California State Water Board — Curtailments May Be Same or Worse in 2015

January 28th, 2015

As the California drought emergency continues, the State Water Resources Control Board (The Board) issued a notice late last week advising all water rights holders that if hydrologic conditions do not significantly improve in the next several months, curtailments in 2015 can be expected to be the same as or exceed those seen in 2014.  In its notice, the Board encouraged water holders to plan ahead and to look into additional conservation measures and alternative water supplies. 

The notice was issued as part of Governor Jerry Brown’s proclaimed State of Emergency declared in 2014 in which he directed state officials to take all necessary actions to prepare for drought. More than 9,000 water rights curtailments have taken place since that time.     

Buschatzke Tapped as New Head of Arizona Department of Water Resources

January 28th, 2015

Yesterday, Governor Doug Ducey announced Thomas Buschatzke as head of the Arizona Department of Water Resources (ADWR).  Buschatzke has been serving as assistant director for the department's Water Planning Division since 2011.  In that capacity, he has been responsible for planning and policy programs for the management of the state's water supplies.  According to the department’s press release, he also manages multiple regulatory and permitting programs and ADWR's water conservation and drought management efforts. 

Buschatzke has worked previously with the city of Phoenix in a number of different capacities and has served on numerous water advisory committees and associations.

Western Growers extends our congratulations to Director Buschatzke and we look forward to working closely with him in his new role.

February 11th ACA Compliance Webinar – Register Today

January 28th, 2015

The clock is running. The bells are tolling. The rubber is hitting the road. However you want to say it, the new Affordable Care Act (ACA) is here and is affecting the way you need to run your business. 

Employer Mandate

The large employer mandate is now in effect for companies with more than 100 full-time employees and full-time equivalents. Employers with 50-99 full-time employees and equivalents have until 2016 to comply with the mandate.

Reporting

All large employers with 50 or more full-time employees and full-time equivalents must comply with new ACA reporting requirements.  The reporting is due in early 2016 for data year 2015.  Employers with 50-90 employees need to start planning now as their implementation mandate begins in January 2016.

Are you unsure what your company needs to be doing and when? If so, REGISTER NOW for this webinar to get the latest from Western Growers’ staff.  We can help lead you through this bureaucratic minefield.

Webinar Details

Affordable Care Act Webinar

February 11, 2015

10:00 – 11:00 PT

REGISTER NOW

If you have questions about the webinar, contact Jonathan Alexander.

WGAT Can Assist You with Your 2014 Tax Year Health Care Reporting Requirements

January 28th, 2015

If your company will issue 250 or more W-2s for the 2014 tax year, the IRS requires you to report the aggregate cost of your company’s group health insurance coverage on those employees’ W-2 forms.

Western Growers Assurance Trust (WGAT) members who fall in to this category in 2014, can seek assistance complying with this requirement by emailing [email protected] and providing the following:

  • Company name
  • Group numbers
  • Account manager
  • Name, title and email to whom reports should be sent

Please send your request as soon as possible so that WGAT can best assist you.

In Surprise Move, Obama Administration Approves Increased Take Limit for Delta Smelt

January 28th, 2015

Following a request submitted by the Bureau of Reclamation, the U.S. Fish and Wildlife Service (USFWS) approved an increase in the “take levels” for Delta smelt in the Sacramento–San Joaquin River Delta.  The unexpected decision implements a modified, interim version of the Reasonable and Prudent Alternative of the 2008 USFWS Biological Opinion (BO) for operation of the Central Valley Project’s (CVP) pumps.  The modified BO will increase the incidental Delta smelt take limit from 78 to 196.  This decision, however, does not apply to biological opinions on salmon in the Delta.

Asian Citrus Psyllid Detection Draws Fresno County into List Quarantined Counties

January 29th, 2015

The detection of three Asian citrus psyllids on the border of Tulare and Fresno Counties has prompted California agriculture officials to quarantine approximately 30-square miles in Fresno County.  Fresno had not previously been on the list of counties quarantined in part or in full.  A quarantine is in effect for all of Tulare County.  The psyllids were found in a trap in the unincorporated area between the City of Dinuba and Delft Colony.

The quarantine area in Fresno County is bordered on the north by E Lincoln Avenue; on the south by the Fresno County Boundary Line; on the west by E Manning Avenue; and on the east by the Fresno County Boundary Line. The quarantine map is available online at www.cdfa.ca.gov/plant/go/acp-qmaps.

CA Issuing Thousands More AB 60 Driver’s Licenses — Are You Ready? Join Our Webinar February 4

January 30th, 2015

On January 2, 2015, the California Department of Motor Vehicles began issuing  driver licenses to undocumented immigrants pursuant to AB 60 (Alejo, D-Salinas).  It is likely that many falsely documented agricultural employees will take advantage of this new opportunity.  According to an agency press release dated January 28, 2015, approximately 39,000 AB 60 licenses have been issued (that’s 28,000 more than was reported by DMV in its January 13th press release) and approximately 307,000 driver license exams have been administered since January 2, 2015 (that’s 197,000 more than was reported by DMV in its January 13th press release).

  • Will you know how to handle these workers when they present these new licenses during the hiring process?  
  • Will presentation of an AB 60 license put the employer on notice that the employee is not authorized to work in the U.S.?

This webinar will give employers the information they need to review and, if necessary, change their procedures related to the completion of I-9 forms and other employment policies as a result of the change in the law.

Webinar Details

February 4, 2015, 11:00 A.M. PST

Presenter: Jason Resnick, WG Vice President and General Counsel

REGISTER NOW!

(After registering, you will receive a confirmation email containing information about joining the webinar.)

Western Growers wishes to thank American AgCredit, CoBank, Farm Credit West and Fresno Madera Farm Credit for their ongoing financial support and commitment to WG members!

Compensation and HR Practices Surveys Open: Sign Up Today

January 30th, 2015

The WG Professional Compensation and HR Practices Surveys are now open for participants to enter data! If you haven’t signed up to participate yet, you’re missing a chance to stay in tune with trends that help attract and maintain the best employees in agriculture.

How It Works

Each year, Western Growers collects data in two surveys: The Professional Compensation Survey and the HR Practices Survey.

The Professional Compensation Survey collects base pay and variable (bonus) salary data for professional positions in the specialty crop industry. We use an independent, certified compensation specialist to protect the confidentiality of your data – no one at Western Growers sees your company’s information.

Data is collected for the following types of positions:

  • Executive level
  • Sales/Marketing
  • Logistics, Food Safety
  • Plant/Office/Field

The HR Practices survey collects information for performance appraisals, merit increases/merit budgets, bonus/incentive programs, austerity programs, health plan offerings, paid time off and more.

