Having begun work here fairly recently and with harvest time continuing for some and approaching soon for other commodity groups, I thought that this might be a good time for a few words about something employers do not usually give much thought to--new employee orientations.
With the coming harvest, agricultural managers must begin to deal with the sudden influx of a large number of employees. A well-planned employee orientation can do much to help make this transitional event as painless as possible and get new employees off on the right foot immediately. The essence of effective management is to get the job done right through other people. Success in doing so depends on the quality of performance that managers get from their employees, which in turn hinges upon not only workers' abilities but also the instructions they receive, the standards the organization sets for them, and the company rules under which they function.
The work environment and the performance and behavior that an employee establishes during the first few days of employment will have a strong influence on that employee's attitude, productivity, and team spirit for weeks, months, and even years to come. This is important even for seasonal workers, as many growers employ the same or a similar labor force year after year. A former personnel manager and mentor taught me a valuable lesson: Once bad habits are developed, and unacceptable standards of performance tolerated, they are hard to change. Workers tend to fall into good or bad patterns very early in their employment. Steering new employees on desirable paths is a primary responsibility of management. It is generally left to first-line supervisors to best accomplish this objective and monitor success.
What can be done to prepare employees for a new work environment? It helps if employees are informed that they are expected to perform to their maximum and given specific goals and work performance standards to meet or exceed in definite time periods. Company rules and standards should be clearly communicated in the orientation. Fewer conflicts will occur if rules are evenly enforced. If after some time it is necessary to terminate a problem employee, the workplace environment must support the belief that if someone is let go it must be deserved.
In most organizations, the orientation process is either short or non-existent. Hopefully the orientation focuses on filling out personnel forms, explaining the job duties and maybe reading or listening to job descriptions, reviewing the company handbook if there is one, taking a walking tour of the new surroundings, meeting co-workers, and getting the work day started. All of these activities are important. Additionally, the best way to cultivate a positive, committed, high-performance employee is through an organized introduction to the values, culture, and expected work ethic that surrounds your business. With costs in turnover due to recruiting, hiring, training, and even more importantly the disruption in work getting done, managers need stable and productive workers. Agribusiness can become more productive and profitable by not treating the employee orientation process so casually and instead take the opportunity to mold workers from the beginning.
Creating an efficient and successful orientation process takes time and effort. Before starting to develop a new employee orientation, you might want to get the opinions of those that have recently joined you and invite both new hires and veterans to participate in the development. In preparing for an orientation, there are some questions that an employer might try to answer before the new hire shows up:
Initial Orientation: What to Do on the First Day/Week
Initial impressions are often lasting ones and care should be taken to provide the employee with a helpful introduction. The following are suggested elements to include in a successful orientation.
PRE-HIRE
Use the I-9 form to verify that the individual is legally eligible to work. Twenty-nine (29) documents are currently acceptable. According to the INS, failure to properly complete, maintain, or present for inspection the form may subject a person or entity to penalties. If the employer makes a "good faith attempt" to comply, the government must explain the problem to the employer and allow at least 10 business days to correct it. If the employer does not correct the failure voluntarily, penalties may be imposed.
If not done before hiring, explain how to perform the essential work tasks and responsibilities of the job and give a realistic preview of what an "average" day on the job might entail, both positive and negative aspects. Larger organizations often present this information on video, but the advantage of doing it in person is that it allows for questions and answers at any time. Realistic job previews are a good tool to help set work standards and open communication lines with employees. Disinterested job applicants may walk away and hired employees will likely provide a better fit with the organization. The common result from using a job preview is reduced turnover that could save substantial sums of money and time.
INITIAL WELCOME
HOURS OF WORK/PAY POLICIES
THE JOB
GENERAL PROCEDURES AND REGULATIONS
SAFETY
Discuss the importance of work safety and schedule safety training. Most accidents are caused by human error. Recently hired employees are involved in a disproportionate number of accidents and in general file a greater number of workers' compensation claims. What you tell employees from the start by reinforcing safe work behaviors will help to reduce the frequency of accidents and cost of workers' compensation premiums in the future. Also, according to California regulations following the U.S. EPA Worker Protection Standard, even field workers require pesticide safety training on the first day before entering a treated field. Employees should be given a copy of the general safety rules covering the following items:
Checkpoint to Evaluate New Employees
After a specified period of time, it is a good idea to evaluate a new employee's work performance. This helps the supervisor to decide whether the employee is performing adequately and making appropriate progress in learning the job. Additionally, the evaluation will benefit everyone if it also gives the employee developmental information, suggestions for improvement, and praise for what he or she is doing right.
