S. G. Borello & Sons, Inc. v. Department of Industrial Relations

• Decision Date: 23 March 1989
• Court: California Supreme Court
• Parties: , 769 P.2d 399 S.G. BORELLO & SONS, INC., Plaintiff and Appellant, v. DEPARTMENT OF INDUSTRIAL RELATIONS, Defendant and Respondent. S003956.

Page 543

256 Cal.Rptr. 543

48 Cal.3d 341, 769 P.2d 399

S.G. BORELLO & SONS, INC., Plaintiff and Appellant, v. DEPARTMENT OF INDUSTRIAL RELATIONS, Defendant and Respondent.

S003956.

Supreme Court of California In Bank.

March 23, 1989.

[48 Cal.3d 344] [769 P.2d 400]

Marcus Max Gunkel, Karen K. Carey and Sims & Gunkel, San Jose, for plaintiff and appellant

Dressler & Quesenbery, Antone S. Bulich, Jr., Nancy N. McDonough and Carl G. Borden, Sacramento, as amici curiae on behalf of plaintiff and appellant.

H. Thomas Cadell, Jr., and Frank C.S. Pedersen, San Francisco, for defendant and respondent.

T. Kirk McBride, Sue E. Manahl, Rucka, O'Boyle, Lombardo & McKenna, Salinas, Joan M. Graff, Robert Barnes, William C. McNeill III, William G. Hoerger, Salinas, Joel Diringer and Michael Blank, as amici curiae on behalf of defendant and respondent.

EAGLESON, Justice.

We ordered review to decide whether agricultural laborers engaged to harvest cucumbers under a written "sharefarmer" agreement are "independent contractors" exempt from workers' compensation coverage. ¹ Our answer has implications for the employer-employee relationship upon which other state social legislation depends. ²

The grower claims the "sharefarmer" harvesters are independent contractors under the statutory "control-of-work" test, because they manage their own labor, share the profit or loss from the crop, and agree in writing that they are not employees. After taking evidence on the nature of the work relationship, the Division of Labor Standards Enforcement (Division) of the Department of Industrial Relations rejected these contentions. The superior court found that the Division's decision was supported by the evidence. However, these rulings were reversed by the Court of Appeal.

Like the Division and the superior court, we find the grower's arguments unpersuasive.

The grower controls the agricultural operations on its premises from planting to sale of the crops. It simply chooses to accomplish one integrated step in the production of one such crop by means of worker[769 P.2d 401] incentives rather than direct supervision. It thereby retains all necessary control over a job which can be done only one way.

Moreover, so far as the record discloses, the harvesters' work, though seasonal by nature, follows the usual line of an employee. In no practical sense are the "sharefarmers" entrepreneurs operating independent businesses for their own accounts; they and their families are obvious members of the broad class to which workers' compensation protection is intended to apply.

We therefore conclude as a matter of law on the undisputed facts that the "sharefarmers" are "employees" entitled to compensation coverage. Accordingly, we reverse the judgment of the Court of Appeal.

FACTS

On August 14, 1985, a deputy labor commissioner issued a stop order/penalty assessment against S.G. Borello & Sons, Inc. (Borello), a Gilroy grower, for failure to secure workers' compensation coverage for the 50 migrant harvesters of its cucumber crop. (Lab.Code, §§ 3700, 3710.1, 3722. )³ Borello appealed the citation to the Division. At the administrative hearing, Borello admitted the failure to secure coverage. It contended only that the workers were independent contractors excluded from the workers' compensation law. ( §§ 3351, 3353.)

A preprinted agreement signed by the heads of harvester families was introduced in evidence. The agreement, printed in English and Spanish, designates the signatory worker as a "Share Farmer" and states that his function is to "prepare for and harvest the cucumbers." Borello agrees to "furnish and prepare the land; plant the crop; cultivate, spray, and fertilize the crop; and pay all the costs incurred with respect thereto." The grower also agrees to furnish the boxes and bins into which cucumbers will be loaded, and to transport the harvest to the buyer.

The "Share Farmer" agrees "to furnish himself and the members of his family, but only the members of his own family, to harvest the crop...." (Italics in original.) "Harvest is agreed to mean the placing of the crop, clean and free from rubbish and debries [sic], in the boxes or bins supplied by [Borello]." The method and manner of accomplishing this task are left "solely" to the "Share Farmer," who nonetheless "agrees to utilize accepted agricultural practices in order to provide for the maximum harvest ... and ... to devote the necessary time to accomplish the harvest." The "Share Farmer" must supply his own tools and his own transportation to and from the field.

