Expert: California vintners need to tighten employment policies amid closer regulator, court scrutiny

Overtime for California agricultural workers started kicking in this year and is set to expand to smaller companies in 2025.

At the same time, state and federal labor regulators are ratcheting up their scrutiny of company employment policies, namely on how disputes are resolved.

Because of this, managers need to be extra careful on how time is calculated for all employees — in the field, cellar, tasting room and hospitality center — and take a close look at employee handbook language, according to employment attorney Richard Rybicki of Napa-based Rybicki & Associates.

The firm represents companies throughout Northern California, and Rybicki himself is admitted before state and federal appellate and supreme courts. He is brought in to advise members of business groups, such as the Napa Chamber of Commerce, on the latest labor law trends.

On overtime, vintners need to watch out for how the state classifies each job and how tracking is being done for all work time and compensation related to the tasks.

“When a winery or another type of agricultural entity has both nonagricultural employees — like cellar and hospitality workers — and agriculture employees, does it treat the agricultural employees as if they are nonagricultural employees?” the attorney asked.

The difference in compensation between different classifications of wine industry jobs can be substantial. Under the Assembly Bill 1066, signed in 2016 and effective since Jan. 1, ag workers at California businesses that employ more than 26 people need to get 1.5 times overtime pay after eight work hours a day and 40 a week — down from the previous standard of 10 a day and 60 a week — then double pay after 12 hours in a day.

Smaller companies must switch to ag overtime this year after 9.5 hours a day and 55 a week, next year to 9.5 daily and 55 weekly, and finally in 2025 to eight a day and 40 a week with double time after 12 hours.

State distinctions in job classifications have created confusion for some vintners, Rybicki said.

Pay for farmworkers is governed by the California Department of Industrial Relations’ wage order 14. But winery jobs can be under wage orders 8 (handling grapes after harvest) or 13 (preparing grapes for market on the farm) depending on where the processing happens. And a small winery with a tasting room, may find need to track certain tasks under wage order 5 (public housekeeping).

By contrast, brewery jobs are under wage order 1 (manufacturing).

“We’ve never gotten guidance from the labor commissioner or the courts on this confusion,” Rybicki said.

Commonly overlooked are how production incentives are handled in pay statements, Rybicki said. For example, winery hospitality workers who are paid a flat wage may participate in a sales performance incentive fund or get a bonus based on the number of wine club sign-ups. Those nondiscretionary bonuses are different from discretionary ones for holidays or other special occasions such as years of service.

If the vintner is not including nondiscretionary bonuses into the employee’s regular pay, then the overtime calculation for 1.5 to 2 times the regular pay could be significantly short.

For vineyard workers, the incentives could be based on a piece-rate scale — volume of grapes brought in at harvest is a key example — on top of base pay or in combination with it.

“The California Supreme Court in the last few years has made it really clear that this de minimus time adds up, and courts aggregate those small claims,” Rybicki said.

Courts had long accommodated the concept that certain amounts of work time can be so small that paying for them wasn’t required. But that changed with a 2018 California Supreme Court ruling that state law hadn’t adopted the “de minimus time rule,” so compensation is required for “all hours worked.”

This view is working through federal courts also, including a November 2021 ruling by the Tenth Circuit Court of Appeals that even the 2 minutes that call center workers spend booting up their computers is work time.

“I’ve seen informal methods, where workers are filling out timecards, and employers are not tracking carefully where little bits of unpaid time go,” Rybicki said. “It may be few percentage points or less, but courts aggregate the overtime and do not give the employer a mulligan.”

Similar to courts’ trend toward holding employers accountable for tracking incentives in pay calculations is the judiciary’s scrutiny of accounting for work at the fringes of the task: job-preparation time and periods for rest and meals. A vintner needs to take note of what’s required for a worker to get ready for the job at the beginning of a shift, such as crossing a vineyard or waiting for equipment in the field or cellar to start up.

Litigation rises over arbitration

Employee handbooks have come under fire in recent years for language on how disputes with employers are handled, particularly after leaving the company. The nation’s high court provided some clarity on this, but federal labor regulators have made moves that have brought the matter back — and legal action to the local level, Rybicki said.

Up to the 2018 U.S. Supreme Court decision in Epic Systems Corp. v. Lewis, employment agreements that excluded multiple employees from banding together — concerted or collective action — against their companies had been scrutinized by regulators as going against the National Labor Relations Act protections for whistleblowers. The court held that job agreements that required individual arbitration proceedings could be enforced.

In February 2021, the acting general counsel of the National Labor Relations Board with the incoming Biden administration rescinded a number of guidance memos from the predecessor under the Trump administration. And one of those rollbacks included employee handbook guidance that flowed out of case law after the Epic Systems case.

In August 2021 the board’s general counsel issued a memo calling on greater action from the agency’s regional offices on tips from employees on concerns about their workplaces — particularly, employment agreements that require arbitration individually when workers bring collective action.

Much of the work at Rybicki’s firm has been in areas of Northern California outside of Napa Valley, but in the past two years, more cases are coming from Rybicki’s home turf.

“We've had cases here locally recently where an employer draws a class action, even for a relatively small number of employees,” Rybicki said. “And the client, it turns out, had an arbitration agreement, but at some point the National Labor Relations Board (staff) approached them and got them to retract the arbitration agreement because they felt that it violated the National Labor Relations Act.”

Contributing to these actions locally is a tendency among a number of North Coast vintners to have a high ratio of revenue to employees without putting enough resources into personnel policies, Rybicki said. And that lack of attention to updating the handbooks to bring arbitration agreements in line with federal law can open them up to legal challenges from workers.

One change to personnel policy that could be helpful in these disputes, Rybicki said is to make sure employment agreements clearly and explicitly exclude a worker from approaching regulators such as the Equal Employment Opportunity Commission or the NLRB with concerns.

Jeff Quackenbush covers wine, construction and real estate. Before coming to the Business Journal in 1999, he wrote for Bay City News Service in San Francisco. Reach him at jquackenbush@busjrnl.com or 707-521-4256.