Merchants Who Purchased Crops, And Who Helped Supervise Picking And Packing Of Crops, Are Not “Employers” And Not Liable For Unpaid Wages

In Martinez v. Combs, (— Cal.Rptr.3d —-, Cal., May 20, 2010), the California Supreme Court considered whether merchants who purchased crops from a company that employed, but failed to pay its employees for picking the crops, could be held liable for the employees’ wages after the company that employed them went bankrupt. The Court ruled that even though the merchants had representatives present in the field to help supervise the selection, picking, and packing of the crops, they were not “employers,” because they did not “suffer or permit” the employees to work, nor did they have the power to prevent the employees from working. Therefore, the merchants were not liable for the employees’ unpaid wages.

Facts

Miguel Martinez, and the other plaintiffs in this case, were seasonal agricultural workers (“Employees”), employed by Munoz & Sons (“Munoz”) to pick strawberries. While still in the field, Employees would immediately package some of the strawberries to be sold by Munoz to wholesale distributors, including Combs Distribution Inc. (“Combs”), and Apio, Inc. (“Apio”). Combs and Apio regularly had representatives in the field with the Employees to advise and supervise them on the selection of strawberries and on their packaging.

In 2000, Munoz began having problems paying his workers on time, leading some of them to stop working. Representatives of Combs and Apio persuaded Employees to continue to work, advising them that continuing to provide strawberries for Munoz to sell was the best way to enable Munoz to eventually pay them. However, Munoz subsequently went bankrupt and wages remained unpaid.

The Employees filed suit against the bankrupt Munoz, as well as Combs and Apio for unpaid minimum wages. The trial court granted summary judgment to Combs and Apio, and Employees appealed. The Court of Appeal affirmed the judgment except for one finding, in which it ruled that there were triable issues of fact on whether Combs had entered into an oral agreement to pay Employees. The Employees appealed the remainder of the Court of Appeal’s ruling to the California Supreme Court.

Decision

The case hinged on whether Combs and Apio were employers of the Employees for the purposes of Labor Code Section 1194, which states, “Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney’s fees, and costs of suit.” Although the word “employer” does not appear in that section, it is nonetheless logically inevitable that only an employer can be liable for the duty to pay wages, the Court said.

Reviewing a century’s worth of legislation and legislative intent in the employment arena, the Court concluded that the Legislature has never clearly defined “employer,” but has largely deferred to the Industrial Welfare Commission (“IWC”), in its issuance of industry and occupation wage orders, the determination of precisely who is an employer. Analyzing the IWC orders, the Court found three primary definitions, any one of which could make a party an employer: “(a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.”

Using those definitions, the Court determined, neither Apio nor Combs could be found to be an employer liable for Employees’ wages. Neither Apio nor Combs exercised control over wages and conditions, neither suffered nor permitted plaintiffs to work, and neither engaged the workers. Only Munoz made those decisions, the Court added. The Court found that Employees’ contention that Apio or Combs, by ceasing to buy strawberries from Munoz, could have caused Munoz to lay off the Employees, was unreasonably broad because it would lead to “a potentially endless chain of liability,” limited not just to the immediate purchasers of the strawberries, but to grocery stores and even consumers as well.

Further, the Court found that although Apio and Combs at times advised and oversaw the areas and strawberries to be picked, and thus to some degree influenced when and where the Employees worked, Munoz was the ultimate decision-maker on those matters, and on wages, hours, and working conditions. The evidence showed that Munoz alone–not Apio and Combs–was the employer of the Employees and was solely responsible for their payment. The ruling was affirmed.

Questions

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