The agreement further provides that the crop harvested by the "Share Farmer" will be sold to a buyer "acceptable to both parties." Borello will retain title to the crop until it is sold, but the "Share Farmer" and Borello will split the gross proceeds equally. The contract specifies that the amount of the proceeds will depend exclusively upon price, weight, and grading data developed by the buyer. Copies of this data will be furnished to both parties. Borello undertakes to keep all necessary weight, grade, and price records, which shall be open to the "Share Farmer's" inspection.

Finally, the agreement recites that the parties deem themselves principal and independent contractor rather than employer and employee; that the "Share Farmer" is self-employed; that he will follow all child labor laws; that Borello will not withhold taxes; that the "Share Farmer" must file separate tax returns; and that Borello will not provide workers' compensation or disability insurance coverage. The contract is deemed personal and nonassignable except with the other party's consent.

Richard and Johnny Borello, principals of the company, testified as follows: Borello grows a number of crops, including cucumbers.

                All the other crops are harvested by employees on a wage basis.  In recent years, the only local market for cucumbers is the Vlasic pickle company.  Vlasic unilaterally determines the cucumber varieties it will accept and sets the prices it will pay.   [769 P.2d 402]  "The smaller the cucumber, the higher the price" per ton
                

The growing cycle for cucumbers is 60 days. Borello plants and cultivates the crop at its own expense, using its own pipe irrigation system and applying pesticides under Vlasic's direction.

The harvest workers--14 migrant families during the 1985 season--arrive around "2-3 weeks" before the harvest begins. They "[want] to go on a sharefarming basis" because "they make a lot more money." Some families have returned to work under the system for several years running, and it is commonly employed for cucumber harvest in the Gilroy area. Vlasic supplies the preprinted "Share Farmer" contract form, which Borello has a family head sign. The contract is read and explained to the workers, in Spanish if necessary.

The sharefarmers may contract for the amount of land they wish to harvest on a first-come, first-served basis. One or two acres or twenty to forty rows is common. The workers are "totally responsible" for the care of the plants in their assigned plots during the harvest period. Besides hoeing and weeding, the harvesters must prevent the vines from growing into the furrows between the rows where they might be stepped on and damaged. The latter task is accomplished simply by laying any errant vine into the proper position. The sharefarmers also collectively decide when to irrigate during this period, but Borello controls the water supply.

Borello maintains no field supervisor and does not direct the harvesters' work. They may set their own hours. The workers decide when to pick each cucumber at the correct size to maximize the profit. Profit incentive is the only guaranty of performance and quality control. Borello's only field employee is a tractor driver. He supplies empty boxes or bins, coded for each sharefarmer, and removes them to a loading area when full. The workers "could" transport their own harvest to Vlasic, but Borello handles the transportation because that is what Vlasic prefers.

Based on the code system, Vlasic keeps records of each sharefarmer's harvest. At Borello's request, the weekly check for the sharefarmer's share of proceeds is issued directly by Vlasic, though Richard Borello "physically" hands over the check and a copy of Vlasic's documentation. The sharefarmer then splits his share as he chooses with other family members working under him.

Borello's witnesses insisted that they have no right to discharge a sharefarmer or his workers during the harvest, and no recourse if the harvesters abandon the field. Despite contract terms which prohibit assignment of the sharefarmer agreement or employment of workers outside the sharefarmer's family, several sharefarmers have unilaterally assigned or sublet their plots when family emergencies arose. The workers leave once the cucumber harvest is over and do not harvest any other crops for Borello. Richard Borello conceded the grower provides no food or sanitary facilities for its cucumber harvesters.

On this evidence, the Division concluded that because of Borello's predominant control over the cultivation, harvest, and sale of its cucumbers, and the workers' lack of investment in the crop, they cannot be deemed "sharecroppers in the true sense." Hence, it ruled, they are employees rather than independent contractors. The penalty assessment/stop order was affirmed. ⁴ Borello sought mandamus to review the Division's order. (Code Civ.Proc., § 1094.5.) After a hearing, the trial court found the Division's finding supported by the evidence and denied the writ.

The Court of Appeal reversed. It concluded that Borello's relinquishment of control over the harvesters' work, its lack of authority to discharge them at will, their responsibility for furnishing necessary tools, the "result" method of compensation, the temporary nature of the work, and the mutual understanding embodied in the written contract all combine to render the...