Throughout California, many ag employers provide buses and vans to transport ag workers voluntarily to and from the fields. Voluntary company-provided transportation makes sense for both ag employers and workers alike.
For employers, the use of buses, cars, and shuttles ensures a safe, environmentally-friendly means of transporting large groups of people. For ag workers, free transportation made available by their employers saves them money they do not have to spend on auto expenses such as fuel, car insurance or registration. Even the public reaps benefits from agriculture’s use of buses, cars, and shuttles to transport large numbers of workers as it reduces the carbon footprint with fewer automobiles on the road, improving air quality for all.
These are all likely reasons that contributed to Governor Jerry Brown’s decision to sign Assembly Bill 2006 into law as part of a well-choreographed press conference at the conclusion to his recent Global Climate Change Summit. The Governor was clear in his message supporting the new law that buses and vans provide a safe, environmentally friendly means to carry farmworkers to and from their worksites.
Now, California Rural Legal Assistance (CRLA) is filing lawsuits throughout California challenging the use of company-provided buses, cars, and shuttles as a means of a voluntary transportation option for ag workers. CRLA and labor activists are seeking legal judgments to dictate that farmers and farm labor contractors provide compensation for any time workers spend voluntarily traveling in company-provided shuttles between home and worksites as part of their work day. The legal and financial impact of the CRLA effort should frighten all of agriculture since, if successful, the ramifications on ag employers have the potential to dwarf the recent non-productive time settlements.
What is Mandated Travel Pay?
Mandated travel pay is a real and dangerous threat for all agricultural employers as it will increase employer liability, require a significant increase in compensation, impact meals, breaks and overtime while decreasing employee production just as new overtime requirements and a minimum wage increase are about to be enacted.
Mandated travel pay would require ag employers to pay all workers for time spent on company-provided voluntary transportation shuttles between home and worksites as part of their workday. Federal law provides no compensation for travel time. However, state law provides for compensation outside a “normal commute”, but it has never defined time or distance. The four lawsuits filed so far focus on H-2A workers and domestic workers while targeting both farm labor contractors and growers separately and in combination as a joint employer theory of liability. Not only would mandated travel pay make future participation in the H-2A program cost prohibitive, it would likely economically destroy any ag employer.
How are these lawsuits different from the Morillion v. Royal Packing Case?
In the Morillion case, employees were required by the employer to take a company bus from a designated pick-up point to the workplace under threat of discipline The California Supreme Court held that such transportation was not voluntary. However, the court also stipulated that “employers may provide optional free transportation to employees without having to pay them for their travel time as long as employers do not require employees to use this transportation.”
In its lawsuits against California ag employers, CRLA is alleging that company-provided transportation is not voluntary, but de facto mandatory. One example is a lawsuit involving H-2A employees, CRLA contends that since the employees live in company-provided housing they don’t have other means of transportation which simply is not true. In CRLA’s view, this means the company has control over the employee. Thus, transportation to and from the housing to work and back is considered as “hours worked” and is compensable. However, since the Morillion case, ag employers complied with the ruling by providing employees with written notices, posted signs and policies that clearly state that company-provided transportation was at the employee’s option and that no employee was required to take it.
What is the Legal Threat?
CRLA is aiming for a favorable judgment in any of their lawsuits to create new compensation requirements for both domestic and H-2A workers who utilize free and voluntary employer-provided shuttles. If successful, CRLA would force new compensation rules that would create a huge economic burden for all ag employers and would incentivize all ag workers across the state to demand compensation for travel time. Travel pay on top of overtime rules and other regulations will create extraordinary and unsustainable pressure on the agricultural industry.
What is the role of CRLA in these Lawsuits?
At this time, the CRLA, Inc. has filed three civil lawsuits raising the issue of employer compensation for voluntary employee transportation. A fourth and recent lawsuit was filed by its sister entity, the CRLA Foundation. This is unusual in that the “Foundation” generally deals with regulatory and legislative issues, leaving litigation to the CRLA, Inc. The Foundation, as a non-Legal Services Corporation (LSC) grantee, is not subject to LSC regulations and thus may file “class action” lawsuits, unlike the CRLA, Inc., which is prohibited from doing so under LSC regulations. Note, the UFW firm, led by Mario Martinez, has also joined CRLA Inc. as co-counsel in one of these cases.
