Employees, Not-So-Independent Contractors, and the Case of Migrant Farmworkers: A Challenge to the Law and Economics Agency Doctrine

Introduction

As the onion harvest is about to begin in West Texas, destitute and desperate Mexican-Americans straggle through the region, knocking on doors to ask for work. They ask at the local unit of a large international corporate producer and marketer of onions, whose foreman tells the workers to be out at the packing shed at seven the next morning if they want a job. Most of the workers do not even ask how much they will be paid. The intrepid ones who do ask are told that they will find out the next day. In the meantime they can sleep on the floor of the shack down the road. At the shed the next morning, they are issued six and one-half gallon plastic buckets, the price of which will be deducted from their first earnings. The few who still cannot repress their curiosity as to how much they will be paid are told that they will find out when they are paid at the end of the week.

The workers are loaded onto the back of an old flat-bed truck and driven out to the fields, where they are given a five-minute demonstration on how to cut the onions with their scissors, and each is assigned a certain number of rows. They work ten hours a day for six days. Saturday they are paid in cash: $150, or $2.50 per hour, minus advances for food and the bucket, but no deductions for social security. The foreman tells the workers that they are not working hard enough and that therefore the company has decided to put them on a piece-rate, which will enable them to earn more money: forty-five cents for two six and one-half gallon buckets. When an illegal alien worker complains, the foreman threatens to call the Border Patrol. Starting Monday morning the field supervisors walk through the fields ordering the workers to cut more carefully and not to fill the buckets with small onions, rocks or dirt. This regime continues for another three weeks, at the end of which the workers’ productivity has risen by fifty per cent and their equivalent hourly wage-rate by only twenty-five per cent over the first week. When this harvest ends, the workers continue their trek through the Southwest.

This story describes the situation of many migrant farm laborers in the United States today. Perhaps more than any other workers, hand-labor migrant agricultural workers are economically dependent upon the entity for which they work, and their position within the social division of agricultural labor systematically precludes them from accumulating the capital that would confer even marginal economic independence. For the purposes of federal employment relations legislation, migrant farm labor should qualify as the prototype of employment dependency. Yet in spite of more than two decades of federal labor law directed towards guaranteeing protection of migrant agricultural workers, a considerable portion of all private actions brought under legislation such as the Migrant and Seasonal Agricultural Worker Protection Act (“AWPA”) and the Fair Labor Standards Act (“FLSA”) on their behalf of migrant farmworkers has been and continues to be bogged down in the Sisyphean labor of proving time and again that the plaintiffs are not independent contractors or employees of judgment-proof, straw-men crewleaders or contractors, but are indeed employees of powerful and financially responsible agricultural employers.

For the affected farmworkers, the socioeconomic consequences of this legal predicament can be devastating. The following representative situations highlight the importance of the problem.

In order to evade legal liability for failure to pay the minimum wage of $3.35 per hour, the world’s largest producer and marketer of onions’ has adopted the fiction that its onion clippers are not its employees but rather the employees of its crewleaders. The latter’s functions are to recruit the onion clippers at the Mexican border crossing and to drive them the few miles to the onion fields. At the work site they act as straw bosses, supervising and paying the workers in accordance with instructions passed down by company payroll supervisors. Although the Fifth Circuit has held on these facts that the company is, at a minimum, the joint employer of these workers and liable for violations of the minimum wage provisions of FLSA, the company continues to indulge in this practice, secure in the knowledge that very few, if any, of its impoverished employees will seek legal redress, and then only at the risk of becoming blacklisted. If workers nevertheless file a lawsuit seeking their back wages, they and their attorneys must bear the burden and expense of discovering in each and every case the facts that will sustain the claim of joint employment. In light of the fact that such cases may take several years before going to trial, the company may calculate that the employees’ immediate incentives to sue it are so small that the benefits of continuing violation of the FLSA exceed the costs. In the meantime, farmworkers lose their resolve to resist such violations of the few employment rights they possess.

