YAKIMA, Wash. (AP) - A Washington Supreme Court ruling on piece-rate pay last spring unleashed an avalanche of lawsuits against most of the state’s tree fruit companies. More than 50 class-action lawsuits have been filed against individual companies.
Most companies of any size have been targeted. Claims for double-pay go back three years, and damages and attorney fees range into the millions of dollars. The ruling - and the lawsuits it spawned - make the future of piece-rate pay in the state uncertain.
Piece rate refers to paying workers for how much fruit they pick instead of paying them by the hour. It’s been used for decades. Workers say they like it because they make more money. Growers like it because they say it’s the most economical pay method. They say the loss of it would increase their costs.
“It’s been around a long time because it has worked. It’s a problem when rules of the road get changed by court action that’s retroactive and of immediate effect with no notice. It’s disruptive and creates uncertainty and additional stress,” Jon DeVaney, president of the Washington State Tree Fruit Association, told the Capital Press.
“I think it would be best for the industry and our employees to continue to be able to use piece rate because we get a high level of productivity and employees are able to earn a higher wage,” said Sean Gilbert, co-owner of Gilbert Orchards in Yakima.
Last year, his pickers on piece-rate averaged the equivalent of $18 to $19 per hour, he said. That’s significantly more than the $11.50 per hour state minimum wage in effect then or the $14.12 per hour minimum wage that was required for foreign guestworkers.
Court rulings
In 2015, the state Supreme Court ruled that piece-rate farmworkers are entitled to separate pay for 10-minute rest breaks.
In the subsequent Carranza v. Dovex ruling last May, the court said that piece-rate farmworkers must also be paid separately and at least at the state’s minimum wage for time on the job when they’re not picking fruit because of weather delays, training, meetings and travel between orchards. It’s generally referred to as down time or non-productive time.
The 5-4 court majority ruled that not paying workers separately for down time conceals not paying them for all the hours they work and violates the state’s minimum wage law. The court left open the question of whether down time such as climbing up and down ladders and emptying picking bags into bins was included.
Justice Debra Stephens, one of the court’s four dissenters, said the majority disregarded that piece-rate pay is calibrated to include down time. She argued the court was rewriting the minimum wage law.
Brendan Monahan, a Yakima attorney versed in tree fruit and labor litigation, said the court made an “unforced error” by prohibiting work-week averaging, the practice of adjusting a worker’s hourly and piece-rate wages in a week to ensure the worker receives at least the minimum wage.
The court ruled piece-rate workers must receive at least the minimum wage for each hour worked and that averaging is no longer permissible. That, Monahan said, is at odds with industry practice, federal law and state Department of Labor & Industries guidance.
“The uncertainty is that the court did not say what is down time. Is it five minutes or 10 minutes or 15 minutes? And the court didn’t say what all types of things are included. Therefore it’s too hard to calculate,” said Dan Fazio, executive director of the farm labor association WAFLA.
Since the ruling, more than 50 companies have been sued in class action suits, most of them brought by a Tacoma attorney, India Lin Bodien, who has advertised for and solicited workers willing to sue, Fazio said.
Lin Bodien did not respond to requests for comment, but her website states that “since starting her law firm in 2013, India has represented over 35,000 workers in Washington state in class action wage and hour cases….”
Monahan said he’s aware of more than 20 such lawsuits but would not say how many he is helping growers defend against.
“Every one of these are potential million-dollar-plus lawsuits. The defendant must pay all the legal bills for the plaintiff and that’s why they settle so quickly,” Fazio said.
Most growers don’t have the depth of records to prove how much time piece-rate workers spent in non-picking tasks going back three years, so it’s “far more economical to negotiate the best settlement you can,” Fazio said.
The settlements are costly. For example, Stemilt Ag Services, a subsidiary of Stemilt Growers LLC in Wenatchee, reached a $464,000 settlement in a class action suit a year ago over back pay for the rest breaks of piece-rate workers. Stemilt Growers also is the parent company of Dovex Fruit Co.
Recommendations
WAFLA facilitated the hiring of 13,848 H-2A-visa foreign guestworkers out of the 24,862 that worked in Washington last year. Like domestic workers, most H-2A workers are paid piece rate for picking, thinning and sometimes pruning and an hourly minimum for tree training and other chores.
Since watching piece rate come under attack in California in 2013, Fazio has been recommending growers switch to the state or H-2A hourly minimum with bonuses for certain amounts of fruit picked.
He also recommends growers require workers to sign arbitration agreements as a condition of employment. The agreements allow individual arbitration but bar class-action lawsuits.
Most employers are implementing arbitration agreements with new hires but it’s tricky to do it with current employees, Fazio said.
The “vast majority” of growers continue to use piece rate because it costs them less for the volume of fruit picked than the hourly minimum wage, he said.
Small growers with fewer than 40 employees are probably safer from class-action lawsuits than larger employers, Fazio said.