Why Your Company Needs to Participate

Data specific to the regional ag industry lets you compare your company’s salary and benefits with other companies in the industry to ensure your competitiveness. The survey results serve as a benchmark guide for budgeting for employee expenses, allowing you to recruit and retain the best talent.

Participants receive complimentary results for the surveys in which they participate. Non-participating members may purchase the compensation survey results.

Sign up today!

If you have questions, contact Karen Timmins at 949.885.2295.

We are on the Upward Slope of Technological Progress

January 6th, 2015

I have some good news to share with you that does not involve politics, legislation, immigration reform, labor unions or government overregulation, but does support this organization’s mission — to increase the profitability of our members.  Western Growers is taking initiative to shape the future of our industry by exploring partnership opportunities in the high tech industry.  Our aim is to advance technology innovation in the fresh produce industry among all commodities and throughout all regions of California and Arizona thereby improving our ability to produce more food in more efficient ways.

By 2050, there will be about 9 billion people to feed.  The middle class will increase from 1.5 billion people to 4.5 billion and they will demand better food choices — more fresh produce is one of those choices.  Global production must increase by 70 percent to meet this demand.  The only way we will produce enough food will be through advanced technology development which will serve to diminish the environmental impacts of farming and reduce our reliance on increasingly unstable human labor.

We are entering the “Precision Ag Era,” when growers will be better able to identify challenges and implement real time solutions to reduce waste, improve yields, protect resources and feed more people.  Technology is the key.

One such opportunity that may help advance our technology capabilities in farming is supporting start-up companies and new ideas.  This is done through incubators and accelerators.  Accelerators speed up the development of a good idea or start-up for new products and services in precision ag.  These will be transformative tech solutions that will develop through an incubator program that provides resources, mentors, and expertise to help idea-generators to launch, find investors, grow quickly and deploy new products or services that develop into thriving enterprises.

Western Growers recently participated in one such program with SVG Partners in San Jose.  This accelerator and incubator program is highly selective and has just identified the first 10 startups, (companies from California and also across the country and around the world) that will have access to mentors and opportunities to collaborate with industry executives, R&D staff and venture capitalists.  Program sponsors include ag companies like Taylor, Mann, Dole, Chiquita, JV Smith and others from outside ag like Verizon, IBM and Forbes.  For eight weeks, these select companies will have access to the best expertise and resources of top ag and tech companies enabling them to quickly deploy their new technologies.  They are also eligible to receive up to $5 million in funding.

Among the startups selected to participate in the program is a Massachusetts company working on automation (bots) and a new growing system to replace farm labor; a California company converting and recycling food waste into soil nutrients (in the form of liquid fertilizer) that is looking to do field trials and then build a commercial-scale plant; and a Fresno company developing some highly customizable, low-cost software and tablet apps to collect and analyze data for all aspects of food production like inspections and soil monitoring (no more pen and paper records).  Many seek interaction with farms and growers, handlers and shippers to refine their inventions and field-test them.  Your involvement will be a key component of this incubator process.

This is an exciting endeavor and an exciting time for our industry.  A new age of agriculture is taking shape; one of opportunity and endless possibility.

2015 Chairman of the Board: Vic Smith Takes the Helm

January 6th, 2015

Vic Smith grew up in southern Colorado, the son of a lawyer without ever considering agriculture as a career.

He hung around the towns of Alamosa and San Luis enjoying a normal childhood and then went to the University of Colorado at Boulder, where he studied economics and business law.  His father was a practicing attorney who served a stint as a prosecutor and then went into private practice as a civil law attorney.  Agriculture was one of the main businesses in that region of Colorado, so his father did have various agricultural clients.  In the late 1960s, the elder Smith represented Sky Valley Ice and Refrigeration in a civil case, which led to him purchasing the firm and renaming it Skyview Cooling in 1971.

In the meantime, Vic, who had worked for his father during the summers while attending college, graduated from the university and began a career in the real estate business in Denver.  “By 1976, my father had expanded into Yuma and wanted to open up a facility in the Salinas Valley.  He asked me to join him, and I did.”

The younger Smith began by splitting time between Yuma and Salinas. It wasn’t long before he found the agricultural business to be very exciting and also fell in love with Yuma.

Throughout the 1970s, Skyview Cooling remained strictly a cooling and distribution company, working with most of the large California and Arizona shippers.  The firm had more than a half dozen facilities in various locations in Colorado, Arizona, California and New Mexico.  This is when Vic learned to fly.  “I’d start out the day in Alamosa (Colorado), fly to New Mexico for lunch, head to Willcox after that and end up in Yuma.”

While the cooling and distribution end of the business was satisfying, John Smith was born on a farm in Missouri and liked the idea of working the soil.  In 1982, the firm dipped its toe on the grower side of the ledger by beginning a specialty crop farm on the Sonoran side of San Luis, below Yuma.  “We started with asparagus, green onions, and radishes,” Vic recalls.

That small farm expanded a bit over the years and in 1991, the company started JV Farms.  Expansion has continued and today the JV Smith Companies farm about 19,000 acres, including 3,000 in Colorado, 8,000 in Mexico and another 8,000 in the Yuma area.

Though the firm is a shipper of its Colorado potatoes, it has largely remained a grower throughout the years and not gotten into the vegetable marketing business.  Vic said that was just a prudent business decision based on the fact that as proprietors of many different coolers, the JV Smith Companies did business with most of the shippers in the west.  Being a grower for those same shippers expands the company’s business model without directly competing with its customers.

Vic said his deals with other shippers are as varied as the number of contracts he has.  Each deal is different.  He often partners with different shippers in a specific crop and also grows lots of crops on contract, either based on acreage or the actual volume produced.  This different business model allows the company to diversify and spread out its risk.  “We look to where we can add value for our customer,” he said, making it very clear that, in his case, the customer is the shipper.

However, he does not lose sight of the shipper’s customer, be it a retail or foodservice buyer or the ultimate consumer.  He said he often partners with shippers as they work with a customer to make sure as a grower he is producing exactly what is called for.  “We are a very valuable link in the supply chain,” he added.

Almost one of the first things John Smith did after forming his firm was to join Western Growers.  Vic Smith continued that membership when he took over the top spot of the company in the early 1990s.  He remembers in early 2006, he attended a Western Growers outreach meeting in Yuma and decided to get further involved with the association.  He soon became a member of the board and moved into the officer ranks three years ago.

At Western Growers board meetings, Vic is often gently chided for his political affiliation, as he is known to be a Democrat in a sea of Republicans.  He believes it is a service to the industry to have different viewpoints represented on the Western Growers board.  “We have to be pragmatic and be aware of political realities,” he said.  “We often advocate on issues that aren’t partisan and we need as many people as we can on both sides of the aisle.”