Costing the Orientation
It is fairly easy to measure the cost of an orientation. For example, suppose that an almond grower hires ten (10) equipment operators every harvest season. The foreman conducts a half-day orientation to make sure that the workers are up to date on their job responsibilities and company rules. The cost per employee can be measured as:
Cost of materials + Employee time spent in orientation X (Average hourly pay X Number of employees) + Foreman's time (unless the owner does it) = $10 + 4.0 Hours X ($7.50) (10) + ($10.00) = $350.00.
Final Words
These employment practices may seem time consuming at first glance, but they are generally much less expensive than paying for damaged equipment, mishandled crops, large medical bills, higher workers' compensation premiums from frequent or severe injuries and governmental fines. All employee orientations and safety training sessions should be documented in writing for greater legal protections. More importantly, a well-conceived and reinforced orientation can help set the stage for increased employee productivity and positive work attitudes.
Knowing and using efficient agricultural production methods are often not enough for a successful operation. If growers and processors retain hired labor, they and their supervisors also must be effective managers and trainers. The ability to lead, manage, and structure work practices comes with experience, knowledge, and the use of appropriate management tools and techniques. It helps if operations create open communication lines at the outset of employment and ensure that rules and standards are adhered to while encouraging participation in some decisions. A reliable, productive, and conscientious employee is a valuable asset to any business.
Back to: "In this issue
Continued Drops in Workers' Comp Premiums
For the past few years there has been a significant drop in workers' comp premiums in California. After 1993, the year the legislature passed a major workers' comp reform package, the state's direct written premium level of just over $9 billion dropped to $5.9 billion in 1995, a decrease of more than 34%.
Supervisors Can Make or Break You
Different studies have looked across various industries and found many of the same factors associated with workers' compensation claim levels. The number one factor was not the type of work being done within an operation, but instead attitudes towards supervisors and managers. When workers feel that the supervisor is fair and they are satisfied with management, the number of claims goes down significantly. The connection between the quality of management and the bottom line is very evident in the area of farm safety.
Free Safety Incentives
Whether the use of employee safety incentives is effective or not has long been the subject of debate. Generally when beginning incentives and informing workers of how to perform safely, costs may initially go up, but in a short amount of time you will generally see claims occurring less and less. The best way to influence safe behaviors and avoid accidents administratively is through the manner in which workers are rewarded or disciplined for unsafe acts. Everyone should be involved in creating an accident-reduced workplace, not only foremen. Identify a worker who you view as competent on each crew to be responsible for monitoring safety behavior. The more eyes that are on unsafe work practices, the less unsafe acts will happen.
If a worker is found committing an unsafe act such as not wearing personal protective equipment, give that worker some information by communicating why the equipment must be worn until he or she understands. Tell the worker that he or she will lead the next tailgate safety meeting covering the relevant topic. The worker will be unable to say "that is not my job" if your safety policy states that everyone must be involved in safety. This creates peer pressure to be safe, and if the worker is found to commit the same unsafe act again, the others will think, "this guy was just telling us last week why that shouldn't be done." Employees who participate in finding solutions to your workplace problems will generally be more committed and better able to implement needed changes.
Back to: "In this issue
There are many pros and cons in utilizing contracted labor. Of benefit, a business may save time and paperwork by not directly having to pay:
Some cons would include:
Possible loss of control over work:
Growers can, often do, and many times should, directly manage the contracted workers. In this case, the grower maintains control, the paperwork is greatly reduced, and recruitment time is eliminated by using the contractor, but the grower will risk liability for employment law violations committed by himself or the contractor should any occur. To lessen liability concerns, many growers hire contractors who manage the labor completely independently. The problem with this scenario is that growers cannot directly control their contractors and deadlines may be missed, product quality reduced, or other situations may arise that are detrimental to the business and the consumer. Perhaps the most serious problem of all is the possibility of the work being disrupted during a critical period in operations.
Increased Labor Costs and Liability for Fines:
Labor contractors charge a commission rate beyond payroll costs and operation expenses to make a profit. Commission charges vary by contractor, commodity, and region but generally range from 20 to 35% of costs. Growers must decide whether the convenience of contracting offsets the additional production expense.
Government fines may occur if the IRS, EDD, DOL, DIR or other government agencies audit your business. Poor employment practices conducted by the contractor may instigate an audit. During some audits, the hiring business must clearly show that the contracted worker who committed the violation was really an independent contractor and not an employee, or the hiring business may also face large fines. If the business cannot afford the taxes or fines, the owners or responsible managers may be held personally liable.
