CA Supreme Court Clarifies Who Cannot Be Sued by Workers

Background

About 180 farmworkers sued Guadalupe-based Apio Inc. and Combs Distribution Co. of Santa Maria ' the companies that contracted with the workers' boss, Isidro Munoz Sr., to market and sell strawberries ' after their pay dried up in the summer of 2000. The workers claimed that the companies qualified as employers after their boss's insolvency because of old IWC wage orders that defined employers as those who have control over wages, hours or working conditions and suffers or permits any person to work. They claimed that the companies benefited from their labor and essentially ran Munoz's operations by contracting to be the sole judge of the crop's quality, and sending personnel into the field to confirm that the strawberries were ready for market.

The Ruling

In her ruling, Justice Kathryn Mickle Werdegar found those arguments unreasonably broad and held that Munoz and his foremen had the exclusive power to hire and fire his workers, to set their wages and hours, and to tell them when and where to report to work. The plaintiffs' argument, she wrote, could extend liability to grocery stores that purchased the strawberries and consumers who ate them. That the IWC has not, she continued, in nearly a century of administering the minimum wage, seen fit to propose plaintiffs' downstream-benefit theory of liability strongly suggests the theory is not reasonably necessary to permit the commission to discharge its statutory responsibilities.

The IWC

Werdegar's ruling delved deeply into the history of the IWC, finding ' to the employee advocates' pleasure ' that the Legislature in 1913 definitely intended the organization to be the final arbiter defining employment relationships in suits filed under the state Labor Code. Courts must give the IWC's wage orders independent effect, she wrote, in order to protect the commission's delegated authority to enforce the state's wage laws and, as appropriate, to provide greater protection to workers than federal law affords.

Mike McKee is a reporter for The Recorder, an ALM sister publication of this newsletter in which this article originally appeared.

For 97 years, neither California legislators nor the courts ever clarified who qualified as an employer under the state Industrial Welfare Commission's (IWC) wage orders. That changed on May 20 when the California Supreme Court decided, in part, who does not qualify ' at least in business relationships where employees work for independent contractors.

Specifically, the court held unanimously that farmworkers could not seek unpaid wages from the two companies that marketed strawberries they picked for their boss, an independent contractor who went broke while they worked for him. The ruling in Martinez v. Combs , 10 C.D.O.S. 6119, shot down the hopes of not only thousands of farmworkers, but janitors, food service workers and others dependent on jobs in which employers contract with third parties for services.

William Hoerger, who argued the farmworkers' case, said he was immensely disappointed that his clients were walking away with their hands empty. But he was thrilled that the high court reaffirmed the Legislature's 1913 decision that gave the IWC the unfettered authority to decide employer liability in wage cases. The result of this is really to keep California in the mainstream of state protections for workers, Hoerger, the director of litigation, advocacy and training for San Francisco-based California Rural Legal Assistance Inc., said. It's an important case for the future. The California Employment Lawyers Association, of Encino, CA, also embraced the ruling, saying in a prepared statement it acknowledges the constitutionally derived powers of the IWC.

Background

About 180 farmworkers sued Guadalupe-based Apio Inc. and Combs Distribution Co. of Santa Maria ' the companies that contracted with the workers' boss, Isidro Munoz Sr., to market and sell strawberries ' after their pay dried up in the summer of 2000. The workers claimed that the companies qualified as employers after their boss's insolvency because of old IWC wage orders that defined employers as those who have control over wages, hours or working conditions and suffers or permits any person to work. They claimed that the companies benefited from their labor and essentially ran Munoz's operations by contracting to be the sole judge of the crop's quality, and sending personnel into the field to confirm that the strawberries were ready for market.

The Ruling

In her ruling, Justice Kathryn Mickle Werdegar found those arguments unreasonably broad and held that Munoz and his foremen had the exclusive power to hire and fire his workers, to set their wages and hours, and to tell them when and where to report to work. The plaintiffs' argument, she wrote, could extend liability to grocery stores that purchased the strawberries and consumers who ate them. That the IWC has not, she continued, in nearly a century of administering the minimum wage, seen fit to propose plaintiffs' downstream-benefit theory of liability strongly suggests the theory is not reasonably necessary to permit the commission to discharge its statutory responsibilities.

The IWC

Werdegar's ruling delved deeply into the history of the IWC, finding ' to the employee advocates' pleasure ' that the Legislature in 1913 definitely intended the organization to be the final arbiter defining employment relationships in suits filed under the state Labor Code. Courts must give the IWC's wage orders independent effect, she wrote, in order to protect the commission's delegated authority to enforce the state's wage laws and, as appropriate, to provide greater protection to workers than federal law affords.

Mike McKee is a reporter for The Recorder, an ALM sister publication of this newsletter in which this article originally appeared.