BORELLO SONS INC v. STATE DEPARTMENT OF INDUSTRIAL RELATIONS (1987)

S.G. Borello & Sons, Inc., appeals from a judgment denying its petition for writ of administrative mandamus (Code Civ. Proc., § 1094.5).   Borello & Sons sought to compel the State of California, Department of Industrial Relations, Division of Labor Standards Enforcement, (DLSE) to set aside its decision affirming the stop order-penalty assessment issued for failure to have workers' compensation coverage.  (See Lab.Code, §§ 3207, 3300, 3351, 3700, 3710.1, 3711, 3725.) ¹  The case involves the question whether the share farmers, who harvested cucumbers for Borello & Sons, were independent contractors or employees.

I

Procedural History

On August 14, 1985, the DLSE issued a stop order-penalty assessment against Borello & Sons for failure to have workers' compensation insurance coverage as required by section 3700.  (§§ 3700, 3710.1, 3722, subd. (a);  Cal.Admin.Code, tit. 8, §§ 15571, 15574.)   The stop order-penalty assessment prohibited the use of employee labor until the company has secured workers' compensation insurance and assessed a $5,000 penalty, calculated based upon $100 per employee, for the violation.

On August 26, 1985, a hearing was held before a DLSE hearing officer to consider the company's challenge of the stop order and penalty assessment.   (§§ 3710.1;  3725;  Cal.Admin.Code, tit. 8, §§ 15581–15590.)   Borello & Sons objected to the stop order-penalty assessment on the ground that there was no employment relationship requiring workers' compensation coverage.  (Cal.Admin.Code, tit. 8, § 15583, subd. (e).)

The DLSE officer affirmed the stop order-penalty assessment, concluding that “[t]he sharecroppers are subject to a degree of direction and control that they cannot be considered sharecroppers in the true sense.”  (§§ 3710.1;  3725;  Cal.Admin.Code, tit. 8, § 15590.)   The officer's determination was based upon the following factual findings:  “(1) The grower unilaterally decides what crop to plant and where to plant it.  [¶] (2) The grower decides what fertilizer to use and when to use it.  [¶] (3) The same for pesticides.  [¶] (4) The grower decides what rows to assign the sharecropper.  [¶] (5) The grower arranges transportation to the cannery.  [¶] (6) The grower prepares the written contract, which was not negotiated.  [¶] (7) The contract restricts the sharecropper to using only family members.  [¶] (8) The sharecropper does some weeding and harvest[s] the crop.  [¶] (9) The sharecropper has no financial investment in the crop.”

On October 28, 1985, Borello & Sons filed its writ petition.  (§§ 3710.1, 3725)  Following a show cause hearing on January 15, 1986, the superior court denied the petition.

II

Independent Contractors or Employees

Section 3700 provides in pertinent part:  “Every employer except the state shall secure the payment of compensation in one or more of the following ways:  [¶] (a) By being insured against liability to pay compensation in one or more insurers duly authorized to write compensation insurance in this state.   [¶] (b) By securing from the Director of Industrial Relations a certificate of consent to self-insure, which may be given upon furnishing proof satisfactory to the Director of Industrial Relations of ability to self-insure and to pay any compensation that may become due to his employees.”   The definition of an “employer” includes “[e]very person ․ which has any natural person in service.”  (§ 3300, subd. (c).)

“ ‘Employee’ means every person in the service of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed․”  (§ 3351.)   “ ‘Independent contractor’ means any person who renders service for a specified recompense for a specified result, under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished.”  (§ 3353.)   Section 3357 provides:  “Any person rendering service for another, other than as an independent contractor, or unless expressly excluded herein, is presumed to be an employee.”

At the hearing, Borello & Sons did not dispute that it had not obtained workers' compensation coverage.   Rather, it asserted that the share farmers were independent contractors, rather than employees.

Richard Borello and John Borello, both officers of the corporation, were the only witnesses.   The following exhibits were introduced into evidence:  (1) the written contract entered into by Borello & Sons and the share farmers, (2) the Vlasic Foods Weekly Pickers Summary for 15 pickers for Borello & Sons covering the week ending July 4, 1985, and (3) administrative decisions in unrelated cases involving cucumber pickers.  (61–81)

According to the testimony of Richard Borello, the share farmer contract was a standard agreement provided by Vlasic, the only commercial cucumber buyer in the area, to the cucumber growers.   The contract provided:  “The parties do agree and intend that the legal consequence of their relationship be one of principal and independent contractor and that the Share Farmer shall be deemed to be self-employed.”