Lawsuits from Contractors:
Lawsuits will continue to occur when contracts are under dispute or when workers are injured. In the future, the latter will be less common due to a recent Supreme Court decision overruling a prior case which had allowed contractors to sue hiring firms for injuries which extended beyond workers' compensation benefits.
What is Required to be a Farm Labor Contractor?
A license is required of anyone who engages in farm labor contracting (FLC's). According to the California Labor Code, the contractor must be licensed by the state annually at a cost of $460 per year. Contractors must also register federally in accord with the Migrant and Seasonal Agricultural Workers Protection Act (MSPA). The act is enforced locally through the California Department of Industrial Relations (DIR) and the U.S. Dept. of Labor (DOL). The DIR Division of Labor Standards now provides on-line access to its current Farm Labor Contractor License Database. Growers can use the Internet to easily obtain basic information about farm labor contractors with whom they are doing or contemplating business; it may be searched at http://data.dir.ca.gov/Farmtab. Additionally, growers may call the DIR at the following number to verify a contractor's license: (415) 975-2069. FLC's may check the status of their license on Monday, Wednesday, or Friday by calling (415) 975-2065 if their last names end in A-N or (415) 975-2066 if their last names end O-Z. For a complete California listing of licensed FLC's, send $15 to the following mailing address:
It seems to depend upon whom you ask. I have found that many people do not understand, with good reason, the varied rules of determining whether or not a contractor's status is legally considered independent or not. The Internal Revenue Service, the Immigration and Naturalization Service, the Employment Development Department, and the DIR's Labor Commissioner and Workers' Compensation Board all utilize common law or a control of work details test to scrutinize the level of control that the grower maintains over the contracted workforce. For example, these agencies look at whether the grower or contractor supervises the workers and how the workers are paid to test whether the grower has sufficient control over the day-to-day operations and work processes to be considered the employer or if the labor is truthfully contracted out.
Meanwhile, the MSPA was recently clarified and perhaps broadened in regards to the status of independent contractor relationships. The United States Department of Labor (DOL) ruled to look at whether the contractor is "economically dependent" upon the grower, whether the grower is ultimately responsible financially for the success or failure of the contractor's business, and whether the contractor performs a job integral to the farmer's business. If they find that the grower is responsible, then the independent status of the contractor is refuted and the grower would be held jointly liable for any employment law violations that have occurred. For social legislation intended to protect workers such as minimum wage laws, the DOL has said that with the intent of the Fair Labor Standards Act and the MSPA, a broader definition of employee may be used so that workers who would otherwise be classified as independent under common law, can be classified as employees of the grower.
In a recent Oregon court decision, Torres-Lopez vs. May, a cucumber grower was found jointly liable for his contractors labor violations and faced government fines. The implication for employers from this decision is that growers may often face joint employer liability with contractors since no grower can produce a crop without land, and harvesting and other labor work is an integral part of the farmer's business in order to realize the crop's value.
Actions are available if workers do not meet the control or economic dependence factors:
1) Change the worker's status from independent contractor to employee: This is risky at best as one must either gather evidence that it is an industry-wide practice, or prove that past practices were less hands-on than the current one.
2) Keep your workers as independent contractors and restructure your relationship to meet the common law factors: Easier to do for future workers than current ones and audits examine past records. However, you may be given credit for correcting the past.
3) Lease workers or use custom harvesters: In other words, find a labor contractor to hire your worker as an employee and handle all personnel management. This allows the business to have a labor supply without incurring high employee benefit costs and lessens paperwork. On the down side, by hiring someone else to treat your workers as employees, enforcement agencies may rule that you realized your past relationship was employer-employee all along.
The many state and federal agencies often have both similar and different rules and interpretations to one another regarding the determination of employment status. This allows for flexibility but is also confusing, difficult to follow, and sometimes seems unfair. Unfortunately, disentangling the many contradictory laws and finding out which ones take precedent over the other is much easier said than done. For the present, a good rule of thumb to follow is that when dealing with federal laws and agencies such as the DOL, the economic dependence test will likely be the standard. With most state laws and agencies the standard will generally be the control of work details. California case law, however, is increasingly accepting the economic realities standard. If you hire an independent contractor primarily as a means of avoiding employment liability, you should try and structure the working relationship so that most factors point to independent status and compile as much evidence as possible to show that your contractor(s) complies with the common law and economic dependence factors. Make sure that the contractor has sufficient management capabilities over the work and do not directly control the independent contractors' workers. If your contractor isn't willing to satisfy these requirements, perhaps he does not really consider himself to be a private and separate business and that could mean trouble for you.
