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<ns0:Id>20250SB__092199INT</ns0:Id>
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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-01-28</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Senators Grove and Hurtado</ns0:AuthorText>
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<ns0:Legislator>
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<ns0:House>SENATE</ns0:House>
<ns0:Name>Grove</ns0:Name>
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<ns0:Title> An act to amend Section 1695.55 of the Labor Code, and to add Section 1585.6 to, and to add Division 6.1 (commencing with Section 13200) to, the Unemployment Insurance Code, relating to employment.</ns0:Title>
<ns0:RelatingClause>employment</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Employment: employer contributions: employee withholdings: credit: agricultural employees.</ns0:Subject>
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<ns0:DigestText>
<html:p>
(1)
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The Personal Income Tax Law imposes taxes on taxable income, as provided. Under existing law, every employer who pays wages to a resident employee for services performed either within or without this state, or to a nonresident employee for services performed in this state, is required to deduct and withhold from those wages, except as provided, for each payroll, a tax computed in an amount substantially equivalent to the amount reasonably estimated to be due under the Personal Income Tax Law. Under existing law, every employer required to withhold those taxes is required to, for each calendar quarter, file a withholding report, a quarterly return, and a report of wages in a form prescribed by the Employment Development Department, and pay over the taxes required to be withheld.
</html:p>
<html:p>This bill would authorize an employer to
claim a credit in an amount equal to the amount of overtime wages, as defined, paid during that quarter to specified agricultural employees covered by a certain wage order. The bill would require the credit to be claimed on the employer’s report of contributions, quarterly return, and report of wages, or in an electronic funds transfer, as specified. The bill would specify a refund of any credit amounts exceeding the amount that would have been remitted for that quarter to the Employment Development Department for employee withholdings. The bill would make implementation of the above-described refund contingent upon appropriation by the Legislature.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Existing law requires farm labor contractors to be licensed by the Labor Commissioner and to comply with specified employment laws applicable to farm labor contractors. Existing law requires a person acting in the capacity of a farm labor contractor to provide a grower with whom the contractor
has contracted to supply farmworkers a payroll record for each farmworker providing labor under the contract. Existing law requires the above-described payroll record to include certain disclosures, including the net and gross wages earned by each farmworker. Under existing law, a person who violates farm labor contractor requirements is guilty of a misdemeanor.
</html:p>
<html:p>This bill would, instead, require the above-described disclosure to include the net and gross wages earned, less the amount of credit the farm labor contractor received pursuant to the above provisions, by each farmworker. By imposing a new requirement on farm labor contractors, the violation of which is a crime, the bill would impose a state-mandated local program.</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions
establish procedures for making that reimbursement.
</html:p>
<html:p>This bill would provide that no reimbursement is required by this act for a specified reason.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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<html:p>The Legislature finds and declares all the following:</html:p>
<html:p>
(a)
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California’s agricultural industry is facing historic economic challenges. A few thousand California farmers and ranchers will likely go out of business in the next two or three years.
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Climate change-induced drought has caused California’s irrigated farmland to shrink by 752,000 acres in the last five years. According to the United States Department of Agriculture’s 2022 Census of Agriculture, the number of California farms fell 10.5 percent between 2017 and 2022, a decrease of 7,387 farms. In 2024, the United States Secretary of Agriculture called the numbers in the 2022 Census of Agriculture a “wake-up
call.”
</html:p>
<html:p>
(2)
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The Department of Food and Agriculture reported that in 2023, California’s farms and ranches received $59.4 billion in cash receipts for their output. This represents a 1.4-percent increase in cash receipts compared to the previous year. This was significantly behind California’s inflation rate in 2023 that was 3.9 percent as measured by the California Consumer Price Index. This means that in 2023, California’s agricultural industry was $1.5 billion behind simply keeping up with inflation, which would have been breaking even.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
In January 2024, at the State of the Industry at the Unified Wine and Grape Symposium, the California wine industry was urged to remove 50,000 acres of grapevines statewide to correct the oversupply issue. In November 2025, the Standing Winegrape Acreage Report found that California winegrape growers removed nearly 40,000 acres of vineyard,
roughly 7 percent of the state’s winegrape acreage, between October 2024 and August 2025. In 2024, the French government saw the same problem and allocated €120,000,000 in subsidies aimed at funding the permanent removal of vineyards. Their objective was to remove up to 100,000 hectares of vineyards in France. In 2023, the French government provided $215,000,000 in funding to wineries to sell off their surplus wine. To date, California has provided no similar financial support for California wineries and vineyards that are competing in a global market.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
In August 2024, AgWest Farm Credit reported high interest rates, falling farm income, shifting water availability, and regulations are among the main drivers lowering agricultural land values in California.
