By Craig W. Anderson
Among the new laws taking effect in January, agriculture is affected by minimum wage, overtime, truck exemption, a new I-9 and the irrigator exemption.
"Ag will have to pay the bill and we'll have to deal with it," said Andrew Watkins, SJFB president. "We'll have to adjust our policies. Farmers won't know the full effect of this and other regulations for a few years and then it could be too late to repair any damage they caused."
About the spate of new regulations Watkins said, "It seems like this is the worst onslaught of regulation I've seen in decades."
With dozens of regulations demanding compliance could some new mandates be lost in the regulatory shuffle? "We can't be 100 percent compliant because there are too many rules and regulations to comply with," said Lodi winegrape grower Bruce Fry. "This will ultimately be the downfall of ag if it keeps heading in this regulatory direction."
Small farms, Fry said, are "going out" due to overregulation and corporate farms are growing as they absorb failing smaller farms. "The large farms are the only ones who can stay in business because they can cope with the regulatory overload. The state decries the increase in large corporate farms but it's California's regulatory policies that are causing the problem."
San Joaquin Farm Bureau is concerned about what the legislators are doing to members with their unending stream of regulations. "All growers are affected by regulations and not many have human resources or enough staff to monitor, track and maintain total compliance," said SJFB Executive Director Bruce Blodgett. "State legislators don't care if we're economically effective or not. They continue to craft laws, rules, regulations that require more time, paperwork and labor to handle."
He said state and federal agencies add new labor and pest management rules to a constantly changing regulatory landscape that demands nitrogen plans, water and air compliance and the eventual addition of the Food Safety Modernization Act and the all-encompassing Waters of the United States (WOTUS) from the EPA and the compliance load could become unbearable. WOTUS is currently on hold due to a judge's order.
"The dairy industry is already the most regulated industry and it has been since the '30s when pasteurization began," said Jack Hamm, dairyman and past SJFB president. "So, now all of agriculture is beginning to experience what we've been going through as an industry for years. Welcome to our world."
Joe Valente vineyard manager for Kautz Family Farms was of the same mind as the others, saying, "There are SO many regulations it's difficult to give each the attention it needs so some could get lost in the regulatory shuffle." He also said, "The intentions behind these regulations are good but the results are usually terrible."
Basically, the new minimum wage law says this: California's minimum wage went up to $10.50 per hour for businesses – including farms and associated businesses such as packers and processors – with 26 or more employees. Those with 25 or fewer on the payroll will have a $10 minimum wage until January 1, 2018.
The minimum wage is scheduled to gradually increase a dollar a year until, for large operations, it reaches $15 per hour in 2022. Smaller employers will have to pay $15 beginning in 2023. After these dates wages will be adjusted according to the Consumer Price Index.
For businesses with payrolls at the 25-worker level, a threshold level could create problems, according to Bryan Little, CEO of Farm Employers Labor Services (FELS), who said, "The change of the threshold for most employers will occur as a result of ramping up seasonally for pruning, harvest or some other activity."
Little said state law requires employers to notify employees of changes in their wage rate, with failure to comply resulting in significant penalties. "Employers will need to carefully consider whether it's worthwhile to move back and forth between the implementation schedules."
The State Department of Industrial Relations recommended that employers with payrolls that reach 26 during a given pay period, pay the higher wage for the duration of that pay period and beyond to minimize the risk of underpayment claims.
"We're paying above minimum wage to get qualified workers who like animals to work at the dairy," Hamm said. "Our industry generally pays above minimum wage." However, he said that with the divide between wages paid by large and smaller businesses, workers would be tempted to leave the $10 per hour company to work for the larger company paying more per hour.
Labor is the most expensive part of any business but employees who've been with a farm for a long time will make more than the minimum, Valente pointed out.
Blodgett said the tenor of the discussion regarding minimum wage by the Legislature was troubling because "workers were equated to slaves. This insulted agriculture and workers at the same time."
Labor vs. mechanization
With the minimum wage increasing the cost of labor, mechanization is becoming more prevalent in ag and, said Fry, "We'll have to cut costs to absorb it [minimum wage]. The answer is increasing mechanization to significantly reduce labor costs."
In the winegrape realm, grape-leaf pullers are replacing humans and, said Fry, "People are going to nuts instead of vineyards when replanting because harvesting, say, walnuts is entirely mechanized and less training is required for walnut workers as opposed to vineyard workers."
Brad Goehring has added mechanical leaf-pullers to the mechanical harvesters he's already using in his vineyards near Lodi and reduced the need for human workers by 95 percent. Now, only 15 workers are needed to pick grapes whereas 300 were needed before mechanization.
"The machines show up for work every day," Goehring said. "The government is de-incentivizing us from having labor."