There are several questions that you should ask a potential contractor and items that you should inspect before outsourcing labor to determine a good fit and weigh your legal and financial risks.
Legally Required:
Require and check if the contractor has been legally licensed by the state and federally registered as a farm labor contractor and has general liability insurance and workers' compensation coverage for his/her employees, otherwise you may be liable for any violations. Call the carriers and request endorsement and a copy of policy.
Prepare a 1099-Misc tax form with the contractor's Employer Identification Number (EIN), as issued by the IRS, for each farm labor contractor who received $600 or more during the year for services at the end of the contractor's job or at the end of the year, but no later than January 31.
If the contractor hauls sixteen (16) or more laborers at a time, they are considered a commercial vehicle and should have a Commercial Drivers License as required by the federal MSPA. Ask them if they have a written program to test their drivers randomly and upon reasonable suspicion for alcohol and drug use.
Keep records in files separate from employee files and never pay contractors through payroll. The hiring business should have a copy of any written contracts, invoices, and 1099's. If you do not have a written contract, have the contractor complete an invoice for the work with the starting and end date, agreed upon payment, and the results of the work.
Optional but Prudent Practices:
Ask for references from prior operations that the contractor has done work for and dates when they have performed similar services.
Have the contractor describe how other farms and agribusinesses learned of the services that they provide.
Ask what overhead business expenses the contractor routinely pays. List the specific tools that the contractor will use to complete the work.
Ask and contract for the baseline commission rate, as it varies widely between contractors and regions.
It is a good idea to submit a bid showing the total price or piece-rate that the contractor will charge you to complete the proposed job. Also, it helps to require that contractors provide invoices prior to a payment of any kind.
After Agreeing to Contract:
Draw up a written contract for everyone's protection and abide by it.
Get weekly copies of all worker payroll records for work done on your property and maintain the records for three years.
Your level of supervision is dependent upon weighing the need to control work processes and your willingness to risk penalties for employment law violations committed either by yourself or the contractor.
Written and Oral Contracts:
It is commonly assumed that an enforceable contract must be in writing; this is usually untrue. Most oral contracts are enforceable, but written contracts are easier to prove. An oral contract can be as legally binding as a written contract unless it is one of those types of agreements which lawmakers have decreed must be in writing. Writing is sensible in any case because it creates a record of what was agreed and helps to prevent misunderstandings and arguments. While a written contract is not necessary for every action and decision taken by a businessperson, it can prove invaluable when:
First, a model of a basic agreement can be kept on file and used when a business hires a contractor. Second, a letter of agreement can be used to create a "written handshake" which states the essentials of the agreement without becoming mired in details. Such an agreement states the simple facts in writing, and is confirmed and accepted when signed and returned to the sender. Make sure that the contractor's Employer Identification Number (EIN) is written clearly on the contract. This simple document should:
It isn't necessary to call an attorney before making every decision. Such hesitation affects the spontaneity of business agreements and can get expensive. Yet it is wise to have documents reviewed by counsel prior to being used for the first time. When in doubt regarding a simple agreement, it is worth the peace of mind to consult an attorney.
Employer Legal Liabilities:
If you are using a contractor and farm workers are not paid the California Labor Commissioner enters the picture and may endeavor to make the grower into a joint employer. The Commissioner may require full wages to be paid to the workers beyond the cost already paid the contractor. The likelihood of this type of problem occurring can be reduced if in advance growers require the potential contractor to fill out an IRS form 8821 Tax Information Authorization. This will provide the grower with information concerning the contractors status as to whether he or she owes any outstanding employment taxes. The form may be faxed to the IRS Ag Team in Fresno who will supposedly respond within a week. However, growers are cautioned when using the form. If a farmer is aware of a FLC's tax problems and hires the contractor anyway, the IRS may find that the farmer has accepted liability by knowingly hiring a contractor who is in arrears.
Final Words:
This reference article discussed the many implications of contracting non-employee labor. Legal liabilities represent a major concern and have the potential to drastically affect a company's bottom line. However, compliance and legal issues aside, there are some sound business reasons both for and against using contracted labor. Depending upon your commodity, acreage size, yield, ability to purchase equipment and manage personnel, need for quality control, harvest timing and efficiency, post-harvest handling, and the cost and availability of qualified labor in your area, the use of contracted labor may or may not represent a successful business practice.