But while he doesn’t shy away from his political affiliation, he does say on the vast majority of issues, especially those dealing with agricultural concerns, his viewpoint is very much in line with most agricultural producers.  He calls himself a centrist.

As he moves into the top volunteer position at Western Growers in 2015, Smith plans to be very active as the association gets more proactively involved on the science and technology front.  Western Growers is curently involved in a strategic alliance to link agriculture with technology experts from the Silicon Valley.  Smith said as the ag industry moves forward, it has to be able to create more with less as natural resources are dwindling while needs are increasing.  He is very excited to be part of a new direction being championed by Western Growers to invest in the industry’s future.

Vic and his wife, Karen, have three children.  Kyle, 31, (pictured on the cover with his father) works in the family farming operation while both Kristen, 30, and Clayton, 20, are in the Los Angeles area involved in the entertainment business.

THE DROUGHT IS OVER …Well, Not Quite

January 6th, 2015

Growers up and down the state were celebrating an abundance of rainy days during the first two weeks in December, which had many people hoping the end of the three-year drought was near.

Even the chief hydrologist for the California Department of Water Resources, Maury Roos, was quoted on Monday, Dec. 15, that he was “kind of optimistic” that the drought would end this year.  Unfortunately, a wet month does not necessarily mean the end of the drought.

Doug Carlson, an information officer at DWR, said that while the double digits of precipitation in early December was a very good start, “one need only look at December of 2012” to be brought back down to earth.  Several years ago, the average rainfall at eight Northern Sierra stations that serve as the gauge for the area was at about 23 inches by mid-December, which was well above normal.  The next six and half months didn’t equal that amount of precipitation and totals for the year was still below normal.

After our heavy early-December storms this year, those eight measuring sticks came in at near 20 inches mid-month.  That’s a very good number and much better than the last couple of years, but still does not signal that the state is out of the woods.  As Carlson spoke to WG&S on Dec. 15, another storm was pelting California, and still another was due by the end of the week.  “It’s very good news.  For the Northern Sierras, as of 9 a.m. today (Dec. 15) we are 139 percent above average and the rain is still falling right now.”

It is a foregone conclusion that the state will move into the new year with much more rainfall under its belt than a year ago.  Carlson said the reservoirs have been able to capture a good deal of the runoff and things are definitely looking up.  For example, the Oroville reservoir, which is one of the largest in the state, reached its low point on Nov. 21 with a total of 898,221 acre feet in storage.  By Dec. 14, the lake held 1,143,195 acre feet, a gain of almost a quarter of a million acre feet in three weeks.  That’s a tremendous gain, and if it can be duplicated over the next three weeks or even a month, that would be great.

Unfortunately, Carlson said one cannot make assumptions about the winter based on a few weeks of storms.  But he said the “ridiculously resilient ridge,” as many have called the high-pressure system that has sat off the California coast for the past couple of years, is no longer there as of mid-December.  For the past three years, this ridge has pushed storms north of California as they came from the ocean and hit land.  The ridge has been credited with California’s drought conditions as well as frigid temperatures in the Midwest and East.

But as of mid-December, the ridge was gone and a more normal storm pattern was upon us.  “What we have seen so far this year is not typical of the last two years,” said Carlson.  “Last year (around this time of year) we had 57 straight days without rain in the Sacramento area.  We appear to be following a more normal pattern this year.”

In fact, many areas of Northern California — including Redding, Santa Rosa, San Francisco, Oakland and San Jose — had already reached 50 percent of their normal annual precipitation by mid-December.  San Diego was at 40 percent though the San Joaquin Valley was still below 35 percent.

Carlson said the storms that were approaching later during the week of Dec. 15 were colder weather events and snow was expected at the higher elevations.  In fact, it is possible that by the time this story is being read in early January, the state’s water picture could look even rosier.  One thing these early storms are probably doing is giving the state the opportunity to have a normal precipitation year without a miracle month late in the season. 

However, reservoirs are relatively empty and it will take more than one year to fill most of them.  Folsom Lake could be filled in a year, but it’s going to take at least two above average years to get Lake Shasta back to a normal level.

Fresh or Frozen, Muzzi Family Farms Has It Covered

January 6th, 2015

Muzzi Family Farms may have only been established in 2012, but the family who owns and operates the Salinas, CA, based company has roots in agriculture dating back well over 50 years.  To hear the brother and sister team of Dominic Muzzi Jr. and Lisa Muzzi talk about their family’s rich agriculture history is to understand and appreciate how the family cemented itself as one of the top produce operations in the Central Coast region.

 

Company History and Background

Dominic Muzzi Sr., the patriarch of the Central Coast Muzzis, started farming operations with his wife, Martha, in 1964 in Watsonville and Moss Landing, having moved from Pescadero in San Mateo County.  Although their new home was only an hour south, the move would provide an opportunity for Dominic Sr. to leave his family’s farming operation and start his own agriculture business.  The couple began their new life and new venture by farming Brussels sprouts, English peas and pumpkins.

In 1975, Muzzi started Dominic’s Farm Fresh Produce, a produce stand on Highway 1 in the Moss Landing area, to sell some of the fruits and vegetables grown on his farm as well as product purchased from nearby farms.  Several years later, in 1984, with the business growing, Muzzi established Watsonville Produce with the intention of using the company to sell vegetables grown and packed in their own fields and ship them across the country and into Canada.  Within a few years, Watsonville Produce was not only selling a majority of their own produce, but the company was now cooling and icing produce from other growers.  During that time, Dominic’s Farm Fresh Produce stand continued its own operations.

It wasn’t until 1993 that Watsonville Produce entered the leafy green market, processing and packaging such items as fresh spinach and spring mix.  That same year, the company also made a major operations decision when it decided to move processing equipment in the winter to the Coachella Valley.

About 10 years later, in 2002, management made another major decision and moved its winter operations out of the Coachella Valley and into Yuma, AZ, where there was more business, more trucks and more availability of raw product.  In short, as Dominic Jr. puts it, “there was more action in Yuma.”  Yuma also became the new home for the Red River Fresh Produce Processing and Shipping facility.  The facility was built in 2005 and currently serves as the Arizona base for the company’s processing and shipping operations.

Up until then, the Muzzis packaged, sold and shipped fresh produce.  But in 2007, that changed.  The family ventured into the frozen produce arena when it started Blue Ribbon Frozen Foods.  Blue Ribbon vegetables are frozen and packed through an individually quick frozen (IQF) process.  After freezing they are packed in bulk cartons or tote bins and are sent for further processing.  The products do not go to grocery chains, but rather to processors who use the IQF vegetables as ingredients in products such as ravioli quiche and spinach dip.  Blue Ribbon processes IQF vegetables including conventional and organic chopped spinach, bell peppers, kale and Brussels sprouts.

