October 4, 2016

Dark Clouds on the Horizon: Gov. Brown Signs Ag Overtime Bills

On September 12, 2016, Governor Jerry Brown signed into law AB 1066, which will gradually lower the daily and weekly hours of work thresholds for paying overtime to agricultural employees.  Currently, agricultural employees are entitled to be paid overtime when working over ten hours in a workday or more than six days in a workweek.  On the seventh day of work, the first eight hours worked must be paid at 1½ times the employee’s regular rate of pay, and any hours over eight must be paid at twice the employee’s regular rate of pay.

Beginning January 1, 2019, agricultural employees must be paid 1½ times their regular rate of pay for all hours worked over nine in a workday or over 55 hours in a week.  Employers of 25 or fewer employees have a delayed phase-in, commencing January 1, 2022.

Beginning January 1, 2020 (2023 for small employers), the weekly overtime threshold drops to 50 hours in a week.

By January 1, 2021, (2024 for small employers) ag employees will be paid overtime after working eight hours in a day.  And in 2022 (2025 for small employers) ag employees will be on par with most other non-exempt employees, getting overtime after eight hours in a workday or after 40 hours in a week.

The law allows the governor to temporarily suspend the scheduled overtime phase in, if the governor puts the brakes on a scheduled minimum wage increase due to a slowdown in the economy.  If that were to happen, the implementation dates would have to be postponed by one year.  This authority to stall the overtime phase-in would end upon the final phase-in of the overtime provisions (i.e., January 1, 2022) or January 1, 2025, whichever occurs first.

The new overtime rules affect all individuals “employed in an agricultural occupation” which has the same meaning as the Industrial Welfare Commission Wage Order 14 definition for Agricultural Occupations.  This means that the overtime exemption for irrigators will go by the wayside.


Day of Rest Provisions

There is another aspect to AB 1066 that has received little notice.  Under existing law, no employer may cause his or her employees to work more than six days a week.  Any person who violates this provision is guilty of a misdemeanor.  Agriculture has been one of the exceptions to this rule.

Labor Code § 554 specifically exempts agricultural employees from the one day’s rest in seven requirement.  Rather, IWC Wage Order 14 requires that agricultural workers be paid overtime for the first eight hours on the seventh day of work and double the employee’s regular rate of pay for all hours worked over eight on the seventh day of work in the workweek.

AB 1066 likely eliminates the agricultural exemption from the day of rest provisions.  The preamble of the bill suggests it is the legislative intent to eliminate all of the Wage Order 14 exemptions.  There may be one saving grace: Labor Code section 515(b) allows for the continuation of the order’s exemptions, but it is unclear how this could occur and there is little reason to believe the Department of Industrial Relations would make such a decision to maintain the day of rest exception for agriculture after the legislature just declared that ag workers should be treated the same as all other workers, regardless of the economic realities of harvesting a perishable crop.

Another potential out is found in the language of Labor Code sec. 554, which states:

Nothing in this chapter shall be construed to prevent an accumulation of days of rest when the nature of the employment reasonably requires that the employee work seven or more consecutive days, if in each calendar month the employee receives days of rest equivalent to one day’s rest in seven.  The requirement respecting the equivalent of one day’s rest in seven shall apply, notwithstanding the other provisions of this chapter relating to collective bargaining agreements, where the employer and a labor organization representing employees of the employer have entered into a valid collective bargaining agreement respecting the hours of work of the employees, unless the agreement expressly provides otherwise.

However, this section provides no comfort to farmers or farm employees who seek to maximize earning potential during the harvest season.  It is impractical under a typical fresh produce harvest season to schedule days of rest equivalent to one day’s rest in seven in a calendar month.  The elimination of the day of rest exception for agriculture will likely result in a reduction to farm employee take home pay, as farmers are forced to reduce hours to comply with the new day of rest requirements.

To make matters worse, the legislative analysis of AB 1066 says the bill “provide[s] that all other provisions of existing law regarding compensation for overtime work shall apply to workers in an agricultural occupation beginning January 1, 2017.”

It is currently unclear whether the day of rest exception for agriculture will be eliminated beginning January 1, 2017 or later with the phase-in of the new overtime thresholds.  The same question remains for the irrigator exception.

If January 1, 2017 is the operative date, it will have a profound effect on small farmers and large farmers immediately.  It is common for harvest workers to work seven days during the peak of harvest—a perishable crop does not rest; it must be picked when it’s ready.  AB 1066 eliminates the flexibility of Wage Order 14 that permits farmers to schedule seven days of work, even though it requires that work be paid at premium rates.

Finally, AB 1066 will likely eliminate Wage Order 14’s “truck driver” exception and modify the current exception for collective bargaining agreements.  It is not yet clear whether certain other employees currently exempt from overtime under Wage Order 14 will continue to be exempt.  These employees include:

•   Employees who are primarily engaged in “intellectual, managerial, or creative” work which requires exercise of discretion and independent judgment for which they earn less than two times the monthly state minimum wage for full-time employment;

•   Parents, spouses, children, or legally adopted children of the employer;

•   Employers who employ fewer than five persons covered by Wage Order 14; and

•   Employees who are covered by Wage Orders 8 or 13; among others.

Western Growers will be working to obtain much needed clarity in the weeks to come.