Following the filing of a Public Records Act Request by one of the defendant employers requesting documents from the California Employment Development Department (EDD) which interfaces with the US Department of Labor on H-2A applications and certifications, it has been revealed that the CRLA, Inc. lead attorney has been communicating with EDD officials since 2013 on virtually all the H-2A applications filed by California farmers. Letters and emails obtained under the PRA Request demonstrate that the CRLA, Inc. has been pointing out deficiencies in such applications, offered training services to the EDD staff and has consistently pushed its agenda that all employee transportation is to be compensated in communications to the EDD and the US DOL. As a result, it has become clear that the CRLA’s agenda is to slow down the H-2A application process and to prevent California farmers from utilizing the program. Indeed, a CRLA, Inc. letter issued to the EDD, as late as June 2018, preceded the filing of the fourth civil lawsuit just two months later involving the same H-2A employer. Let there be no doubt that the CRLA, Inc., and now the CRLA Foundation, are working jointly to push their agenda to ensure that all voluntary employer-provided transportation of farmworkers is to be considered as “hours worked” and compensable.
Is Legislation a Feasible solution?
While the sole focus today is the continued preparation of the first case being heard in early 2019, many have asked if there are other ways to resolve this issue. One possible solution would be some type of legislative fix to address the issue. For ag, any solution must include:
- No retroactive back pay;
- No impact on timing for meals and breaks;
- Distance to be the determining factor in calculating compensation, not time;
- No impact on OT;
- and A separate NPT class of time.
However, the California Legislature will not meet again until early 2019 so pursuit of a legislative fix is still some time off. In the meantime, the mandated travel pay issue will be presented to and discussed with agricultural leaders throughout the State. It is imperative that the industry unite to fight this effort or be prepared to live with a judge’s unfavorable decision that could effectively put their company out of business.
What Will be the Economic Impact of Mandated Travel Pay?
We already know that labor costs will rise for ag employers in California in 2020 by nearly 10 percent due to changes in minimum wage and overtime requirements. These same factors will result in an additional 32% increase in labor costs by 2023.
If compensation for company-provided voluntary transportation is determined to be mandatory, all ag employers will be responsible for compensable time as wages will become part of the overall payroll. Wanting to better understand the economic impact of mandated travel pay on ag employers, California Farmers for Fairness worked with Dr. Dennis Tootelian, a retired professor and former lead of the Center for Small Business at California State University, Sacramento, to develop an economic model to measure the potential financial impact.
The study focused on a cross-section of ag employers and commodities in California. The study included the Central Coast (leafy greens and strawberries), the North Coast (winegrapes) and the Central Valley (grapes, tree fruit and citrus). The economic model was built using reputable data from the University of California as well as local counties, the State of California and the United States government. The results are considered conservative as the projected costs of mandated travel pay will vary by ag employer, commodity and season.
With mandated travel pay, an ag employer’s cost per worker per day in 2020 – a little more than one year from now – will increase 12% – 31%. In 2023, an ag employer’s cost per worker per day will skyrocket another 11% – 36% per worker per day! When factoring minimum wage increases and new overtime requirements, mandatory paid transportation will increase an ag employer’s labor costs by 68% per worker per day in 2023 compared to 2018 labor costs!
Is this Different from Non-Productive Time Cases?
In the non-productive time court cases, the ag industry was caught by surprise by two appellate court decisions involving other industries, but by extension, affected agricultural workers paid by piece rate were to be compensated for rest periods and other non-productive time. The follow-up legislation, AB 1513, provided the agricultural industry a “safe harbor” in litigation of such cases. The agricultural industry was blindsided by these appellate court decisions and forced to comply with the requirements of AB 1513. With mandated travel pay, the industry is learning of the threat of compensable travel time to and from work before any judgment or decision has been reached. Thus, we have a chance to address this issue in front of the courts for a favorable decision for the industry or seek a compromise that would be fair to all ag employers.
While the ag industry was caught by surprise by the non-productive time issue a few years ago, this issue is different. We have a chance to organize and mobilize before the courts hear the suits and reach a decision or seek a compromise that would be fair to all ag employers. But, it is critical that our industry unite if we are and our families are to survive this hostile effort that could ultimately eliminate California farmers and their families from existence.
It is critical that the ag industry rallies together now with an organized response to prevent the CRLA from invalidating existing voluntary transportation arrangements and establishing these compensation requirements with no regard for increased commuter time or distance for both H-2A and domestic workers. If the opponent is successful, it would create a huge economic burden and would incentivize all ag workers across the state to demand company transportation because they could more easily seek compensation for travel time. Travel pay on top of overtime rules and other regulations are creating extraordinary and unsustainable pressure on the agricultural industry.