Q: As a FLC, I have growers that want to make payments to employees that we employed and that worked for them. How can we handle this?
A: There are several important considerations in this situation. The following is not legal advice. We recommend seeking legal advice for all issues with AB 1513 that are not clearly spelled out by the statute itself or by the information provided by the California Department of Industrial Relations. What we have done is highlighted some specific issues that may require specific legal advice as well as practical considerations when dealing with this question.
First, AB 1513 does not cover situations or scenarios where multiple entities are making the safe harbor payments to employees. Growers may have liability as joint-employers and may want to take advantage of the safe harbor provisions. They may have other reasons for wanting to make the payments directly to the employees, or want to employ third party services to make the payments on behalf of the FLC/grower.
Whether it is allowed under the bill could be a matter of interpretation of the statute. We advise seeking legal counsel on this matter to make sure that splitting up the responsibility of making the safe harbor payments protects your rights to an affirmative defense in the event of future legal action. You may also want to discuss with your grower their legal interpretation of the statute.
If multiple parties are making payments, there is a question of whether all parties must use the same method (4% or “actual sums due”). While most of our customers appear to be using the 4% method, some growers might feel that the actual less paid method is more advantageous depending on their circumstances. The DIR has indicated that a single employer should use a single method for all employees. It has not addressed (and will likely not address) what should be done in cases where multiple entities are making safe harbor payments to the same employees.
Keep in mind that the phrase used in the legislation “actual sums due” is not defined and it is left up to the employer to arrive at a definition when using the “actual sums due” method. (The DIR has indicated to us that this phrase could be defined by a court in the course of future legal action.) This could be another issue which requires legal advice.
(For purposes of calculating the actual sums due, our Safe Harbor report uses the regular rate of pay calculation mandated by AB 1513 for wages from 1/1/16 on for the “actual sums due” for wages paid during the Safe Harbor period, and subtracts what was actually paid for rest and recovery period to arrive at a net due amount.)
If the grower is going ahead with safe harbor payments, the first issue is simply getting the information to the grower that will be needed for the grower to calculate the correct amounts to base the payments on.
The grower may request reports from you with the labor detail on which to base the payments. The Labor Analysis Report might be used for this purposes. Other reports may be required to provide supplemental information. The new AB 1513 reports may be used to provide the grower with the information needed.
Although it is not required by the legislation, we would recommend that the grower identify that the payments made to the employee are on behalf of the farm labor contractor that actually employed the employee on the statement that they provide to the employee. Further, it may be a good idea to include the state and or federal employer ID numbers of the farm labor contractor on this statement to clearly identify that the employee was not directly employed by the grower, but by the FLC.
Once the grower has made the safe harbor payments, the information on the employees paid and the payment amounts made by the grower will need to be provided to the FLC.
When using the 4% method, the employer is supposed to list all of the pay periods during the Safe Harbor period on the statement that accompanies the check. When a grower makes the payment, the statement that they provide would only list the pay periods in which the employee was working for that grower. Pay periods where the employee may have worked for other growers would not be included on this statement.
As the FLC, you would need to list all of the pay periods during the Safe Harbor period on their statement that they provide. It may be necessary to indicate which pay periods where safe harbor compensation was made separately by the grower. You will either need to not calculate the safe harbor amount for these pay periods, or go ahead and include them in your calculations and net out the payments made separately by the grower at the end of the statement.
In cases where the employee worked for multiple growers during one pay period, it may be necessary to split a check amount up into separate amounts paid for by the FLC and amounts paid by the grower(s).
In this scenario it may be necessary for the FLC to delay safe harbor payments made to employees that worked for multiple growers until the grower has made their own payments and provided the information on the payments made to the FLC.
Again, this scenario is not covered by the legislation, so it does not say what information the employees’ statements should include in a scenario where multiple parties are making the safe harbor payments. Providing a reconciliation for the employee as to the separate amounts paid by grower(s) on the FLC’s statement seems to be the logical thing to do.
Since there will undoubtedly be checks returned as undeliverable, growers and FLCs may also want to coordinate and share information about invalid addresses and amounts forwarded to the state.
There may be other issues to consider when multiple parties are making payments to the same set of employees.
We are currently completing work on the Create Safe Harbor Checks and Employee Safe Harbor Statement options. The initial version of the statement will be created under the assumption that the FLC is making all of the safe harbor payments. Modifications to the statement may be made later as we determine the exact needs of the FLCs in this situation.
Q: A grower appeared on the summary totals of the Safe Harbor Report with an amount due for breaks. Employees for this grower are only paid on an hourly basis. Why is the program calculating breaks due when there are no piecework wages for this grower?
A: There are a couple of possibilities. You can narrow this down by using the new Detail Report by Grower to see exactly what employee/checks are contributing to the breaks due calculation.
One possibility is that you have an employee that worked for that grower as well as a second grower in the same week, and was paid on a piecework basis for the second grower. As soon as there are any piecework wages in a pay period, all of the wages paid in that pay period are subject to the safe harbor calculations, even if the other wages are paid on an hourly basis.
This means that if you are using the 4% method, 4% of all of the wages (less the breaks paid) are calculated as due. AB 1513 does not let you calculate 4% of the piecework wages only. For the grower with hourly wages, the breaks are included in the wages paid, so the program looks up how much break time was due in the break time table and multiplies that by the hourly pay rate to determine how much break time was paid. This is subtracted from the 4% total due.
If you are using the actual method, then the same lookup is performed on the hourly wages to see how much break time is due, but the break wages due is based on multiplying that time by the regular rate of pay (to match the new break rules in AB 1513). It is possible that the piecework wages may raise the regular rate of pay above what was paid on an hourly basis. In this case, the grower that only had hourly wages will end up owing break time.
A second possibility is that there are some wages that are incorrectly being categorized as piecework. After identifying the employee that is causing the amount to appear, check the wage types used on the check(s) for that employee. If any of the wage types are set to Piecework as the Base Pay Type, then the program is considering those wages to be piecework. If the wages are not supposed to be considered piecework wages for purposes of the Safe Harbor Report, you can override this status by using the Pay Types button on the Safe Harbor Report to designate a different Base Pay Type for those wages.