A new study shows during the first two years of California’s agriculture overtime law, Assembly Bill 1066, the number of employees working overtime hours has roughly dropped in half.
The state passed the measure in 2016 and it became a major hallmark in the tenure of former-Assemblymember Lorena Gonzalez, who left office last year to lead the powerful California Labor Federation AFL-CIO. Gonzalez promised AB 1066 would improve the well-being of farmworkers through higher pay.
It inspired similar legislation in Colorado, New York, Oregon and Washington, and has had broad implications for the industry. Before AB 1066 took effect, 57% of U.S. crop workers pulled in more than 40 hours per week, according to Alexandra Hill, an assistant professor in agricultural economics at UC Berkeley.
But Hill found little evidence to back Gonzalez’ claim. To investigate the issue further, she looked into the latest employment data available from the National Agricultural Workers Survey, which runs through 2020.
Former-Asm. Lorena Gonzalez, D-San DiegoCalifornia began phasing in the ag overtime law in 2019, gradually reducing the overtime threshold until it reaches an eight-hour workday and a 40-hour workweek. In the two years studied, AB 1066 targeted companies with 26 or more employees. Smaller companies were not required to comply with the law until 2022.
The results of Hill’s research showed “the law caused a large and statistically significant decrease in the number of employees working 56—60 hours a week,” according to her paper published in the journal Choice’s Magazine. Yet the bracket just below the law’s threshold at the time — for workers performing 46-50 hours per week — saw a more than a 30% bump as more employers reduced overtime hours.
Hill also found that AB 1066 decreased worker pay. The share of the workforce with higher and with midlevel earnings each dropped by a third and led to a $100 decrease in weekly earnings. Overall, the law cut up to 45,000 hours annually across the industry and dropped pay by as much as $9 million.
“This early evidence suggests that the law may not be benefiting the workers they aim to protect,” according to Hill, in a publication for UC Agricultural and Resources Economics.
She reasoned that workers may be satisfied with the lower pay. It comes with fewer hours, more leisure time and safer work environments, since longer hours correlate to more injuries. But the loss of income could be pushing more workers to seek out second jobs, negating any benefits from AB 1066 while adding more travel burdens.
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An important caveat is the study did not capture data on H-2A guestworkers, a visa program that California agriculture has increasingly turned to for offsetting a growing shortage in the domestic workforce. Hill’s study also could not factor in second jobs or changes in total employment beyond the work hours. The evidence only captures the first two years of implementing AB 1066 and the final provisions for small employers will not take effect until 2025.
Yet the early findings led Hill to surmise that a refundable tax credit to employers for overtime hours could alleviate some of the issues. New York has incorporated such a provision in its overtime law. Farm groups have called for California to include a credit as well, though legislative attempts have gathered no traction.
In 2020 Asm. Robert Rivas of the Salinas Valley, who chaired the Agriculture Committee and is now speaker, filed a measure offering a dollar-for-dollar tax credit to offset the costs for overtime wages. But policy committees never took up the bill.
“As the first state in the nation to have an overtime law,” Rivas told Agri-Pulse the following year, “we've got to account for the impact it's going to have to the industry.”
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