</html:p>
<html:p>
(5)
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In November 2024, the California Farm Bureau reported a significant decline in San Joaquin Valley land values. This is
attributed primarily to reduced access to groundwater, which has hit farms without surface water access hardest. Reduced land values has been particularly challenging for almond orchards and vineyards, where values have been reported to have dropped by as much as 50 percent.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The combination of low commodity prices and high operating costs has made it difficult for agricultural producers to secure operating loans and has resulted in abandonment of orchards and vineyards. This has created the pest problems that led the Legislature to pass Assembly Bill 732 in 2025 allowing county agricultural commissioners to compel landowners to clean up neglected orchards and vineyards.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
California’s 400,000 agricultural employees face incredible challenges and need help.
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The Public Policy Institute of California in 2022
reported, “A trend taking shape over decades is the increasingly settled nature of farm work, with workers living in the United States year-round. In the past, patterns of settling were quite different by immigration status.” This report highlights the need of agricultural employees for year-round services including health care.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A November 2024 report from the Rural Health Information Hub stated, “The challenges that rural residents face in accessing healthcare services contribute to health disparities.” The barriers to healthcare access include distance and transportation, healthcare workforce shortages, cost of insurance, and lack of access to broadband, privacy, and health literacy.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Work in vineyards, orchards, and fields is hard work. Section 858 of the Labor Code states, “Agricultural employees engage in back-breaking work every day. Few occupations in today’s America
are as physically demanding and exhausting as agricultural work.” Yet Section 3441 of Title 8 of the California Code of Regulations is a barrier to using technology to make the work safer and less labor intensive.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Agricultural employees have a difficult time finding housing in California as the state has some of the highest housing prices in the nation. In the coastal area of the Counties of Monterey and Santa Cruz, a consortium of local agencies released a housing report in 2018 that found that about 73,000 agricultural employees live in the Salinas and Pajaro Valleys year round. An estimated 77 percent live in overcrowded or extremely overcrowded conditions, with multiple families sharing bedrooms. Little has been done by the State of California to help create new agricultural housing.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Recognizing the needs and importance of supporting its
agricultural employees, the Oregon Legislature approved House Bill 4002 in April 2024. The measure requires agricultural employers to pay certain workers for overtime hours worked and created a refundable personal or corporate income tax credit for employers for a percentage of wages paid as overtime pay to agricultural workers for calendar years 2023 through 2028.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The State of New York has also created a farm employer overtime credit. The credit is 118 percent of the overtime hours the agricultural employer paid multiplied by the difference between the employees’ overtime rate of pay and their regular rate of pay.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
In 2016, the Legislature passed legislation that was intended to increase the take-home pay of California agricultural employees who are working overtime.
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
It was the intent of the Legislature,
“to enact the Phase-In Overtime for Agricultural Workers Act of 2016 to provide any person employed in an agricultural occupation in California, as defined in Order No. 14-2001 of the Industrial Welfare Commission (revised 07-2014) with an opportunity to earn overtime compensation under the same standards as millions of other Californians.”
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
According to research led by Dr. Alexandra Hill at University of California, Berkeley, California farm workers have experienced reduced work hours and reduced earnings since the Phase-In Overtime for Agricultural Workers Act of 2016 became law. Dr. Hill found that in farmworker interviews reported by the National Agricultural Workers Survey (NAWS), California farm workers reported 4.7 fewer work hours per week in 2022 than in 2012. In the farmworkers’ responses to the American Community Survey (ACS), farmworkers reported 4.2 fewer work hours per week in that same period. As a result, according to NAWS,
these workers reported reduced average weekly earnings of $120 per week in 2022 than in 2012. According to ACS, responding farmworkers reported reduced average annual earnings of $2,800 in 2023 compared to 2012.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The USDA Farm Labor Survey found that the average weekly hours of directly hired California workers fell relative to the average weekly hours of all United States directly hired farm workers. In 2016, California’s directly hired farm workers averaged 2.7 more hours a week than all United States farm workers. That fell to 1.9 more hours a week in 2019, 0.1 more hours in 2021, and one less hour in 2023, which means that directly hired California farm workers averaged an one hour less per week in 2023 than all United States farm workers.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
As California’s agricultural industry faces economic challenges causing the reduction of overtime hours available to employees, the
unintended consequence of the Phase-In Overtime for Agricultural Workers Act of 2016 is that employees are losing money. Therefore, it is in the public interest to support agricultural employees through public financial support of overtime wages.
