Misclassification of Employees: A Per Se Violation Under the Agricultural Labor Relations Act By Pat Moody, Catherine Houlihan and Vismaad Gondara, Barsamian & Moody Can non-compliant paystubs in violation of Labor Code section 226(a) lead to an unfair labor practice under section 1153(a) of the Agricultural Labor Relations Act (the “Act”)? Shockingly, or not so shockingly in California, the answer is yes, according to a recent ruling by the Agricultural Labor Relations Board (the “ALRB”). It is now the ALRB’s position that an employer’s misclassification of workers, in and of itself, is an unfair labor practice in violation of the Act. Even more significant is the Board’s holding that, absent any authority and in a groundbreaking divergence from years of Board precedent, employers may be subject to civil penalties under Labor Code section 226.8 for the willful misclassification of employees as independent contractors.
The ALRB’s recent decision in Cinagro Farms, Inc. (2017-CE-008-SAL) (48 ALRB No.2), related to the employment and alleged termination of a group of farmworkers. Upon hiring, the employer told the workers they would be receiving gross pay without deductions. The workers allegedly complained multiple times about the form of the checks and the lack of paystub information, such as year-to- date pay, hours worked, rates of pay and payroll tax deductions. Although the employer never expressly told the workers they are independent contractors, it allegedly instructed its bookkeeper to treat the workers as “vendors” [independent contractors] rather than employees. A few months after hiring the first group and receipt of their complaints, the employer hired a different group of farmworkers and advised the previous group there was no work for them “until further notice.” Following a hearing, the ALRB held that the employer constructively terminated the first group of workers in violation of section 1152, which protects workers’ “concerted activities.” According to the ALRB, the employer did not need to expressly communicate to the workers that they were being “treated” as independent contractors, rather, the deficient paystubs by themselves constituted an implied admission to the workers. In issuing its decision, the Board held that the employer’s misclassification of the employees as independent contractors “implicitly conveyed to the workers that they have no labor rights.” Earlier this year, the ALRB had invited briefs from interested parties on the question of whether misclassification of agricultural employees as independent contractors constitutes an unfair labor practice and the scope of the remedies available to the ALRB in cases of misclassification. Specifically, the ALRB requested briefs addressing three questions, one of which was “If the Board finds an agricultural employer willfully misclassified agricultural employees as independent contractors, what is the
scope of the Board’s authority to assess civil penalties pursuant to section 226.8, if any?” Barsamian & Moody and a whole host of others filed briefs in support of Cinagro’s position, specifically providing authority evidencing that the ALRB lacked authority to impose civil penalties. The ALRB ultimately rejected the arguments of the agriculture industry representatives and found that the misclassification was a per se violation of section 1153(a) of the Act and that the ALRB has the authority to assess civil penalties under Labor Code section 226.8. Labor Code section 226.8 provides, in pertinent part, that it is “unlawful for any person or employer to engage in…[the] [w]illful misclassification of an individual as an independent contractor.” Section 226.8 can be enforced through civil proceedings in a court of competent jurisdiction (e.g., California Superior Court) or with the Labor and Workforce Development Agency (“LWDA”) and its departments, divisions, commissions, boards, or agencies. Notably the LWDA oversees seven agencies, including the Department of Industrial Relations (Labor Commissioner / Department of Labor Standards Enforcement (“DLSE”)) and the ALRB. Section 226.8 allows for the imposition of civil penalties, meant to punish the wrongdoer, upon the determination that a person or employer has engaged in the willful misclassification of an individual as an independent contractor. The available penalties include a penalty of not less than $5,000 and no more than $15,000 for each violation; which in this case was each employee misclassified. Employers who are found to engage in a “pattern or practice” of willful misclassification are subject to a minimum civil penalty of $10,000 with a maximum penalty of $25,000 for each violation. Section 226.8 allows for the imposition of additional fines and penalties as permitted by law, including required positing of a notice of violation. As general background, while the ALRB has broad discretion in ordering an employer take an
28
SEPTEMBER | OCTOBER 2022
Western Grower & Shipper | www.wga.com
Made with FlippingBook - Online Brochure Maker