High Court Orders Worker Protections for ‘Share-Farmers’

SAN FRANCISCO —  The state Supreme Court, in a stunning blow to a widespread practice in California agriculture, ruled Thursday that growers must provide workers’ compensation coverage and other protections to laborers who work for a share of the crop instead of an hourly wage.

In a 5-2 decision, the court held that these so-called “share-farmers” are not “independent contractors” exempt from coverage but rather are “employees” entitled to the legal protection accorded ordinary farm workers.

The court majority, in an opinion by Justice David N. Eagleson, said that allowing growers to escape from providing workers’ compensation insurance would offer “a disturbing means” for them to avoid a wide range of other protective legislation--such as wage and hour laws, child-labor restrictions, health and safety regulations and anti-discrimination statutes.

The ruling could affect an estimated 20,000 farm workers in the state who have signed at least some form of agreement to perform certain tasks in return for a portion of the sale of such crops as cucumbers, strawberries and peas, authorities said.

And, while the decision applies directly only to farm workers, attorneys on both sides of the dispute said the legal standards it sets could affect future cases in other fields--ranging from the garment industry to taxi-driving to the computer business--where certain workers are treated as contractors or consultants, rather than employees.

In a scathing dissent, Justice Marcus M. Kaufman called the ruling “one of the sadder episodes in the history of this court--a wholly unnecessary and inappropriate intermeddling in the affairs of and curtailment of the liberties of California’s residents.”

Kaufman, joined by Justice Edward A. Panelli, who picked cucumbers as a youth in the Santa Clara Valley, said the ruling “will end up harming the very persons it is paternalistically intended to help.” Under the long-established practice, workers have been able to earn considerably more as share-farmers than they could as hourly employees, the dissent noted.

The justices overturned a ruling by a state Court of Appeal that had exempted S. G. Borello & Sons, a Gilroy grower, from providing compensation insurance to about 50 migrant workers who harvested pickle cucumbers under a share-farming agreement with Borello and Vlasic Pickle Co.

Legal services attorneys joined state officials in attacking the arrangement as a subterfuge, warning that if the appellate ruling were upheld, it would invite employers in other industries to adopt similar practices to avoid worker protective laws.

Growers Rebuffed

The high court rejected grower contentions that the workers actually functioned as independent contractors because they managed their own labor, provided their own tools and transportation, set their own hours and decided when to harvest the crop, all free of interference by the landowner.

While workers come on the land to irrigate, weed and pick the crop, the owner planted, cultivated and arranged the sale of the crop, and thus maintained “all necessary control” over the workers’ role, the court said.

Harvesting the crop involves only “simple manual labor” where no supervision is required, it said.

Unlike sharecroppers, who live on a farm as tenants and operate the property and split the proceeds as a form of rent, the share-farmers at Borello make no real financial investment in the business, the court pointed out.

“In no practical sense are the ‘share-farmers’ entrepreneurs operating independent businesses for their own accounts,” Eagleson wrote. “They and their families are obvious members of a broad class to which workers’ compensation protection is intended to apply.”

Wage Cut Seen

Borello’s attorney, Marcus Max Gunkel of San Jose, said the ruling, as a practical matter, would eliminate share-farming in its present form and force growers to hire supervisors and absorb other costs required under state protective laws. Meanwhile, he said, workers who had been receiving from $8 to $20 an hour as share-farmers now more often will be receiving the minimum wage of $4.25 as employees.

“There are implications well beyond agriculture,” Gunkel said. “Eventually, there could be a tremendous impact in other industries where people work independently, on their own, and are not now covered by workers’ compensation or other laws.”

The attorney, acknowledging the pro-business reputation of the current court, observed: “A lot of people will be surprised at this ruling. This supposedly conservative court has taken a very liberal stance on this issue.”

William G. Hoerger of San Francisco, an attorney for California Rural Legal Assistance, agreed that the ruling could have a broad effect if its reasoning is applied in future cases.

Impact Weighed

“It could have a tremendous impact on the current trend where employers are trying to evade their responsibilities under wage and hour laws by transforming employees into contractors,” he said.

The case arose in 1985 when the state Department of Industrial Relations cited Borello for failing to obtain workers’ compensation coverage for the estimated 50 people harvesting its cucumber crop.

Borello said it was not required to provide coverage because the workers were share-farmers, performing under independent contract requiring them to care for assigned lots in exchange for a portion of the crop sales.

A Santa Clara County Superior Court upheld the department’s action but a state Court of Appeal in San Jose reversed the decision, saying that Borello had relinquished substantial control of the operation, thus rendering the workers as independent contractors under the law.

State officials, apparently because of a sparse factual record in the case, decided at first not to appeal the ruling. But attorneys for California Rural Legal Assistance sent a letter to the court urging the justices to review the case on their own initiative. The court, in an unusual action, decided to do so.

In another matter Thursday, the court widened its review of Proposition 103, agreeing to decide whether a group of Travelers Insurance companies may be barred under the initiative from withdrawing from the car insurance business in California.

The court, in a brief order, said it would hear a constitutional challenge to an order issued in January by state Insurance Commissioner Roxani Gillespie requiring four Travelers subsidiaries to continue to renew about 22,000 car insurance policies they had planned to cancel in abandoning the California market.

The companies contended that by filing notice of withdrawal the day before the initiative was passed on Nov. 8, they were free to withdraw.

The validity of the cancellation restrictions already has arisen in a separate case in the broad-ranging attack by insurers on the measure in which the court already has heard arguments and is due to render a decision by June 7.