March 17, 2022

Produce Shippers Win California Federal Joint Employment Case

On October 15, 2021, the U.S. District Court for the Central District of California issued a very significant wage and hour decision for the produce industry, ruling in favor of two separate produce marketing companies based in Santa Barbara County, California, Red Blossom Sales, Inc. and Better Produce, Inc. (the “Marketers”).

Each Marketer separately sold fresh strawberries grown by one or more corporate strawberry Growers under the Marketer’s own proprietary labels to retailers or wholesalers for ultimate sale to consumers.  The Plaintiffs alleged the Marketers were either “joint employers,” under federal law and/or California law, and/or “client employers” under Cal. Labor Code Section 2810.3, and hence equally responsible for labor law violations that occurred during their employment by the Growers. The Court disagreed.

The Court found that neither of the Marketers were “agricultural employers” under the federal Migrant and Seasonal Worker Protection Act (“AWPA”), holding that the Marketers did not jointly employ the Plaintiffs with the Growers. The Court analyzed the relationships under the “economic reality” test established by federal case law and regulations, which evaluates whether the workers are economically dependent on the putative “agricultural employer.”

The Court found that Red Blossom’s food safety monitoring and compliance verification, and Better Produce’s quality control activities, did not make either of them joint employers, because neither party controlled the Growers’ planting or harvest dates, made decisions regarding the Growers’ use of pesticides, plant spacing or fertilizer application, or had the ability to modify the Plaintiffs’ working conditions. The Growers controlled the Plaintiffs’ hours, shifts and assignments.

The Court also found that the Marketers did not “employ” the Plaintiffs within the meaning of California Wage Order 14 applicable to persons employed in agriculture.  The Growers had exclusive power to hire and fire the workers, set their wages and hours, and tell the workers when and where to report to work.

Finally, the Court determined that neither Marketer had liability under California Labor Code Section 2810.3, which requires a “labor contractor” and a “client employer” to share liability for a labor contractor’s failure to pay wages. First the Court found no evidence of a traditional or formal labor contractor relationship whereby the Marketers paid the Growers a fee in return for the Growers providing labor. The Court noted that the payment structure did not indicate that the Growers supplied labor, because the Growers received net sales proceeds from the sale of strawberries, while the Marketers were paid commissions paid on gross sales.

On February 1, 2022, the Plaintiffs appealed the District Court’s decision to the Ninth Circuit Court of Appeals.

Red Blossom Sales, Inc. was represented by Anastassiou & Associates, Salinas, California and Sheppard, Mullin, Richter & Hampton LLP, Los Angeles, California.  Better Produce, Inc. was represented by Twitchell and Rice, LLP, Santa Maria, California, and Law Office of Todd C. Hunt, APC, Westlake Village, California. The Plaintiffs were represented by California Rural Legal Assistance Foundation, Sacramento, California, and Hadsell Stormer Renick & Dai LLP, Pasadena, California.

This article was submitted with permission for republication by Michelle Deleissegues. Director of Marketing, Red Blossom Sales.