and Federal law:
"Curbing Extreme Overwork:"
- Protect pregnant women from pesticide exposure my mandating job status protected unpaid pregnancy leave: All U.S. and California workers enjoy the protection of the federal Family and Medical Leave Act and the California Family Rights Act. FMLA and CFRA mandate 12 weeks of job-protected leave for all workers after the birth or adoption of a child. Additionally, California State Disability Insurance (SDI) provides partial wage-replacement insurance for workers who suffer a loss of wages due to a medically-disabling condition resulting from pregnancy or childbirth.
- Require real rest breaks by defining breaks as beginning when a work reaches a break area…: California's Wage Order 14 stipulating working conditions for agricultural workers requires that that farm workers receive "ten minutes of net rest time per four hour (work) period (or major fraction thereof)"..., and the Heat Illness Prevention standard (HIP) requires net-10 minute rest periods every two hours whenever the temperature exceeds 95 degrees, as well as provision of water for all workers at all times and shade for all workers on a break a meal or rest break.
"Cracking down on Wage Theft:"
- Several recent laws passed by the California Legislature are aimed by protecting workers from wage theft, including full disclosure to workers of their wages and deductions required on every paycheck stub, empowering the Labor Commissioner to enforce local wage laws, empowering the Labor Commissioner to place liens on the property of employers found to have not properly paid wages. Penalties under the Labor Code for failure to promptly pay wages are substantial, including as much as 30 days of a workers’ pay over and above any unpaid wages, as well as other penalties ranging from $1000 to $5000, criminal prosecution, and civil liability under California’s Private Attorneys’ General Act (PAGA).
"Protecting Health & Safety:"
- Provide grant funding for worker safety training: California employers are required by state law to provide training for workers to perform their jobs safely, to provide training on heat illness under the HIP standard, and other specific task training like safe use of forklifts and tractors. The U.S. Department of Labor and numerous other organizations also provide grant funding for local private and charitable organizations to provide additional training, and many agricultural and other community-based organizations also provide training and health screening services for farmworkers, like cholesteral and blood pressure screening.
- Inspect farms for clean bathrooms: Cal/OSHA already vigorously enforces the Field Sanitation Standard, which calls for toilet facilities, wash water, soap and paper towels.
- Aid victims of sexual assault: California provides extensive protection to prevent sexual assault and to aid victims; all employers are required to provide sexual harassment training to supervisors every two years; farm labor contractors are required to training their supverisory personnel annually, and to train workers on their rights and protections from sexual harassment at least annually upon hire.
Much of what CAUSE is demanding from Santa Barbara County is already being done by the state or by agricultural employers in compliance with state and federal law. Unfortunately, organizations like CAUSE periodically seek headlines to satisfy their liberal donor base, even if their demands have already been largely met.
FED OSHA Issues Ag Safety Fact Sheets
The federal Occupational Safety & Health Administration, the national counterpart to California's Cal/OSHA, has issued three new fact sheets on ag safety:
- All-Terrain Vehicle Hazards during Farm Work;
- Preventing Farm Vehicle Backover Incidents; and,
- Protecting Workers from Tractor Hazards.
The issuance of these fact sheets does not create any new compliance obligations for California agricultural employers. A positive effect of their issuance may be allowing farm employers to learn more about best practices for use of vehicles; vehicle accidents are among the most common types of accidents in agricultural employment. A possible negative effect of the issuance of these fact sheets is that their existence may bolster an OSHA General Duty Clause violation (the federal OSH Act imposes a general obligation on employers to provide a workplace free of recognized hazards) or Cal/OSHA Injury & Illness Program violation citation for failing to identify and abate a hazard.
LAWSUIT FILED TO INVALIDATE PIECE-RATE SAFE HARBOR CARVE-OUTS
FELS has provided eNews readers with regular updates on the passage and implementation of AB 1513, legislation to provide clear guidance to employers using piece-rate compensation and to provide a “safe harbor” for employers who did not compensate piece-rate employees as required by 2013 California appellate court decisions in the Bluford and Gonzales cases. Those cases provided employees had to be compensated separately from piece-rate producing time for rest, recovery, and other non-productive time.
Because it had long been assumed that averaging piece-rate earnings over hours worked met the minimum wage requirements, Bluford and Gonazles created massive litigation exposure for employers using piece-rates because the statute of limitations for claims of undercompensation is four years. Dozens of lawsuits had been filed and many settled with massive wage, damage and penalty awards after Bluford and Gonzales were handed down. AB 1513 provided a safe harbor that permitted employers to make back-wage payments to piece-rate compensated employees and escape penalty and damage liability.
However, AB 1513 also included limitations making the safe harbor relief unavailable to several employers locked in piece-rate litigation. Two of those employers brought suit in United States District Court for the Eastern District of California on Jan. 22, alleging these restrictions on the availability of the AB 1513 safe harbor violate their constitutional rights.
Fowler Packing Company and Gerawan Farming allege that provisions of AB 1513 that do not allow the safe harbor to apply to any non-productive wage and hour claim brought before March 1, 2014 illegally excluded Gerawan Farming from safe harbor relief. They also claim that the provision of AB 1513 excluding “claims for paid rest or recovery periods or pay for other non-productive that were made in any case filed prior to April 1, 2015” illegally excludes Fowler Packing from safe harbor relief.