For example, in 1991 the University of California conducted a study concerning the custom harvesting of walnuts. In the study, a risk factor analysis was performed to allow growers to make objective decisions as to whether harvesting labor and equipment should be contracted out or not. To illustrate with a similar example, is the case of a grower with 300 acres of seven-year old trees yielding just over one ton per acre, who pays 12% interest and who is in the 28% marginal tax bracket. For this grower, the basic analysis shows that the total annual cost of purchasing used equipment is $46,630 (but may be a higher cost if equipment needs to be repaired more often), and the custom costs total $42,520 per year. However, the grower is aware of a neighbor who lost $70,000 one year due to 10-12% worm damage. The damage could have been partially avoided if the custom crew had not started the harvest late. The grower estimates that the loss is likely to occur only once each eight (8) years. Therefore, the estimated cost of custom harvesting needs to be raised by the cost of this risk factor, calculated as:
Cost of risk = (damage) X (probability of problem) = ($70,000) (.125) = $8,750
And $42,520 + $8,750 = $51,270
It can be seen in this case that contracting is a higher cost than the purchasing of equipment. If the costs of directly hiring labor are added in along with the purchased equipment, the costs are fairly similar. The choice boils down to how much control the business wants to have over the quality of operations.
All decisions contain risks. However, the odds are enhanced considerably in your favor by gathering all available information and weighing the options in an informed, objective manner. The decision to hire contracted labor, boon or bust, should be based upon an empirical evaluation of your own particular situation and not simply following a cost-cutting fad or because your neighbor or friend has done the same. The ability to objectively evaluate personnel practices, among other skills, is an important duty of the Agricultural Personnel Management Program. If interested in an employer checklist to reduce joint employment liability, call or leave a message at the Butte County Cooperative Extension office.
Back to: "In this issue
The legal environment is obviously complex and ever changing, and prudent farm employers try to keep informed of it. Violations of law can result in embarrassment, wasted time, and costly penalties. I have no doubt that regulatory changes are the main force driving the establishment of written personnel policies and employee handbooks. In their determined efforts to stay within the law, unfortunately, many growers have adopted what may be called a "compliance mentality" with regard to personnel management. Their personnel policies are disproportionately influenced by legal guidelines to the near exclusion of other important factors.
Now there is nothing wrong with staying out of jail. Friends tell me that it can be cold in there and the food pretty bad. But farm managers can go further than compliance by creating personnel policies that help them build effectiveness in employee performance. They often even save some big bucks in the process. Consider the following incidents.
An orchard operator wanted to get better control of his pruning costs. He decided to put his temporary crews on a piece rate rather than hourly pay system. He divided last year's total pruning cost by the number of trees on the ranch to get a base rate, and then subtracted ten percent from that. Surely, he thought, on a piece-rate plan enough of the crews would be able to finish all the pruning in a little more than half the time it took them last year. They would thus be able to earn ninety percent of last year's income in less than fifty-five percent of the amount of time. A few days later, however, the operator found several areas in the orchard where trees had been subjected to severe lopping rather than careful pruning and where clippings were strewn about. Had he violated any state or federal laws in revising the pay system? No. Did the decision hurt his operational results? You bet.
A mechanic who had been employed one year on a ranch and was known for his fine craftsmanship was promoted to the position of shop foreman when the previous supervisor retired. Six other shop employees, with an average ten years length of service, were surprised by the promotion of the most recently hired co-worker. Suddenly, most repairs became big deals, taking longer than usual to complete and often requiring special order parts. An OSHA inspector appeared and cited the ranch for missing safety shields that the foreman swears were there the day before. Shortly afterwards the two most experienced mechanics in the shop left for other jobs nearby. Was the promotion decision a violation of law? Not at all. Did it hurt? Very much.
A mechanical grape harvester crew of five was sent home two nights in a row because of a faulty valve on the machine. Three other crews in the vineyard operation worked slightly longer hours those nights to achieve required production. Three members of the crew who were sent home called in sick the following day. Later in the week a neighboring farm called for a reference on another member who had applied there for a job. Legal violation? Hurt ? You know by now.
What did all three incidents have in common? All were touched off by personnel management decisions, and all ended up hurting the employer and employees. Laws of the state or nation were not violated in any of these cases, but some principles of good management probably were. It ought to be clear that agribusiness needs to think well beyond compliance requirements in making personnel management decisions.
(Partially excerpted and adapted from "Farm Personnel Management for Effectiveness: Part I: Beyond the Compliance Perspective" in Economics: Trends in Human Resource Management by Howard Rosenberg, APMP Director and Extension Specialist)
Back to: "In this issue