Dominic Jr. concedes that starting Blue Ribbon wasn’t the easiest thing to do since the whole operation was basically developed from scratch. “We acquired a facility, purchased the necessary equipment — some new and some used — put it together and that was the start of Blue Ribbon.”  Despite its challenging birth, the company has earned a reputation among brokers and customers in the frozen food industry as one of the nicest, cleanest, well-run processing plants in North America.  ”We are proud of that fact,” Dominic Jr. added.

After decades of acting in its traditional capacity as a co-packer of other people’s products, in 2012 the family started Muzzi Family Farms.  The new entity is designed to sell more of the vegetables that are processed at the Watsonville Produce fresh processing plants and the Blue Ribbon frozen processing plant.  Allowing some of the production to be allotted to their own sales company still provides the Muzzi family the ability to maintain its traditional co-packing responsibilities for other companies — covering all of the proverbial bases when it comes to sales.  Its top products are fresh spinach, arugula, kale and spring mix.

 

A Family Operation

The patriarch and his two children are all very much involved with running Muzzi Family Farms and the family’s related companies.  Dominic Jr. is involved in the operations of the family’s business entities and Lisa oversees the accounting and bookkeeping for the majority of them.  With his wealth of knowledge about the industry and his companies, Dominic Sr. provides the counseling and input necessary to ensure that things run smoothly.  He is around on a daily basis, and whether he is dealing with day-to-day operations or is involved with a special project at one of the plants, he knows exactly what’s going on.

One of the family’s top concerns, regardless of the Muzzi business entity you are talking about, is food safety.  “From the beginning, our family has always invested in food safety whether it’s in the plants we run, the machinery we purchase, or in training our personnel,” said Dominic Jr.  “The last thing we want to do is make somebody sick.  Food safety is high up on the priority list of things we focus on.  So that is one of the areas where we spend the most money in order to stay up to speed with what’s going on in the industry — fresh and frozen — to eliminate any potential issues.”

 

Giving Back to the Community

Like many Western Growers members, the Muzzi family likes to give back to the community, especially when it comes to children.  It’s easy to see that both Muzzi offspring are proud of their parents’ community involvement.  Lisa said her dad and mom have long been involved with donating to schools as well as children’s fundraising efforts.  Beyond running the fruit stand for many years, Martha has been involved with Omega Nu, a women’s organization with several state chapters that raises money for needy children and battered women.  Lisa said, “The local chapter was responsible for donating money for a special needs hospital room at the local community hospital.”

 

Connection to Western Growers

Muzzi Family Farms has a long-standing relationship with Western Growers through Watsonville Produce that dates back to 1984.  Like most of Western Growers members, Muzzi relies on the association’s government affairs department to do much of the heavy lifting on key issues like immigration and water.  However, being so highly focused on other issues as well, like food safety, the company also takes advantage of the many programs, services and webinars offered by the association.

SEED CERTIFICATION: Cucurbits Virus Requires Vigilance

January 6th, 2015

Seed industry representatives are urging California growers to get their cucurbits seed certified as free of the Cucumber Green Mottle Mosaic Virus (CGMMV) before planting because of several outbreaks that have occurred over the past two seasons.

Ric Dunkle, senior director of seed health and trade for the American Seed Trade Association (ASTA), told WG&S this is a serious concern, and if the virus is found in a field, the crop has to be destroyed.  He said it is incumbent upon growers to have their seed tested before planting to prevent the spread of this virus.

The ASTA executive said the current issue surfaced in California in the summer of 2013.  “It was initially detected in July of 2013 in several fields of cucumbers and melons that were being grown for seed production in the Central Valley,” he said.

Those fields were destroyed and barred from growing cucurbit seed for the following two years.  “We thought it had been discovered and eradicated before it spread,” said Dunkle.

However, a year later, in July 2014, the virus was again found in several fields of seedless watermelon in the San Joaquin Valley, most notably in Kern County.  Dunkle said those fields were transplants that came from a nursery.  In the seedless watermelon, the virus took the shape of destroying the watermelon from the inside out.  “When you cut open the watermelon, it was rotten inside,” said Dunkle.

Again fields had to be destroyed.

Dunkle said the seed industry and nursery industry have been alerted to the problem and seed is being tested and certified as virus free before it is sold and grown.  But he said growers also need to be vigilant as seed sometimes comes from alternate sources and is not certified.

Betsy Peterson, associate director of technical services and programs for the California Seed Association, Sacramento, CA, said the statewide group is helping to eradicate the virus by reaching out to growers and publicizing the issue.  A brochure developed by ASTA is available on the California Seed Association's website (calseed.org) that explains the issue and informs growers as to what they should do.  She urged growers to download the nine-page pamphlet, which has step-by-step advice as to testing seed, recognizing infected fields and eradicating the virus.

The brochure states that the virus itself was first described in 1935.  It has long caused problems in Europe, Asia, the Middle East and more recently in Canada.  The 2013 discovery in the San Joaquin Valley was its first noted presence in the United States.

The brochure describes the disease in the following manner:  “Cucumber green mottle mosaic is caused by the cucumber green mottle mosaic virus (CGMMV), which is a rod-shaped, microscopic (300 nm long x 18 nm wide) particle.  The virus is easily sap and seed transmissible, and it survives for long periods in infected crop debris.  Transmission in seed has been most frequently reported in cucumber but it can occur in other species as well.  The virus can be introduced into a crop production in many ways, but contaminated seed and soil are among the most common.”

While CGMMV is a cousin of the far-reaching Tobacco Mosaic Virus (TMV), which has many host plants, CGMMV has a narrow host range limited primarily to cucurbit species, including watermelon, melon, cucumber, pumpkin, squash and gourds, according to the ASTA brochure.

The biggest concern is that the disease is easily transferred.  “In some environments and production cultures, CGMMV can be especially problematic due to the ease with which it is transmitted and its stability and long viability in plant debris, in soil or on greenhouse or equipment surfaces,” reads the literature about the virus.  “The damage it causes to the host plant and fruit can be extensive, resulting in substantial yield losses.”

The virus does present itself in leaf disfiguration and there are field tests that can detect it, but the seed association executives say the best way to combat it, is to use seed free of the problem.  All sources of seed, according to the brochure, should be tested and certified with a “negative” or “no evidence” of CGMMV.

Unfortunately that step does not end the grower’s due diligence. Though it is a great first step and a negative test offers assurance that the virus does not exist in that seed, it is not a guarantee that the entire seed lot is free from the virus.  “Regularly inspect seedlings, beginning at about the two true leaf stage of growth,” cautions the brochure.  “Note that symptoms of CGMMV most likely will be subtle and difficult to recognize when plants are small.”