Similarly, some agricultural businesses may deny their role as employers of migrant farmworkers with respect to AWPA. This statute provides for a comprehensive set of controls governing the recruitment and employment of migrant and seasonal agricultural workers. It requires agricultural employers, inter alia, to pay migrant agricultural workers the wages owed to them when due. Pickle farmers in Ohio, Wisconsin, Michigan, Colorado, and Texas directly, without recourse to a crewleader, recruit entire families of Mexican-American farmworkers in South Texas to harvest their crop. They require the workers, as a condition of employment, to sign a statement to the effect that they are independent contractors and not employees. Consequently, the farmer may claim that she is not subject to the minimum wage provision of FLSA. On the same basis the farmer may also claim that she has no obligations to pay unemployment benefits under the Federal Unemployment Tax Act (“FUTA”) or her state’s Unemployment Insurance program. Workers who wish to recover their lost wages may choose to sue the farmer under AWPA as well as FLSA. In such a suit they would have the difficult and costly burden of discovering the relevant facts to prove their claim that the farmer employed them. In the meantime, the farmers continue the practice.

Another unpleasant surprise awaiting farmworkers whose employers have classified them as independent contractors may come in the form of a proposed increase in tax payments from the Internal Revenue Service (“IRS”). Some cotton farmers in West Texas, for example, directly hire entire families of migrant farmworkers to hoe cotton. In addition to openly paying them by the hour at three-quarters of the minimum wage, or $2.50, they may also try to shirk their obligation to pay taxes imposed on employers pursuant to the Federal Insurance Contributions Act (“FICA”), as well as expenses involved in deducting the tax imposed on their employees. Thus these farmers issue their employees a Form 1099-MISC, used for “Miscellaneous Income” paid to persons not treated as employees, rather than a Form W-2.

Once the IRS has matched the 1099 sent by the employer with the farmworker’s W-2 submitted with her income tax return, the IRS notifies the worker that she has failed to pay her self-employment social security tax. This process may take two or three years. Many migrant farmworkers, ignorant of their rights, make arrangements to pay the deficiency. Even where they retain counsel, several years may pass before the IRS or the Tax Court rules in the farmworker’s favor.

By classifying their employees as independent contractors, agricultural employers also seek to evade their responsibilities under the various state Workers Compensation programs as well as a host of other protective statutes. Because the employer can accomplish this end by the simple act of non-compliance or non-reporting, the worker will in the first instance be deprived of the benefits of these protective statutory schemes. Only those farmworkers who are knowledgeable and assertive enough to contest their employers’ violations administratively, and perhaps judicially, will ultimately come to receive those benefits.

In sum, though virtually all other similarly situated dependent employees in the United States routinely enjoy the uncontested presumption of employment, large numbers of migrant and seasonal hand-harvest agricultural workers are daily caught in the dilemma of acquiescing to the inferior conditions imposed by employers who deny that status or of assuming the risks and dangers attendant upon carrying the burden of proving that presumption.

Indeed, not only have courts been unwilling to extend a presumption of employment status to these workers, but some courts, most notably the Sixth Circuit in Donovan v. Brandel, have recently taken the position that unskilled, capital-less workers may nonetheless be independent contractors capable of contracting on equal terms with agricultural entities. As a result of Brandel, which the U.S. Department of Labor decided not to appeal to the Supreme Court, some lawyers in the Sixth Circuit have stopped contesting sharecropping agreements, counseling clients to make the best of their business deductions as self-employed persons on their income tax returns.

This Article describes the historical development of legal and social distinctions made between employees and independent contractors and demonstrates that, when analyzed as a class under the standard currently used by the courts in evaluating a worker’s status under the FLSA and other legislation, unskilled migrant farmworkers should categorically be recognized as employees. Taking as its theoretical focus a critical evaluation of Law and Economics¬†agency doctrine, it argues that, in its understanding of workers’ dependence, Law and Economics does not fundamentally misconceive certain aspects of the relation between farmworkers and agricultural businesses, but in fact supports the conclusion that the subjects of this Article are employees. Finally, this Article proposes that courts should abandon a particularized inquiry into the facts of agricultural employment status and instead adopt a per se rule that unskilled migrant farmworkers are employees of agricultural businesses.

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