Report Spotlights Farm Labor Contractors

This information has been adapted from an article prepared by Suzanne Clark, Public Information Representative, College of Natural Resources, University of California, Berkeley.

Knowledge about farm labor contractors in California has not kept pace with their growing significance to agricultural business, despite the attention that public agencies give them under a plethora of laws and regulations. While more than 1,000 FLCs are responsible for some 20 percent of all farm employment in the state, anecdotes about the misdeeds of some have been more plentiful than informed understanding of their wide ranging business practices in relation to customers, employees, and government agencies.

A new UC report to the Employment Development Department presents results of interviews with 180 labor contractors in the Fresno, Imperial, Monterey, San Joaquin-Stanislaus, and Ventura-Santa Barbara County areas during 1991. It addresses such questions as: Who becomes an FLC and why? How are their businesses organized? How and where do they market their services? How do they manage employees and deal with government regulation? What is their outlook on the farm labor market?

EDD's Labor Market Information Division contracted with the UC Agricultural Personnel Management Program to conduct this study, which also included complementary surveys of growers and workers. Survey interviewers were much more likely to reach "visible" FLCs, selected from government agency files, than unlisted operators. Although contractors who flaunt even the basic filing requirements were underrepresented, the report adds to evidence of a sector of FLCs trying to run their businesses effectively and fairly within the guidelines of public policy.

Study findings may be quickly brought into assessment of recent legislative initiatives and new regulatory proposals affecting labor contractors. Material in the report has already been considered by the U.S. Commission on Agricultural Workers and the state Farm Worker Services Coordinating Council. Among conclusions of the study are that:

• FLCs are an established part of agricultural industry in California. Having evolved along with production technology, workforce demographics, and the regulatory climate, labor contracting today typically engages native Spanish-speakers of Mexican descent for work on farms run by English-speakers. It relieves growers of burdens associated with direct employment and supervision of workers, especially for seasonal tasks of short duration, and can provide workers more continuous earning opportunities in a succession of such tasks. Contractors use specialized knowledge and skills, offices, computers, and field equipment. Most of those interviewed have enduring relationships with customers and direct ownership interest in at least one related business.
• Contractors are mostly of Hispanic background, about half born in Mexico and more than one-quarter in California. More than half speak Spanish at home. Most are in their 40s and 50s, average less than 10 years of total schooling, and have plenty of agricultural experience. More than a fourth have been growers or farm managers. Committed to the occupation, they operate as FLCs an average of nearly nine months a year.
• Labor contractors have various "product lines" and business sizes. With different crops, organizational structures, and preferences for direct involvement in farm production, customers have different sets of needs that they hire FLCs to serve. Most contracting firms are small, but the one-seventh with payrolls exceeding $1 million account for more than half of all FLC employment and three-fifths of wages paid. Nearly all contractors employ foremen to deal directly with workers - recruiting, hiring, instructing, assigning tasks, and enforcing work rules. The number of foremen at peak season averages 8 and ranges up to 62. Family members of the contractor are involved in two-thirds of FLC businesses, most commonly in office tasks.
• Contractors in the survey tend to have a stable customer base. On the average, they provide services to 15 growers or packing houses, but some have only one customer, and even some large FLCs do all their business with a few. Less than 20 percent put their arrangements with any customers into the form of a written contract. The structure and amount of FLC charges to customers vary more between than within crop and regional groupings. A sizable minority of the contractors say that they accept commission rates determined by customers.
• Core personnel functions usually served by FLCs include recruiting and hiring workers, directing them to the worksite, supervising their work, and paying wages. About half of a contractor's workforce is composed of returnees from the previous year. Recruitment of new hires is most frequently through "walk-in" or referral from foremen and other current employees. Contractors generally provide drinking water and field sanitation facilities and often furnish tools. Less commonly, some contractors provide worker transportation, housing, food, and check-cashing services.
• To enter the contracting business requires little or no capital investment, and most FLCs do not find the license examination and bonding requirement difficult. Operating as a contractor in full compliance with the law, however, is much more challenging. Four out of five contractors in the survey had been inspected by at least one government agency during the 1987-90 period. Contractors are concerned about regulatory priorities and the irony of greater attention being given by administrative agencies to those who are more stable and observant of laws.
• Differences in how government agencies define FLCs are reflected in respective lists of those registered with the U.S. Department of Labor, licensed by the state Department of Industrial Relations, and filing unemployment insurance as labor contractors. Only 506 of a total 3,580 entities on any of the three lists are on all of them, and an unknown number of persons who act as labor contractors are on none of the lists. Nonuniform definition of the FLC population inhibits understanding and coordinated enforcement of applicable regulations.

Overall project leader and principal investigator of the study was APMP Director Howard Rosenberg. Project coordinator and field work supervisor was Suzanne Vaupel, Vaupel Associates, Sacramento. Other co-authors of the report were Jeffrey Perloff, Department of Agricultural and Resource Economics, Berkeley; David Runsten and Don Villarejo, both of the California Institute for Rural Studies, Davis. Additional members of the study team were Christopher Edmonds, Vijaykumar Pradhan, Ana Garcia, Loretta Lynch, and Youssouf Camara.

The report is being published by EDD. Copies will be available through the LMID Special Projects Unit, phone 916/262-2123.

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