If the virus is detected, the impacted area needs to be destroyed.  In addition, the virus can be spread from workers’ clothes and tools, plant trays and any mechanical equipment that was used with the infected plant.  Anything that came in contact with the virus should be destroyed or sterilized.

The brochure notes that while there is only limited information on cultivars that are resistant to the virus, there is a seed treatment available for seed found to be infected.

Both the American Seed Trade Association and the California Seed Association are conducting seminars and other outreach programs to spread the word and educate the seed industry, nurseries and growers as to the problem, its causes and solutions.  ASTA is holding an accredited workshop in Florida in late January, in association with an industry conference, and is urging people to attend to help spread the word.  Information about this program is available on the ASTA website (amseed.org).

Closer to home, the 2015 National Watermelon Association Convention will be held in La Quinta, CA, in February and will have some type of session devoted to the problem (nationalwatermelonassociation.com).

California State Senator Andy Vidak of the 14th District, which includes Delano, Reedley and parts of Fresno.

January 6th, 2015

(Editor’s Note: The questions and answers have been paraphrased for clarity and brevity.)

 

Where did you grow up and what were some of the key elements of your youth?

Our house burned down when I was three and I do remember that.  I grew up in Visalia where my dad was a teacher and then became the longtime superintendent of schools for Tulare County.  I do have a lot of agriculture in my background as my grandmother came from cattle ranchers and my grandfather worked in Delano.  Vidak is Croatian, and my grandfather worked with the many Croatian grape growers in Delano.  In fact, he was in Chile in 1971 and ‘72 when Chile first began to ship grapes to the United States.  On the other side, my grandfather was a veterinarian.  Both sides came from Orosi.

I graduated from Redwood High School (in Visalia).  When I was growing up I always thought I’d be an English teacher and a basketball coach.

 

When did agriculture become a viable option for you?

I didn’t know what I was going to do when I went to college.  Then at the College of the Sequoias I took an ag class and changed my major to animal science.  I was on a livestock judging show team and got recruited by Texas Tech University to help build a meat judging team.  We won their first national championship (in meat judging).

 

After you graduated from college, how did you use your ag education?

My dream was to come back to Visalia, buy 40 acres and start my own plum orchard.  I looked for a job and got one selling produce.  I did that for seven years, including time on the Westside and in Salinas and Yuma. And then we formed our own cooler.  I just always liked working outside.

[Vidak eventually saved enough money to buy his own acreage.  Instead of plums, though, he became a cherry farmer, which he still does today.  He also became a cattle rancher and settled down to a rural life as a farmer for about a decade beginning in the mid to late 1990s.]

 

How did you get involved in the political arena?

In 2008 and 2009, I saw friends of mine standing in food lines because they couldn’t make any money selling their crops.  And here we were selling items from other countries.  It broke my heart.  I was very upset with environmental radicalism, and I started to go to rallies and speak out.  Sean Hannity came to our area and I listened to him.  Then once I was at a rally at Congressman George Miller’s office in Concord and I spoke to the crowd.  Someone told me I really knew how to speak and state our case.  So I decided to run against Jim Costa for Congress.  I got a lot of support but didn’t win.

 

So that launched your political career.  Were you then looking for another office to run for when your present seat came open?

At the time I ran against Jim Costa I was just doing my civic duty.  I actually didn’t think I would ever run again.  But I did get more involved in the Republican Party, and when Michael Rubio resigned (his State Senate seat in early 2013), a lot of people asked me to run.  I asked myself two questions.  Can I win and can I make a difference?  I ran and won.  And now I have won re-election.

 

How do you describe yourself politically?

I can work with both sides.  As I see it, common sense has no party lines.

 

What are your top priorities?

Water.  Water.  Water.  My district is water and energy, and I believe jobs come first.

 

What is your take on the recently passed Water Bond?

I was one of the co-sponsors and I was very supportive of it.  I have visited both sites for dams and we made sure that we put enough money in the bond to start construction on them both.  Initially Governor Brown was only asking for $2 billion (for water storage projects), but we were able to get $2.7 billion which gives us enough to start both projects.

 

What do you think of the groundwater legislation?

We did not like some of the provisions in that bill and we don’t think other people should be telling us how to run our water system.  We were able to get all of the legislators from the valley to oppose it.

 

You are opposed to the high-speed rail project.  Why, and what is the next step?

The issue is in the courts right now.  The bullet train will destroy jobs, homes, farms and small business.

 

Our members, and some of your constituents, grow the best fruits, vegetables and nuts in the world.  Do you have a favorite?

I am a cherry grower so I love cherries, but I really like everything.  When I was selling broccoli and cauliflower, I loved broccoli and cauliflower.  Whatever I start selling, I love to eat.

Regulatory Update: Crop Protection Tools

January 6th, 2015

The new California Legislature has arrived in Sacramento, and as a new two-year session begins, Western Growers staff is busy meeting with the newly sworn-in members of the Assembly and Senate.  This is an incredibly important time of year because of the fleeting opportunity we have in welcoming the members to Sacramento and introducing them to our association and our core policy concerns prior to their immersion in the daily legislative routine.

Among our policy priorities is the preservation of crop protection tools, which have come under increasing legislative and regulatory fire.  WG has a long history of advocating for the registration and safe use of pesticides that are critical in growing our state’s fresh fruits, nuts and vegetables.  California has the world’s most stringent pesticide use restrictions in place to protect human health and the environment.  Just as important, growers care about the environment, public health and the stewardship of their land.  WG continues to educate the Legislature and other government officials about the rigid and demanding registration and oversight system that California imposes on all crop protection products.  As long as the applicator is following the specific product’s label instructions, the toxicity and approved usage have been scientifically studied and the appropriate exposure mitigations are factored into the application instructions.

Furthermore, for restricted use materials including chloropicrin, 1,3-dichloropropene (1,3-D), and metam sodium, only a certified applicator can apply the product and prior notice must be given to the county agricultural commissioner.  A permit from the commissioner is then necessary prior to the application being conducted.  It is important to note that the commissioner has broad authority to approve or deny a permit and often specifies additional restrictions on when, where and how a product will be applied.  For example, a permit may be conditioned to allow the application to occur only on a non-windy day to further reduce risk of unintended exposure.

Unfortunately, a message continues to be pushed by activist groups that pesticides are not being adequately regulated within our state.  Their underlying message is that farm workers and people near farms, such as school children and residents, are being literally poisoned by drifting pesticides.  The title of a November article published by The Center for Investigative Reporting hints to this bias: “California’s strawberry industry is hooked on dangerous pesticides.” The article primarily focused on 1,3-D and chloropicrin.  Both of these active ingredients have been used in California agriculture for many decades to control a wide variety of diseases and pests that live in the soil.  Chloropicrin itself has been in use for more than 50 years and has a very strong safety record.  The idea that pesticide use regulations in California are inadequate couldn’t be further from the truth, and a thorough and unbiased review of the safety record confirms this fact.