The contract set forth the share farmer's function as follows:  “1. The Share Farmer agrees to furnish himself and the members of his family, but only the members of his own family, to harvest the crop from the land of the Grower shown on Exhibit A.   Harvest is agreed to mean the placing of the crop, clean and free from rubbish and debris, in the boxes or bins provided by Grower.  [¶] 2. The method and manner of preparing for and harvesting the crop shall be determined solely by the Share Farmer, provided that the Share Farmer agrees to utilize accepted agricultural practices in order to provide for the maximum harvest of the crop and the Share Farmer agrees to devote the necessary time to accomplish the harvest.  [¶] 3. The Share Farmer shall provide for his own transportation to and from the land of the Grower and shall provide for all the tools needed to accomplish the harvest such as hoes, gloves, pails, etc.”

The contract stated that the grower's function would be to “․ furnish and prepare the land;  plant the crop;  cultivate, spray and fertilize the crop;  and pay all of the costs incurred with respect thereto,” to “․ provide all boxes and bins to be used in the harvest ․,” and to “․ be responsible for the loading and transporting of the harvest to the receiving station of the buyer of the crop.”   It provided that it was the grower's duty to keep “․ all necessary and required records with respect to weights, grades, and prices.”   It also provided that “[t]itle to the crop shall remain solely in Grower until its sale and the division of gross proceeds.”   The contract established that the gross proceeds would be “․ shared between Grower and Share Farmer on a 50/50 basis.”

Richard Borello testified that the growing season for cucumbers, from planting until harvesting, is approximately sixty days.   The share farmers do not become involved until two or three weeks before the harvest begins, when they contract with Borello & Sons.

By that time, Vlasic has already determined the variety of cucumbers being grown and set its prices.   A price schedule, which sets forth the grade, size description, and price per ton, is included in the contract with the sharefarmers.   Vlasic pays more for smaller cucumbers.

Borello & Sons, who is responsible under the contract for the initial growing period, lays the pipe for furrow system irrigation.   Borello & Sons is also responsible for pesticide application.   Vlasic advises Borello & Sons regarding the type of pesticides to be used.

According to Richard Borello, the share farmers and their families request the amount of land they wish to harvest on a first come, first serve, basis.   Ordinarily, a share farmer agrees to harvest one to two acres or twenty to forty rows.

The share farmers' responsibilities involve care of plants, including training of the vines, weeding and hoeing, and picking.   The share farmers decide when, and at what size, to pick the cucumbers.   They also determine their own hours.   Borello & Sons does not retain any right to control, and does not supervise, the work done by the share farmers.   Borello & Sons provides the water for irrigation and turns on the pump, but the share farmers collectively decide when to irrigate.

An employee of Borello & Sons places bins for the cucumbers on the fields and removes them.   Each of the bins is coded by Vlasic and the code is used “․ to verify the picker and the weight tag.”   Borello delivers the cucumbers to Vlasic.

Vlasic maintains weekly picker summaries which show the pounds picked of each grade by each share farmer and the amount paid.   Vlasic makes out checks directly to each share farmer for 50% of the price.   Borello & Sons delivers the checks and the weekly picker summary to the share farmers.   Other than providing their own tools and equipment, the share farmers have no expenses in the growing process.

Richard Borello testified that the sharefarmers consider themselves independent contractors.   He affirmed that the contract could be “sublet.”   The contract permits assignment by a party with the written consent of the other party.

 The substantial evidence test was the appropriate standard for the trial court's review of the administrative decision since the DLSE's decision did not affect a fundamental vested right.  (See Bixby v. Pierno (1971) 4 Cal.3d 130, 144–147, 93 Cal.Rptr. 234, 481 P.2d 242.)   The function of this court on appeal is the same, namely whether substantial evidence supported the DLSE's factual findings and whether its administrative determination that the share farmers were employees was legally correct.   (Id. at pp. 144, 149, 93 Cal.Rptr. 234.)   Since the facts are uncontradicted here, we are faced with a question of law which we independently resolve.²  (Isenberg v. Calif. Emp. Stab. Com. (1947) 30 Cal.2d 34, 40–41, 180 P.2d 11;  Swaby v. Unemployment Ins. Appeals Bd. (1978) 85 Cal.App.3d 264, 269, 149 Cal.Rptr. 336, disapproved on another ground Pacific Legal Foundation v. Unemployment Ins. Appeals Bd. (1981) 29 Cal.3d 101, 116, fn. 7, 172 Cal.Rptr. 194, 624 P.2d 244.)

“In determining whether one who performs services for another is an employee or an independent contractor, the most important factor is the right to control the manner and means of accomplishing the result desired.   If the employer has the authority to exercise complete control, whether or not that right is exercised with respect to all details, an employer-employee relationship exists.”  (Empire Star Mines Co. v. Cal. Emp. Com. (1946) 28 Cal.2d 33, 43, 168 P.2d 686, overruled on another ground in People v. Sims (1982) 32 Cal.3d 468, 479–480, fn. 8, 186 Cal.Rptr. 77, 651 P.2d 321;  see Perguica v. Ind. Acc. Com. (1947) 29 Cal.2d 857, 859, 179 P.2d 812.)   A contract's characterization of the relationship is not controlling.  (Tieberg v. Unemployment Ins. App. Bd. (1970) 2 Cal.3d 943, 952, 88 Cal.Rptr. 175, 471 P.2d 975.)