One grower, Monahan said, has switched to “super-premium” hourly rates of $18 to $20 with strict enforcement of minimum production levels.
All of the various pay methods carry their own risks, he said.
Not all settle
Gilbert and many other growers were sued the day after the May 10 Carranza v. Dovex ruling, which he said seemed to be orchestrated. While many growers settled quickly, Gilbert has not.
“Most of the things we were sued on did not pertain to us. Meaning we were already doing the things they were alleging we weren’t doing,” Gilbert said. “Things like education and training we had already been paying for and continue to do so. It’s an ongoing suit. We are leaning on our records and policies.”
Gilbert Orchards has about 800 year-round employees, and the number peaks at 1,100 with seasonal workers added during Gala and Honeycrisp harvest, he said.
“Our cost per unit, lug in cherries or bin in apples, is lower when we do piece rate. It increases the productivity per person,” Gilbert said. “Most growers would like to continue using piece rate. All we need is clarity on what is meant by non-productive time.”
The court ruling is vague enough that the legal basis for the lawsuits is not clear, DeVaney said. Because of that the burden is on the plaintiffs, and many settlements are being reached for smaller amounts than are being sought, he said.
“If you have a clearly defined internal policy on how you compensate for non-production time, then your legal risk is significantly reduced even in the absence of a clearly defined definition by the court,” DeVaney said.
The main options for growers, he said, are to continue using piece rate with clear policy and documentation of pay for non-production or to switch to hourly pay or to hourly with a bonus. Most are trying to stay with piece rate, he said.
In California, non-productive time was more clearly defined in law, DeVaney said.
Two years ago, he discussed seeking legislative clarification of non-productive time but dropped it when farmworker advocates resisted.
“I think there will be more discussion,” he said. “When we are in a strong labor market there is upward pressure on wages and benefits.”
Piece rates, he noted, are not just set by labor supply but by orchard conditions such as weather and crop maturity.
Monahan said he thinks the state Department of Labor & Industries and the Legislature should be “moving at high speed” to craft legislation and regulations that address piece-rate pay in agriculture.
Worker’s perspective
Roberto Castillo, 45, has worked in orchards 27 years. He was in a crew of a dozen workers earning $14.12 an hour pruning cherry trees at Griggs Orchards, Orondo, Washington Dec. 31.
“I’m a supervisor, bus driver and tractor driver now during harvest, so I get $15 an hour,” he said. “I used to pick apples and cherries and prefer piece rate because it’s more money.”
Shifting everyone from piece rate to hourly would be OK, he said, if it paid a little more.
His foreman, Graciano Sanchez, 52, said fast pickers can make $200 per day on piece rate in apples and $240 or more in cherries. Rate per bin or lug depends on several things, he said, including the height of trees, orchard slope, condition of fruit and weather.
“Most guys are happy, happy because it’s good money. It’s more fast. Hourly is too slow, too costly for the grower,” Sanchez said. “If rain is coming in cherries you have to get it done in a hurry.”
Advocate’s opinion
Farmworker advocates generally oppose piece rate as “inhumane because it pushes people too hard, employers push employees,” Fazio said.
That actually happens more as minimum wages increase, he said. As the gap between the hourly wage and what a worker can make on piece rate narrows, there’s less incentive for the employee to work fast, he said.
Farmworker legal service lawyers have been “all over the map on the issue,” and some have lobbied the U.S. Department of Labor to require piece rate pay for H-2A guestworkers. DOL has rejected that, he said.
Andrea Schmitt, a Tacoma staff attorney for Columbia Legal Services, a leading farmworker advocate, said she doesn’t see blanket opposition to piece rate among legal services and that CLS has not helped workers sue employers for piece rate down time.
“There certainly are times when piece rates are set at unreasonable levels and manipulated, causing people to work too hard and be misled about what they will be earning,” Schmitt said. “But there are circumstances where workers appreciate a good piece rate.”
There are times when piece rate can be “unpredictable and detrimental to workers even when employers are not trying to be,” she said.
“For example, a worker can work hard in a field where the fruit is good and the next field is less plentiful and his earnings drop off. Workers haven’t had opportunity to gauge how much they should be motivated by piece rate,” she said.
But, she said, there can also be good situations where workers are happy.
DOL is supposed to publish a prevailing wage rate and a minimum wage (Adverse Effect Wage Rate, or AEWR, for H-2A guestworkers) for given areas each year but doesn’t always publish a prevailing wage, Schmitt said. When it doesn’t, the AEWR is the fallback.
There have been times legal services and farmworker advocates have felt the AEWR didn’t accurately reflect a higher prevailing wage, she said.
That’s when groups have advocated piece rate as the accurate prevailing wage, she said.
The piece rate is sometimes several dollars higher per hour than the AEWR so it cuts wages if the AEWR is the only thing an employer has to pay, Schmitt said.
“Farmworkers often have spotty and seasonal employment in a short period of time,” she said, adding that what they make has to last them through the winter.
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