Our goal is to continue standing resolute in ensuring that all growers (conventional and organic) have ready access to safe and effective crop protection tools.

We encourage our members to stay updated on Department of Pesticides Regulation’s rules on chloropicrin.  DPR released new proposed control measures for chloropicrin on May 15, 2013.  These proposed control measures are more stringent than both the U.S. Environmental Protection Agency’s and DPR’s current application requirements.  The new control measures likely will make changes to buffer zones, buffer zone credits, acreage application limits, the handling of overlapping buffer zones, emergency preparedness and response, notice of intent requirements and tarp cutting limitations.  WG staff is awaiting the release of DPR’s final control measures at the time of this writing in mid-December.

If you have any questions about any of these regulations, please contact WG staff for more information.

Traceability: Important or Indispensable?

January 6th, 2015

During the International Association for Food Protection (IAFP) Conference in Indiana back in August of 2014, the theme of the session dedicated to food traceability was: Traceability is important for food safety and indispensable for food defense.  Still questions remain: Why should you care about traceability when there are more pressing issues?  Is the difference between a recall program and traceability understood in your company?  Is it time for your company to review where it stands on traceability?

In a recent webinar hosted by the Western Growers Science & Technology Division, more than half of the participants taking a survey during the webinar confirmed they are part of the Produce Traceability Initiative (PTI).  Although we cannot draw any conclusions from this survey question, we can say many producers are already working toward having a traceability system in place.  In the produce sector, traceability refers to the ability to trace the movement of a particular produce item back and forward in the supply chain.  As mentioned by Dr. Jennifer McEntire of The Acheson Group during her webinar presentation, “trace back usually precedes a recall in the supply chain.”  Therefore, when a company conducts a recall it is basically exercising the trace forward component of traceability.  Our food supply chain is very complex, and therefore, following records back or forward can be extremely difficult.

Food regulators experience a very challenging task when it comes to trace back.  Their main priority is to protect the public health and act as soon as possible once an illness is associated with food and an outbreak is taking place.  However, in some cases, inaccurate actions have caused negative impacts on companies implicated prematurely in situations like this.  Because of the complexity of the food supply chain, it is a challenge to accurately identify which particular food item is implicated in an outbreak.  These situations can lead to economic damages and reputation issues hard to bear.  What we don’t often consider is how much time could be saved and how actions could be more accurate if everyone in the supply chain would adopt systems to trace products back and forward in the supply chain that allow easy data synchronization and enhanced communication.  Besides the public health benefit, regulators and companies could also benefit from this: regulators by being able to take more timely/accurate actions and companies by being able to minimize reputation and economic impacts.  There is no question, it would be easier and faster to rule out or rule in a company.  Traceability is important for food safety reasons!

The potential impact of intentional food adulteration to cause public health harm and economic disruption would be more extreme than what we have seen as a result of an unintentional event (most of the outbreaks we have experienced in the United States).  We can clearly see why a good traceability system is indispensable for food defense (to protect food from intentional adulteration).  The Federal Bureau of Investigation records indicate that agriculture and food production are tempting targets of terrorists for potential threats to the United States.  This makes sense from an economical and logistical point of view; the complexity of our supply chain can offer a perfect mechanism to introduce an adulterant in our food without incurring a huge cost.  The impacts of these acts could be unbearable and this confirms why traceability is indispensible for food defense and why everyone in the supply chain plays a key role in supporting a good traceability system.

So, what can you do about it?  What about starting with these questions:  Where does your company stand on traceability, and where do you want to go?

Perhaps it is time to think proactively about this (if you haven’t already done so), even though government regulations are not expected anytime soon, probably for several years.  Perhaps it is time to conduct an internal review of current procurement and distribution processes, recordkeeping procedures/systems and a trace back/trace forward exercise. If you are able to quickly and accurately identify where all your products/ingredients (if any) came from and where they went, you are on the right path.  Also, if you have not, it is time to consider the benefits of traceability for marketing or branding opportunities, increasing inventory control and efficiencies in general.

Traceability is important for food safety, indispensable for food defense and can be beneficial for your company.

Contact Sonia Salas at [email protected] or visit our Science & Technology blog for any comments, questions or suggestions on this topic at http://www.wga.com/sci-tech/agknowledge.

Sakata Releases New Varieties for 2015

January 6th, 2015

Following is a list of new varieties available from Sakata Seed in 2015.

 

 

Melon

Infinite Gold LSL melon has been bred for strong performance and long shelf life, without sacrificing great flavor and fruit quality.  In fact, a third-party sensory analysis panel rated Infinite Gold higher in flavor and quality attributes than the leading competition.

 

Bell Pepper

Blitz is an early maturing, widely adapted blocky bell with heavy first cropping potential providing growers the opportunity for earlier returns.  The extra-large and jumbo fruit are of good general quality and have thick walls.  Blitz has high resistance to TMV: 0, and Xcv: 0-5, 7-9 and intermediate resistance to TEV.

 

Tomato

Oribustar is an indeterminate red grape tomato that shows excellent performance — based on yield potential with double and triple clusters, fruit firmness, resistant to cracking, and excellent flavor profile — in both high tech and medium tech environments.

 

Broccoli

Emerald Crown broccoli is a medium-maturing, very uniform, heavy-headed, domed variety with small beads on a small framed plant that produces excellent quality crown cuts/short trim in all NAFTA regions.

 

Tomato

Raceway tomato is a great quality choice for high yield and resistance to Fusarium crown and root rot.  The smooth fruit are mostly extra-large, deep oblate to globe shaped, very firm and with deep red color for the mature green and vine ripe markets.

 

Watermelon

Unbridled triploid watermelon is part of a quartet of new watermelons that represent our next generation breeding.  This watermelon has an 85-day maturity and has high yield potential. Unbridled boasts very strong vines and bears fruit with crisp, firm flesh.  Extra tasty, too!

FAQ: Immigration Executive Actions

January 6th, 2015

On November 20, 2014, President Obama announced several executive actions on immigration.  Under the plan, an estimated four to five million undocumented immigrants will likely qualify for temporary relief from the threat of removal, and be eligible to receive employment authorization.  The president’s decision to bypass Congress has infuriated many Republicans with some vowing to block these measures.

While none of the policy reforms specifically reference the agricultural industry, the Immigration Accountability Executive Actions include several provisions that could directly impact some WG members and their employees.  Specifically, the provisions covering deferred deportation for certain immigrants who entered or remain in the United States without authorization is a shift in immigration enforcement priorities by the Department of Homeland Security.  Following is an explanation of some of the impacts these executive actions may have on agricultural employers.