“Strong evidentiary support of the employment relationship is ‘the right of the employer to end the service whenever he sees fit to do so.’   [Citations.]  ‘An employee may quit, but an independent contractor is legally obligated to complete his contract.’  [Citations.]”  (Perguica v. Ind. Acc. Com., supra, 29 Cal.2d at p. 860, 179 P.2d 812;  see Empire Star Mines Co. v. Cal. Emp. Com., supra, 28 Cal.2d at p. 43, 168 P.2d 686.)

 Other factors to be taken into consideration in determining whether a person is an employee or independent contractor are (a) the extent of control exercised by the master over details of the work, (b) whether or not the one performing services is engaged in a distinct occupation or business;  (c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;  (d) the skill required in the particular occupation;  (e) whether the principal or the workman supplies the instrumentalities, tools and the place of work for the person doing the work;  (f) the length of time for which the services are to be performed;  (g) the method of payment, whether by the time or by the job;  (h) whether or not the work is a part of the regular business of the principal;  (i) whether or not the parties believe they are creating the relationship of employer-employee;  and (j) whether the principal is or is not in business.  (Rest.2d Agency, § 220;  Tieberg v. Unemployment Ins. Ann. Bd., supra, 2 Cal.3d 943, 950–953, 88 Cal.Rptr. 175, 471 P.2d 975;  Empire Star Mines Co. v. Cal. Emp. Com., supra, 28 Cal.2d at pp. 43–44, 168 P.2d 686;  see Perguica v. Ind. Acc. Com., supra, 29 Cal.2d at p. 860, 179 P.2d 812.)

 Here, the work to be performed was the care and harvest of the cucumber plants.   Borello & Sons did not retain or exercise control over the manner in which those responsibilities were discharged by the share farmers once they were contractually undertaken except to require the share farmers to use their own families to perform the work.   The share farmers were free to utilize their own methods and set their own hours.   Although the Vlasic's pricing schedule was an economic incentive to pick the cucumbers while they were small, the share farmers were free to pick them at any stage of maturity.   The share farmers determined when the cucumber crops would be irrigated.

The following factors are also indicative of an independent contractor relationship.   First, there was no evidence that Borello had the authority to terminate the share farmers at will.   Second, the share farmers were required to furnish their own tools and equipment necessary to care for and harvest the cucumber plants.   Third, the share farmers worked for a limited time period.   Fourth, the share farmers were paid based on the result produced rather than upon the time devoted.   Fifth, the parties evidently believed they were creating an independent contractor relationship.

“The right to control the means by which the work is accomplished is clearly the most significant test of the employment relationship and the other matters enumerated constitute merely ‘secondary elements.’  [Citations.]”  (Tieberg v. Unemployment Ins. App. Bd., supra, 2 Cal.3d at p. 950, 88 Cal.Rptr. 175, 471 P.2d 975.)   Here, the secondary factors are mixed, but Borello & Sons substantially lacks the authority to control and direct the details of the share farmers' work.  (Cf. S.A. Gerrard Co. v. Industrial Acc. Com. (1941) 17 Cal.2d 411, 414, 110 P.2d 377 [melon pickers were employees];  Winther v. Industrial Acc. Com. (1936) 16 Cal.App.2d 131, 135–138, 60 P.2d 342 [olive pickers were independent contractors].)  We find that circumstance determinative.

We do not find the fact that Borello & Sons retained responsibility for the application of pesticides and fertilizer significant since those activities involve different skills and knowledge and were separable from the manual labor which the share farmers had contracted to perform.  “[I]n weighing the control exercised we must carefully distinguish between authoritative control and ․ necessary co-operation where the work furnished is part of a larger undertaking.  [Citation.]”  (Western Indemnity Co. v. Pillsbury (1916) 172 Cal. 807, 813, 151 P. 721.)

We conclude that the hearing officer's determination was legally incorrect.

The judgment is reversed and the superior court is directed to grant the writ petition upon remand.

Each party to bear its own costs.

FOOTNOTES

1.   All further statutory references are to the Labor Code unless otherwise provided.   Borello & Sons also sought to compel the DLSE to set aside its decision affirming the citation-penalty assessment issued for failure to have a work permit for a minor employee.  (See § 1299.)   However, the issue appears to have been mooted because that citation was vacated.

2.   Review of the evidence shows all the factual findings of the hearing officer to be supported by substantial evidence, except finding number six regarding preparation of the contract.   Uncontradicted evidence showed that the contract was not prepared by Borello & Sons but rather supplied by Vlasic.   The respondent contends that only factual findings five and seven were supported by substantial evidence.   Except as to finding six, we think this argument is one of semantics.

CAPACCIOLI, Associate Justice.

AGLIANO, P.J., and BRAUER, J., concur.