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The intent of enacting Section 13200 of the Unemployment Insurance Code is to recognize the findings and declarations in subdivisions (a) through (c), inclusive, and to provide a much-needed investment in the well-being of agricultural employees.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
In September, 2024, Governor Gavin Newsom stated, “Farmworkers are the backbone of California’s nation-leading agricultural industry and play a critical role in ensuring the stability of the state, nation and world’s food supply. Investing in their well-being is investing in California’s success.”
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 1695.55 of the
<ns0:DocName>Labor Code</ns0:DocName>
is amended to read:
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<ns0:Num>1695.55.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
Every person acting in the capacity of a farm labor contractor shall provide any grower with whom the contractor has contracted to supply farmworkers a payroll record for each farmworker providing labor under the contract. The payroll record shall include a disclosure of the net and gross wages, less the amount of credit the farm labor contractor received pursuant to Section 13200 of the Unemployment Insurance Code, total hours worked, and total hourly and piece rate earnings for each farmworker.
</html:p>
<html:p>
(b)
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Each grower entering into a contract with a farm labor contractor shall retain a copy of the payroll record provided by the contractor for a period of three years after the contract has ended.
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 1585.6 is added to the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
, to read:
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<ns0:Num>1585.6.</ns0:Num>
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<html:p>
(a)
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For an employer, if the total amount claimed pursuant to subdivision (b) of Section 13200 in any given quarter exceeds the amount that would have been remitted by that employer for that quarter to the Employment Development Department for employee withholdings pursuant to Division 6 (commencing with Section 13000) but for the operation of Section 13200, the employer shall receive a refund, subject to subdivision (b).
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<html:p>
(b)
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Implementation of this section shall be contingent upon appropriation of sufficient funding by the Legislature in the annual Budget Act or other statute for that purpose.
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<ns0:Num>SEC. 4.</ns0:Num>
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Division 6.1 (commencing with Section 13200) is added to the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
, to read:
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<ns0:Num>6.1.</ns0:Num>
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<ns0:LawHeadingText>Overtime for Agricultural Workers Act of 2017 Credit</ns0:LawHeadingText>
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<ns0:Num>13200.</ns0:Num>
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<html:p>
(a)
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An employer whose employees are covered by Wage Order No. 14-2001 of the Industrial Welfare Commission may claim a credit in accordance with this section.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The amount of the credit shall be equal to the amount of overtime wages paid for that quarter under Chapter 6 (commencing with Section 857) of Part 2 of Division 2 of the Labor Code to employees who are covered by Wage Order No. 14-2001.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The credit shall be claimed, in a form and manner prescribed by the department, pursuant to either of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
On the report of contributions, quarterly return, and report of wages required under Section
1088.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
In an electronic funds transfer pursuant to subdivision (f) of Section 1110 or Section 13021.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
This section does not change the amount of taxes required to be withheld from employees pursuant to Division 6 (commencing with Section 13000) and required to be reported to the employee, the Employment Development Department, the Franchise Tax Board, and the Internal Revenue Service.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
This section does not require additional taxes to be paid by the employee or otherwise alter the employee’s tax liability under Part 10 (commencing with Section 17001) of Division 2 of the Revenue and Taxation Code.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
It is the intent of the Legislature that the operation of this section does not require an appropriation of moneys by
reducing moneys remitted by the employer to the Employment Development Department that would otherwise be deposited in the General Fund.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The Employment Development Department may adopt rules and regulations that are necessary or appropriate to implement this section.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
For purposes of this section, the following definitions apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Employee” has the same meaning as that term is used in Sections 3205, 3205.1, 3205.2, and 3205.3 of Title 8 of the California Code of Regulations, as those sections read on January 1, 2023.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Overtime wages” means the difference between the employees’ overtime rate of pay and their regular rate of pay.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Quarterly return” means the form on which
the employer reports its employer contributions and employee withholdings pursuant to this code.
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<ns0:Num>SEC. 5.</ns0:Num>
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No reimbursement is required by this act pursuant to Section 6 of Article XIII
<html:span class="ThinSpace"/>
B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII
<html:span class="ThinSpace"/>
B of the California Constitution.
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