Agricultural Labor Relations

Thumbnail image for int42C.JPGIn California, agricultural workers are covered by the California Agricultural Labor Act which established the Agricultural Labor Relations Board (the “ALRB”). The ALRB was “created in 1975 to ensure peace in the fields of California by guaranteeing justice for all agricultural workers and stability in agricultural labor relations.”

The ALRB previously could uphold or set aside a union election, but it did not have the authority to impose sanctions on employers who engaged in misconduct over the election. California Senate Bill 126, which was sponsored by the United Farm Workers Union, sought to remedy this problem. More than 5,000 farm workers, their families and supporters marched for 13 days over 167 miles from Madera in the Central Valley to Sacramento to urge the Governor to sign SB 126.  SB 126 was signed into law by Governor Brown on October 9, 2011.

Under this new law, if the ALRB refuses to certify an election because of employer misconduct that, “in addition to affecting the results of the election, would render slight the chances of a new election reflecting the free and fair choice of employees, the labor organization shall be certified as the exclusive bargaining representative for the bargaining unit."  Thus, the employer is compelled to negotiate with that labor organization. In addition to this change, the statute shortens the time frames for challenging election results (by 90 days in some instances), strengthens mandatory mediation requirements, and prohibits courts from delaying the implementation through judicial “stays”.

In order to avoid making inadvertent mistakes, employers must begin discussions with their supervisors. Some of the topics to discuss include:

  • The company’s position on unions
  • The definition and role of a supervisor
  • What a unionized operation means to management, supervisors and employees
  • Union dues, fees, fines, assessments, possible strikes and constitutional restrictions
  • Why employees want to join unions
  • How to see signs of union organizing
  • What a supervisor can and cannot say to employees
  • Why union authorization cards are significant
  • How to enforce no solicitation and no distribution rules
  • Maintaining discipline during organizing

I consulted with my labor and employment law partners (Dan Berkley, Keith Chrestionson and Dave Faustman), and their extensive combined experience in the field of agricultural labor relations tells them the following: “The ALRB will be re-energized with the new legislative power granted to it. The unions will certainly take maximum advantage of the new statutory perks by bypassing losing election results and court enforced injunctive remedies. Prevention is the best cure now.”

Are You an Employee or Independent Contractor?

In Parts 1 and 2 of 7x7 SF magazine's “How to Get a Job in the Wine Industry,” Ian White, Wine Country Director/Blogger at Hartle Media, advises on how to break down barriers to get a job in the wine industry. As Ian says, "the wine industry is a very tough nut to crack".

Thumbnail image for shutterstock_84879559.jpgWe’re often asked by our clients to draft employment agreements and independent contractor agreements. If you have the right credentials, skills and background and are the right fit, the company will want to hire you as an employee.

But what if you don’t have the right credentials or experience? Then, it may be difficult to land a permanent position from the beginning. Sometimes it helps to start as an independent contractor, sometimes called a contract employee, as a way to get your foot in the door by working on one specific project. Some of you may find that you want to remain as a contract employee for lifestyle reasons – even though your income becomes more uncertain, you’d have more flexibility in schedule and choice of projects. Only you can decide if the trade-off works.

What does it mean to be an independent contractor?

In general, the most important factor is control. You, not the company, set the manner and means by which the agreed upon services are performed. Some other factors to consider are that if you are an independent contractor:

  • The company does not train you.
  • You have no set working hours.
  • You can work for other companies.
  • There is no expectation of a continuing relationship – you get paid for the project and then you must move on.
  • You aren’t covered by workers’ compensation.
  • You don’t have an employer so employment taxes are not deducted from your earnings. Instead, you pay self-employment taxes and handle your taxes.
  • You don’t receive employee benefits.
  • You aren’t covered by federal and state anti discrimination laws or wage and hour laws.
  • You aren’t entitled to unemployment insurance benefits.

