Landmark labor decision could have ‘profound’ impact on California agricultural industry

California labor officials have issued civil penalties to an employer that fired a group of farmworkers it misclassified as independent contractors; labor experts say the landmark decision could have a “profound” impact on the agriculture industry.

The July 28 decision by the Agricultural Labor Relations Board resulted from a complaint filed by Marisol Jimenez, a farmworker on California’s Central Coast who was fired in 2017 alongside five other workers after raising concerns about not receiving proper paystubs with their weekly paychecks.

The ALRB — the state agency tasked with enforcing the Agricultural Labor Relations Act, California’s 1975 law that provides labor rights to the state’s agricultural employees, found the workers were “unlawfully terminated” as well as “willfully misclassified” by Cinagro Farms, Inc., a Ventura County-based farm that grows kale, lettuce, radishes, cilantro, and parsley.

The decision marks the first time the ALRB has recommended civil penalties for willful misclassification of farmworkers as independent contractors instead of employees, according to an ALRB news release on the decision.

“Misclassifying employees as independent contractors, at the very least, implicitly, conveys to the employees they have no labor rights, and therefore contains an inherent chilling effect on those employees’ free exercise of protected rights,” according to the ARLB’s decision.

The agricultural industry and farm labor contractors should “take notice” of the decision, said Ana Padilla, executive director of the UC Merced Community and Labor Center.

The decision sets “a very important, and I would even say, profound, precedent around the issue of misclassification in the ag industry,” Padilla said during an interview with The Bee on Tuesday.

In addition to the civil penalties, Cinagro Farms was also ordered to offer reinstatement to the six workers that were fired and compensate them for financial losses resulting from their unlawful termination. In addition, the company must end any further retaliation against workers exercising their protected actions, cease misclassifying workers, and comply with other technical reporting and notification requirements.

The total amount of penalties is set to be confirmed at a future date, and parties have 30 days to appeal the board’s decision. Padilla said it’s important that as a precedent-setting case, the fines act as a deterrent to especially farm labor contractors, from misclassifying workers, but acknowledges, however, that large multinational corporations might not feel the impact of the penalties.

However, Rob Roy, president and general counsel for Ventura County Agricultural Association and the attorney representing Cinagro Farms, in this case, said the decision is “concerning” for other reasons in an interview with The Bee on Wednesday.

Roy said he thinks the ALRB “went off the deep end” in applying Section 226.8 to this decision. Under California labor law Section 226.8, it is unlawful for any person or employer to willfully misclassify an individual as an independent contractor, and an offender can be fined between $5,000 to $15,000 per violation.

“We will be challenging that aspect of the decision in the Second District Court of Appeal,” he said. “We think that this is a very critical issue on behalf of the entire agricultural industry.”

Employer lack of concern is ‘chilling’ says labor board

Cinagro Farms’ failure to provide workers with proper classification, and therefore paystubs that reflected legally required employee deduction information had “serious downstream consequences” for the farmworkers, the ALRB said.

Farmworkers said that, as a result of the misclassification, they faced challenges with everyday needs, such as taxes, proof of medical insurance, or proving Medi-Cal eligibility for their children, according to the ALRB’s records.

Padilla explained that misclassifying employees as independent contractors “robs people” of basic rights like minimum wage, eligibility for certain types of health care insurance, occupational safety protections, and other benefits associated with formal employment.

However, she said that employee misclassification is a common issue typically associated with workers in the gig economy, truck drivers, janitors, and security guards, but the problem isn’t talked about enough in the agricultural industry.

“That’s why this ruling is a pretty big deal,” she said.

According to the ALRB’s records on the case, Cinagro attempted to “downplay the significance of its conduct” by arguing that aside from compensation, it treated workers like employees. Cinagro argued that it provided workers tools and adhered to Cal/OSHA requirements such as providing water and sanitation, as well as meal and rest breaks.

Padilla said that the cherry-picking of which laws to comply with reflects a “lack of understanding” of minimum labor standards.

ALRB documents show Cingaro owner Anthony Dighera admitted that he knew he was misclassifying workers as independent contractors but thought he wouldn’t get caught.

According to testimony found in the ALRB’s decision, Dighera had said, “I didn’t think there was any issue. I mean, do I know it’s wrong? Absolutely. Was I concerned that somebody was going to say something about it? No.”

The ALRB described his “cavalier lack of concern” as “chilling” and said this attitude reflects the “unfortunate realities of the agricultural workforce, which is particularly vulnerable to exploitation and abuse.”

Roy of the VCAA said misclassifying workers as independent contractors “rarely ever happens” in the agricultural industry but did not provide any evidence.

Ultimately, Roy said, Cinagro Farms is a “very small company just trying to get by.”

The case “comes down to an employer who doesn’t have a lot of money, who hired these agricultural workers, and did not take any taxes out of their paychecks because they just couldn’t afford it,” he said.

Grower group says case is part of growing ‘bias’ against farmers

Roy, of the VCAA, said he believes the ALRB is acting out of jurisdiction in its Cinagro decision.

The ALRB is supposed to be a remedial authority, Roy said, “meaning that they can only make whole the workers for losses of pay and put them back into their job position, not to impose ‘punitive’ remedies,” he said.

However, in an email statement to The Bee on Monday, Santiago Avila-Gomez, executive secretary of the ALRB, said “Labor Code section 226.8 authorizes the ALRB, and other entities within the Labor and Workforce Development Agency, to issue civil penalties for willful misclassification of an individual as an independent contractor.”

Meanwhile, the ALRB’s decision stated that “civil penalties are not necessarily ‘punitive’ in nature, but rather serve remedial purposes.”

Roy said he thinks the decision, as well as other pieces of proposed legislation, are part of a growing anti-farmer trend. He pointed to AB 2183, a bill currently in the legislature that would expand farmworkers’ options for voting in union elections. The bill would also allow the ALRB to issue civil penalties of between $10,000 to $25,000 to employers that commit unfair labor practices during union elections.

There seems to be a “very biased trend” against farmers by the California legislature and ALRB in its imposition of civil penalties against farmers, Roy said. “They have never done that in the history of the (Agricultural Labor Relations) Act.”

But Padilla, of UC Merced, said this decision marks an important new chapter for the ALRB: “It shows us that there are state regulatory bodies that will exact fines on cases of non-compliance (of worker classification).”