 

What Executive Actions might apply to agricultural employees?

The president's immigration actions include several provisions to provide relief to undocumented immigrants.  Two of these provisions may apply to certain falsely-documented agricultural employees.

First is the expansion of eligibility for Deferred Action for Childhood Arrivals (DACA), which will extend the existing program to anyone who entered the United States by January 1, 2010, and was under the age of 16 at the time of entry, and not just those born after June 15, 1981.  DACA relief and work authorization permits will be lengthened from the current two years to three years.

Second is the creation of a new prosecutorial discretion program, Deferred Action for Parental Accountability (DAPA). DAPA covers the parents of U.S. citizens or lawful permanent residents that were born on or before November 20, 2014.  As with the DACA program, qualified applicants will be eligible for employment authorization.  Both the deferred action and the employment authorization will be valid for three years.  The U.S. Citizenship and Immigration Services said it will begin accepting applications approximately 180 days after the president’s announcement.

 

Who among our current workforce could be eligible for relief?

The fact is, nobody knows for certain.  It has been widely reported that the United Farm Workers union estimates at least 250,000 farm workers nationwide — including 125,000 from California — will be eligible under the new programs to receive deferred deportation action and temporary work authorization, but some in agriculture have questioned the basis for that number, believing it to be grossly inflated.  How many workers may be eligible for any particular employer will vary greatly.

 

How many eligible farm workers will actually take advantage of the program?

Again, the jury is still out.  Some analysts believe that interest in applying will be tempered by the fact that Immigration and Customs Enforcement (ICE) priorities have been redefined to ensure agents are focusing on recent border-crossers — defined as those who came after Jan. 1, 2014 — along with convicted criminals, suspected terrorists and potential threats to national security.  Farm workers who have lived in the United States for more than a year do not appear on that list of priorities.  If history is any guide, approximately 55 percent of the 1.2 million unauthorized youths who met the criteria for the Obama administration’s original DACA program at its launch in 2012 had applied for relief from deportation through July 2014, according to the Migration Policy Institute.

Also, falsely-documented workers would be justifiably concerned about the prospect of the president’s successor or a future Congress unraveling his actions and eventually deporting them.  A future administration could try to reverse some of his policies, and any Republican president would be under great pressure to do so.  That would leave falsely-documented workers who have lived in the country for at least five years especially vulnerable.

 

What action can employers take to assist current employees?

As a threshold matter, employers should have no reason to believe that any employee is eligible for Executive Action because every employee that works for you is presumably work authorized — as evidenced by a properly completed Form I-9.  On the other hand, any employee who may benefit from this program in the future is currently not authorized to work.  An employee who discloses his unauthorized status places the employer on notice of that individual’s lack of employment authorization.  Continued employment of someone whom the employer knows to be unauthorized exposes the employer to liability under federal immigration laws.  So it is not recommended that employers proactively seek to assist employees with the deferred action process.

However, the lawful employees of a company may have friends or relatives (not employees of the company) who are seeking information about how to apply for deferred deportation and work authorization.  These employees may also have legitimate concerns that their relatives may be taken advantage of by unscrupulous notarios, consultants or attorneys who prey on vulnerable immigrants with promises of a changed legal status in exchange for a large sum of money, and deliver nothing.  It would be much better for those individuals to seek advice from a local law school immigration clinic.  Pacific McGeorge School of Law (Sacramento), U.C. Davis School of Law, Stanford Law School (Palo Alto), University of Arizona College of Law, and other law schools have excellent, affordable legal clinics that could assist with the deferred action program.

Employers may consider (after consulting with counsel) posting a flyer in Spanish with the following information:

If you have a friend or relative who may be eligible for President Obama’s Executive Action on immigration, you should tell them:

1.  Do not tell their employer they are applying for deferred action when asking for employment verification documents.  That could put the employer on notice they are not currently authorized to work and force the employer to terminate employment.

2.  Beware of unscrupulous notarios, consultants or attorneys who make false promises and take clients’ money without delivering results.  Call a local law school immigration clinic such as [Name of Clinic and phone number] or other reputable organization to seek assistance in applying for deferred action — do not ask their employer for help.

 

What if an employee asks me for a letter or other evidence of employment history in order to apply for deferred action?

Employees frequently ask for evidence of employment history for many reasons other than applying for deferred action.  Banks, schools, and landlords routinely ask for such employment verification documents.  So an employer should not assume or ask if the request for employment records are for qualifying for deferred action.  For the employer and the employee, it’s simply better not to know.  Also, there are records other than employment documents an employee may provide to establish residency in the United States.

Learning that your employee is applying for deferred action could put the employer at risk of having constructive knowledge that an employee is not work authorized.  Western Growers is seeking further guidance from government agencies to ensure that employers are not exposed to legal risk while employees apply for and await employment authorization.  However, employers must be aware that unless and until such guidance is issued, it is illegal to continue to employ a worker known to have applied for deferred deportation and work authorization.

 

What if an employee who receives deferred deportation and work authorization comes forward and identification documents are different than what were presented at the time of hire?

This is a potentially vexing issue, particularly for employers with “dishonesty policies” that say employees should be disciplined or fired if they are found to have lied.  Assuming that the person now has a valid Employment Authorization Document (EAD), the individual is employment-authorized.  However, the same individual may have violated the employer's dishonesty policy.  As with any company policy, and in particular those that lead to adverse action, employers should apply the policies consistently and without regard to any protected characteristic, including race, national origin and citizenship status.  Employers that fail to treat employees equally may be subject to a charge of discrimination.  Unfortunately, there is presently no safe harbor that allows employers to treat deferred action beneficiaries differently from other employees who violate company rules.  Employers with such policies may consider amending such policies, but not before consulting with legal counsel.

Once an eligible individual is successfully registered for the new or expanded deferred action program, he will be issued an EAD valid for up to three years.  The EAD is an acceptable Form I-9 List A document proving identity and employment authorization.  If an employee presents a new EAD, complete a new Form I-9 with the new information and attach it to the old I-9.  Also attach a memo explaining that the new I-9 and change of information is due to the employee informing you and providing proof that she has obtained work authorization under the president’s Executive Actions.  Failure to do so may result in an expensive I-9 paperwork violation.  Don’t forget to update tax and other reporting information related to the employee.

 

If an employer has had to terminate an employee resulting from an ICE audit, could that employee be rehired if he is eligible for deferred action?

Absent guidance by the government to the contrary, an employer could not rehire an employee whose application for deferred action is in pending status.  However, once the employee receives his work authorization document, there should be nothing prohibiting the employer from rehiring that work authorized individual.

 

Are there any steps employers should take now to prepare?