The plaintiffs claim that the date restrictions for availability of safe harbor relief in AB 1513 amount to a violation of their constitutional rights to their detriment and to the detriment of any of their employees who might have benefited from back-pay payments made under the AB 1513 safe harbor.
ALRB Initiates Educational Access Rulemaking
On Dec. 3, the Agricultural Labor Relations Board (ALRB) decided to proceed with a proposed regulation allowing the Board to give its staff the right to trespass on farmers’ property for the purpose of educating farm workers about their rights under the Agricultural Labor Relations Act (ALRA). The Board, and particularly Board Chairman William Gould, are convinced that on-site workers education during working hours (though as envisioned by the Board, access will occur during the lunch period) is necessary because farm workers have no other means available to them to learn about their rights under the Act.
Piece-Rate "Fix" Effective Jan. 1
Legislation (AB 1513, Williams, D-Carpinteria) setting rules for payment of piece-rate employees’ non-productive work time will take effect on Jan. 1.
Are you ready?
AB 1513 was precipitated by two California appellate court decisions issued in 2013 that have caused confusion and fostered numerous wage-and-hour lawsuits against California farmers, farm labor contractors, and employers in other industries using piece-rate compensation plans. Those decisions held that in addition to their piece earnings, employees must be paid hourly wages for their non-piece-producing work time.
Since the Bluford and Gonzalez decisions were handed down in 2013, numerous lawsuits have asserted claims for unpaid wages, as well as for damages and penalties that add up to several times the amount of unpaid wages.
AB 1513 requires that piece-rate employees be compensated for rest periods taken under an Industrial Welfare Commission wage order, cool-down recovery periods taken under Cal/OSHA’s Heat Illness Prevention standard, and other nonproductive time separate from any piece-rate compensation.
Other nonproductive time means time under the employer's control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.
A piece-rate employee must be paid for rest and recovery periods at no less than the higher of the applicable minimum wage or the employee's average hourly rate. That rate is determined by dividing the employee’s total compensation for the workweek, minus compensation for rest and recovery periods and any overtime premium compensation, by the total hours worked in the workweek minus rest and recovery periods.
AB 1513 also requires that a piece-rate employee be separately paid for other nonproductive time at a rate of at least the applicable minimum wage. By paying an hourly rate of at least the minimum wage for all hours worked in addition to piece earnings, an employer complies with this requirement – but probably not with the average hourly pay requirement for rest and recovery periods.
AB 1513 allows employers to determine other nonproductive time by using either time records or reasonable estimates. An employer who in good faith underestimated and underpaid other nonproductive time is liable for the full amount remaining due, but is not liable for penalties or damages as long as (1) the employer provided wage-statement information required by AB 1513 and paid the amount due under the employer’s erroneous calculation, and (2) the total paid for any day in the pay period is at least the applicable minimum wage plus any overtime due. Employers may use this means of determining how much they owe in wages for non-productive time in both the past and the future.
Paystubs will have to separately state “other nonproductive time” and “rest and recovery periods.” The paystubs must state for each category the total time, rate of compensation, and the gross wages paid for that time during the applicable payroll period. Exception: This information need not be shown for the other nonproductive time of employees who, in addition to their piece-rate compensation, are paid an hourly rate of at least the applicable minimum wage for all hours worked.
In addition to specifying minimum hourly rates for piece-rate employees’ non-piece-producing work time, AB 1513 enables an employer to “buy” an affirmative defense against claims for wages, damages and penalties for the employer's failure to compensate for rest and recovery periods and other nonproductive time for pay periods before and including Dec. 31, 2015. To qualify for the affirmative defense, an employer must pay employees who were uncompensated or undercompensated for their non-piece-producing work time from July 1, 2012, to Dec. 31, 2015, under one of two formulas.
Under the first formula, the employer determines and pays the actual amounts due, together with 10 percent annual interest.
Under the second formula, the employer pays each employee four percent of the employee's gross earnings in pay periods in which any piece work was done from July 1, 2012, to Dec. 31, 2015, minus amounts already paid to the employee, separate from piece-rate compensation, for rest and recovery periods and other nonproductive time during the same time. The credit for wages already paid for other nonproductive time is capped at one percent of the employee's gross earnings.
Using the 4% Formula
Here’s a simple example of the calculation under the second formula discussed in the accompanying article; it’s for 50 weekly pay periods from July 1, 2012, to Dec. 31, 2015, in which the affected employee had piece earnings:
Gross Pay: $50,000
Rest and recovery time already paid by a separate hourly wage: $950
Nonproductive time already paid by a separate hourly wage: $570, capped at 1% of gross pay: $500
$50,000 x 4% = $2,000
$2,000 - $950 - $500 = $550 owed to employee
An employer choosing to buy this safe-harbor affirmative defense under either formula must notify the Department of Industrial Relations of that selection by July 1, 2016. These payments must be completed by Dec. 15, 2016.
An employer must use due diligence to locate former employees. An employer that can’t locate former employees owed wages must pay the amounts due them to the Labor Commissioner, along with an administrative fee.
The fee is the lesser of 0.5% of the amounts paid or $2,500.
DIR is expected to release guidance for complying with AB 1513’s wage-payment requirements, and it is preparing to facilitate employers’ use of AB 1513’s safe harbor.