The distinction between an employee and independent contractor is very important. Various federal and state laws govern the classification of independent contractor versus an employee. Definitions vary from agency to agency ranging from the Internal Revenue Service, EDD/California Franchise Tax Board, Immigration & Naturalization Service, Workers’ Compensation, US Department of Labor and the California Labor Commissioner.

For the company, the consequences of misclassifying an employee as an independent contractor are very serious. There can be tax, wage and benefit liabilities, and potentially substantial fines from various government agencies.

The California Chamber of Commerce publishes an excellent guide to California and federal employment laws, regulations and court rulings in “2012 California Labor Law Digest”. Cal Chamber summarizes the different tests in the form, “Independent Contractor vs. Employee – How Six Agencies Determine Relationships.”

Weekend Edition -- Williamson Wines

One of the most romantic winemaking couples is Bill and Dawn Williamson of Williamson Wines in Healdsburg. Bill and Dawn are from Australia and are passionate about their wines, food pairing, and, of course, each other.

Passion doesn’t mean unscientific though. Bill says their state-of-the-art winemaking and protocols differentiates Williamson Wines. They examine lab panels that ensure that their wine stays within certain parameters while fermenting and aging. By examining the panel weekly, no more than 7 days can elapse after an event may have occurred in the wine so they can make minor corrections as they go along.

The Williamsons recently added to their wine line-up:

Caress Cuvee Blanc, a white wine blend of Roussanne and Semillon (pairs with Stilton Cheese with apricot which is amazing and also goes well with Fizz, the sparkling wine).

Enchant Trinity, a Chateauneuf-du-Pape style wine blended with Grenache, Syrah and Mourvedere (pairs with herb and garlic spread).

Wine club members receive wine, menus and recipes to help with food pairing. To further enhance the wine and food pairing experience, a member can join the cheese club. These are not ordinary cheeses – Bill and Dawn find wonderful, interesting cheeses from around the world. Each shipment contains 3 half-pound blocks of three cheeses and there are 4 shipments per year per cheese club member. To give you a sense of the popularity of the cheese club, consider that Williamson Wines ships 2 tons of cheese every year!!!

The public can visit the tasting room in Healdsburg for complimentary food and wine tastings and also arrange for private tastings of their Legacy and Icon Wines. A second tasting room in Geyserville recently opened for wine club members and is open on Friday, Saturday and Sunday and by appointment for the general public. The Geyserville tasting room accommodates groups of up to 150 people. A longer wine education program is offered in Geyserville where you can spend a morning and/or afternoon in the vineyard, taste wines, learn about pruning and blending, have lunch, and much more.

Wine club members can take wine-tasting and education to a whole new level by going on the Oz Odyssey to Australia to stay meet Australia’s winemakers, taste their wines, experience an Australian culinary school, eat at local restaurants, and more.

With wines named “Rapture”, “Bliss”, “Caress”, and “Elate”, you can try to match the wine to how you want to feel. So to continue the romance from Valentine’s Day, try the Williamson Rapture Pinot Noir (described as “capricious, fickle, mercurial, sublime, noble and evocative”) with a rack of lamb encrusted with the Williamson’s Truffle Salt. Bon appetit!

11 Months and Counting!

Last week, I spoke at the USC Gould School of Law 2012 Tax Institute about flexible gift and estate tax strategies that work in an uncertain political and economic environment. USC will be publishing my presentation soon. In the meantime, some of the strategies are highlighted in our Tax & Wealth Planning Department’s Alert: “$5.12 Million Gift Giving Window of Opportunity: 11 Months and Counting!

Weekend Edition -- Johnny Visits St. Helena

John Parise, my Italian “godfather” from New Jersey, visited St. Helena this weekend. John, Stewart Viets and I had a retreat of sorts discussing captive insurance companies and their role in business succession planning. (I'll discuss that in a weekday edition).