Overtime for irrigators
Under the new overtime law, there is some uncertainty concerning overtime for irrigators and whether AB 1066 changed the overtime-exempt status of employees who spend more than half of their time in a workweek doing irrigation work.
FELS believes that, under AB 1066 the irrigator overtime exemption continues to exempt irrigators from daily overtime until at least Jan. 1, 2019.
However, FELS is concerned that a provision in AB 1066 can be read as applying the seventh-day overtime provisions in Labor Code section 510 to allagricultural employees, including irrigators and other employees exempt from the Industrial Welfare Commission Wage Order 14's overtime-pay provisions as of Jan. 1, 2017, which states: "Any work in excess of eight hours on any seventh day of a workweek shall be compensated at the rate of no less than twice the regular rate of pay of an employee."
Pickup truck BIT exemption
Pickup trucks used on farms and ranches and at home received an exemption from California's Basic Inspection of Terminals (BIT) due to a law – AB 1960 – signed in September. The BIT program requires those operating vehicles for business purposes pay a fee and submit to periodic inspections.
"The description of a pickup truck in the code is 11,500 pounds," said Andrea Fox who works on transportation issues for CFBF. "Most pickups of any size are now at least 12,000 to 13,000-14,000 pounds. It brought all of those into BIT requiring them to have a commercial license and all things commercial vehicles have to have. The bill fixed that."
The law makes an exception to the BIT program for farmers and ranchers provided the pickup isn't hired out, is driven by the farmer or his employees, and is driven only for the individual's business; the gross weight does not exceed 16,000 pounds; and the vehicle and trailer combined don't weigh more than 26,000 pounds with a total length under 40 feet. If the vehicles are used commercially they must participate in BIT.
Fox said, "If the pickup has a trailer on it and they haul equipment to another farm to do work, then it doesn't get the exemption." The exemption ends Jan 1, 2023, and the CHP and the DMV will report to the governor and Legislature on how well, or not, the law worked.
New I-9 regulations
A new I-9 form is now in use from the Department of Homeland Security, U.S. Citizenship and Immigration Services (USCIS). The form verifies employee eligibility to work in the U.S. and, said a statement from USCIS, "Use of the old form for new hires are invalid after Jan. 21. Employers who fail to use this revised form after Jan. 21 could face fines and penalties."
The form is considered a smart form as it lives on the USCIS website and can be completed electronically The user can also download and use the form electronically from their computer. While the form can be accessed on USCIS's website, using the electronic version is not mandated. The new I-9 can be printed and completed manually. The smart-form will ultimately need to be printed as employee and employer signatures are required.
Features include drop-down fields and electronic enhancements to make it easier to complete the form faster. The user will also be alerted if fields are left blank, ensuring all of the necessary information is gathered.
Additionally, the smart form contains a new feature that ensures information provided by the employee is consistent with their citizenship/immigration status. Once the box is checked by the employee that indicates their citizenship/immigration status, the fields that don't apply to the employee's status will be filed in as N/A. Another enhancement is the clarification of the "other names used" field to request only "other last names used." For complete information go to www.uscis.gov/i-9.
The Trump administration
Regulations take time to reach their maximum impact in the arena where they're in effect and SJFB is informing the membership, Blodgett said. "We want growers to be aware of what's happening, so we'll continue to keep after California and the federal government about regulations."
While it isn't a regulation, Blodgett said Farm Bureau continues working on having the estate tax eliminated. "There is no end to California's regulations, it's complete insanity with new rules all the time," Hamm said. "Is California's legislature using overregulating in conjunction with other challenges, to eliminate the dairy industry in California? Well, that could very well be the end game for some of those politicians."
Hamm said regulations are "well intentioned" but are rife with elements that create unanticipated bad news for the dairy industry and agriculture.
"Legislation creates laws and agencies such as the EPA which goes above and beyond as it also enforces its rules and doles out fines as they see fit," Valente said. "EPA's done this for a decade and it does what it wants without fear of being held accountable or reined in."
Both state and federal governments should realize that a tidal wave of regulations could cause a compliance failure which is exactly the opposite of the intended purpose of regulations. "It's one expense after another," Valente said, "and every regulation goes up incrementally, continually."
The Trump administration has said a goal held by the president is to significantly reduce by elimination dozens of needless regulations.
"We could get lucky at some point and contribute to the federal regulation reduction by electing a governor and legislature that understands agriculture," Watkins said. "And if they comprehend economics and business too, they could help eliminate our stifling regulations."
While Watkins' suggestion might seem to have originated in an alternate universe, Fry posits, "We've gotten a good look at how to work with regulations and regulators, we know how the system works. Now, we have to educate our state and federal politicians so they'll at least have knowledge foundation of our situation."
Will the Trump administration agree to this? "I don't know," said Fry. "But we'll find out soon enough."
Ag Alert and Bloomberg contributed to this story.