Employers should be aware that the executive actions create an interagency working group to identify policies and procedures that protect workers from exploitation and violations of worker rights.  The agencies in the group will include DOL, DHS, Justice Department, Equal Employment Opportunity Commission and National Labor Relations Board and will seek to ensure workplace enforcement without fear of retaliation, ensure that law enforcement agencies aren't exploited by those who wish to undermine workers' protection, and ensure that federal labor, employment and immigration laws are enforced consistently.  This means that employers should be vigilant in auditing their Form I-9s and reviewing policies and practices to ensure they are compliant with immigration, employment and labor standards, in anticipation of a government audit.

 

This is general and preliminary guidance.  Employers should consult experienced immigration and employment counsel to assess the extent to which the president’s executive actions will impact their particular business and look for updates from Western Growers as information is made available.

Ready-Set-REPORT!

January 6th, 2015

What’s ahead for you in 2015 to be (or remain) compliant with the Affordable Care Act?  The answer depends on a number of factors including whether your company is an applicable large employer and the number of employees you have.

Does the following sound like a recipe for a headache?  Changing your benefits strategy, having to collect a myriad of data not previously collected and integrating this among several roles within your organization to meet IRS reporting guidelines.  Whatever your company size, Western Growers and Western Growers Insurance Services are ready to help.

 

100 or more EMPLOYEES

For the largest of the employers (those with 100 or more employees), much analysis and effort was most likely spent in 2014 to bring the company into compliance by putting into place a benefit strategy and plan that would meet legal guidelines.  The timeline for reporting seems a bit distant — the first reports to employees are not due until January 31, 2016, and reports to the IRS don’t seem to be on the calendar until February 29, 2016 (March 31, 2016 if filing electronically).

But don’t be lulled by this timeline.  To be able to do the reporting required in 2016, you need to have started data collection by January 1, 2015.  While the reporting occurs annually, compliance (and related taxes/penalties) will be assessed on a monthly basis.

 

50-99 EMPLOYEES

For groups in the 50-99 employees category, the upcoming year will be a review of benefit strategy and compliance.  True, the limited Internal Revenue Service reprieve from reporting on their 2015 offer to employees for these groups gives extra time until they are mandated to report.  However, experience from 2014 has demonstrated that getting to a compliant benefit strategy that meets the company’s needs requires more time, analysis and planning than you might have initially expected.  Also, if the company is not already offering a benefit plan that complies with minimum value guidelines and is affordable, 2015 will be a planning year to effect changes by January 1, 2016.

 

FEWER THAN 50 EMPLOYEES

Groups that employ fewer than 50 people don’t get to skip this discussion.  There are two items that will be on the table for you.  First, though the small group employers don’t have a mandate to make an offer of coverage to employees and their dependents, the individual mandate is in play.  You need to consider the mandate as you set your benefit strategy.  Second, the demands of attracting and retaining a skillful labor pool may require continued evaluation of how the company’s position on offering benefits serves as a competitive advantage or disadvantage.

This is what we can see based on what is on the table today… are changes likely to be coming forward? If so, we will continue to assess and address.  Meanwhile, WGIS remains on top of how best to serve our members.  We are here to provide you the business consultation to help you effect solutions that match your strategic direction in addressing all your insurance needs.  For more information, contact me at: [email protected], or 949.885.2391, or go to our website www.wgis.com.

What’s That Mean?

Applicable Large Employer: Your company’s Applicable Large Employer status is based upon its average number of full-time equivalent employees (employees expected to work 30 or more hours per week) in the prior year.  If you employed 50 or more full-time equivalent employees in the prior year, your company is considered an Applicable Large Employer.

Individual Mandate: This is a piece of the Affordable Care Act that says nearly everyone must have health insurance that meets minimum standards. With some exceptions, people who do not maintain health insurance coverage have to pay a penalty.  In 2015, that penalty for not having coverage increases to $325 per person (or 2% of income) — that’s up from $95 per person (or 1% of income) in 2014.

Be Careful of Landmines in Response to ACA

January 6th, 2015

Dear Jon,

 

I have a confession:  We did nothing to comply with health care reform.  We employ more than 150 employees, of which 20 in management are covered by a health plan.  The remaining 130 have always worked full-time.  Our plan is to cut their hours effective January 1, 2015, to ensure that they are not full-time in order to avoid owing an offer of health benefits coverage to these individuals.  Is this allowable?

 

— Man with a Plan in McFarland

 

 

You might be about to step on a landmine.  The Employee Retirement Income Security Act of 1974 as amended (ERISA) at Section 510 provides, “[i]t shall be unlawful for any person to…discriminate against a participant or beneficiary…for the purpose of interfering with the attainment of any right to which such participant may become entitled under the provisions of an employee benefit plan.”  ERISA Section 3(7) defines “participant” as “any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan.”

Traditionally, ERISA Section 510 has generally, but not exclusively, been used in pension benefit cases.  Lately, however, this provision is in the spotlight because of health care reform.  Many employers, I’m sure, have considered exactly what you are planning: capping employees’ hours of service in order to avoid the employer mandate obligation.  While nothing in the Patient Protection and Affordable Care Act (ACA) requires a large employer to offer a plan, interfering with an employee’s rights or rights that might arise in the future under an employer sponsored health benefit plan may run afoul of ERISA Section 510.  In the absence of case law directly on point (ERISA Section 510 hasn’t yet been applied to the ACA’s employer mandate provisions), it is possible to forecast some likely outcomes.

For example, assume an employer cuts the hours of full-time employees who are currently covered under an employer sponsored health plan resulting in their loss of coverage.  The employees could bring suit alleging a violation of ERISA Section 510.  The employer may argue that the hours of service reduction from full-time to part-time is independent of group health coverage, but rather was triggered by bona fide business considerations.  The burden would then shift to the employees to demonstrate that it was the employer’s intent to avoid the ACA large employer mandate penalties.  If facts favorable to the employee plaintiffs exist (e.g. if a copy of your question and any other evidence supporting employee claims came to light), it is reasonable that the employees could prevail.

Don’t lament too much.  It is possible to take action even at this late date to cut off the bleeding.  If you choose not to cap your employee hours to avoid ERISA Section 510 liability, you can get into compliance after January 1.  If you are out of compliance in January, February or even as late as March, you may face a potential large employer mandate penalty for those months if a full-time employee obtains subsidized coverage at a health insurance exchange.  However, you can offer coverage and cut off penalty exposure on a going forward basis (e.g., by February 1 or March 1).

For more information about this article or if you have other questions about health care reform contact our Health Care Reform team today at [email protected] or 800-333-4WGA. Write to Dear Jon at [email protected]. For more information and resources on Health Care Reform, visit www.wgat.com/health-care-reform.