State Supreme Court Ruling on Employment Definition Favorable to Farm Employers

May 20, 2010

On May 20, the Supreme Court of California issued its long-awaited decision in the case of Martinez v. Combs. In its unanimous opinion, the court held that the definition of "employ" under Industrial Welfare Commission (IWC) Order No. 14, which applies to agricultural occupations, applied to farm workers' claims for unpaid minimum wages.

In 2000, the plaintiff farm workers harvested strawberries for their employer, a grower named Muñoz, who had contracted to sell the strawberries to defendants Combs Distribution Co. and Apio, Inc. Muñoz failed to pay the plaintiffs their wages and then declared bankruptcy. The farm workers sued Combs and Apio-called "produce merchants" by the Supreme Court-for non-payment of minimum wages on the theory that Combs and Apio were their employers.

The plaintiffs argued that Combs and Apio, merely by consenting to the performance by the plaintiffs of labor that benefited them, had suffered or permitted the plaintiffs to work for them and therefore were the plaintiffs' employers. Under this test, one hiring an independent contractor to work on his property would in all cases be the employer of the contractor's employees.

While agreeing with the farm workers that the IWC definition of "employ" applied to their claim, the court rejected as unreasonable the expansive scope of the definition sought by the workers. The court held that under the IWC's definition, to employ has three alternative definitions:

- To exercise control over wages, hours or working conditions

- To suffer or permit to work

- To engage, thereby creating a common-law employment relationship

The court concluded that the merchants were not the plaintiffs' employers. The merchants did not have control over the workers' wages, hours or working conditions. The court said that the payment provisions in their sales contracts with Muñoz did not mean the merchants controlled the workers' wages. And while the merchants' own field representatives may have pointed out quality issues to workers, that fact does not indicate control over how work is to be done.

Further, the merchants did not suffer or permit the farm workers to work. Merely benefiting from the work of others doesn't make one their employer. "Potentially endless chains of liability" would otherwise be created, the court noted.

At the same time, the court said that "a proprietor who knows that persons are working in the proprietor's business without having been formally hired, or while being paid less than the minimum wage, clearly suffers or permits that work by failing to prevent it, while having the power to do so." In that type of situation, the proprietor would be deemed the employer of and liable to those persons.