John, who owned an Italian restaurant in his twenties, made the following incredible Saturday night dinner: Clams Casino, Italian Mixed Green Salad, and Pasta with Meatballs (and Spareribs and Sausages!) Sauce. The pasta dish was a true Sicilian meat extravaganza -- very rich and even better the second day. All recipes follow except the Clams Casino – John won’t divulge the secret recipe.

According to John, the key to Italian cooking is start sipping wine 30 minutes into cooking and add a dose of music, preferably jazz. We went with Stan Getz.

Stu & John.jpgThat's Stewart (left) and John (right).  For wine pairing, if we were in Italy, we’d have a Barolo. Here, Stewart chose Cakebread’s 2007 Dancing Bear Howell Mountain Cabernet and Grassi’s 2008 Napa Valley Cabernet.  Perfecto!

Here are the recipes:

Pasta With Meatballs (Spareribs & Sausages)

Ingredients:

1 pound pork spareribs

2 pounds Italian sweet sausage

2 pounds mixture of veal, beef, and pork (or meatloaf mix)

White wine

4 large cans (28 ounces each) crushed tomatoes

2 eggs

1 cup grated Parmesan cheese

½ loaf Italian bread

14 cloves garlic

1 onion, chopped

1 bunch basil

1/2 bunch Italian parsley, finely chopped

Salt

Pepper

Olive oil

Milk or water

1. Bake 2 pounds of Italian sweet sausage in the oven at 350 degrees while you are making the sauce.

2. Sprinkle salt and pepper on the pork spareribs. Braise the spareribs in olive oil in a large pot.

3. When the spareribs are almost browned, add 4 cloves of coarsely chopped garlic. 4. After the spareribs have browned, remove the pork from the pot. Add 1 chopped onion, 6 cloves of coarsely chopped garlic, and a good handful of chopped basil.

5. Add white wine to deglaze the pot and add flavor, around 1 to 1-1/2 cups. Let it cook a few minutes.

6. Add 4 cans of crushed tomatoes.

7. Add Parmesan cheese.

8. Add some salt and pepper but not too much. You have to test the taste as you go. If you put in too much salt at this point, you won’t be able to reverse the saltiness.

9. Add the spareribs back in and mix well.

10. Take out the sausages from the oven, cut in half (or whatever size will make it easiest to eat). Add the sausages to the pot. Add another half a handful of chopped basil.

11. Put on slow heat and cook for a total of 5 hours.

12. Stir appropriately, which is more than occasionally and enough so you don’t burn the bottom of the sauce.

13. After an hour or so, start the meatballs. Cut off the ends and the bottom of half the Italian loaf. Soak it in milk or water until completely soaked. If the bread crust isn’t absorbing the milk (or water), take out that part of the crust.

14. Mix the pork, beef and veal mixture with 2 eggs (basically 2 eggs per pound of meat), 4 cloves of finely chopped garlic (i.e., 2 cloves per pound of meat), one cup of grated parmesan cheese, ½ bunch of finely chopped Italian parsley, a little salt and pepper.

15. Drain excess milk or water from the bread and put the bread into the meat mixture. Mix all by hand and shape into meatballs. The size should be appropriate to the pot, but you should have 20 to 25 meatballs. Extras can be saved in the freezer for the next batch.

16. Fry or bake the meatballs until cooked, about 10 to 15 minutes. When cooked through, drop the meatballs into the sauce. Continue cooking for 3 more hours, stirring as appropriate.

Homemade pasta

2 cups water

4 eggs

2 cups flour

1 to 1-1/2 pounds ricotta cheese

½ cup grated parmesan cheese

½ bunch Italian parsley, chopped

Salt

Pepper

1. Mix 2 cups water, 2 eggs, and 2 cups flour in a medium size mixing bowl. Add salt and pepper to flavor. Mix well to get the consistency of a thick and creamy crepe mix.

2. In a separate medium bowl, mix the ricotta cheese and 2 eggs. Add the parmesan cheese, par Take a pound and 1-1/2 pounds of ricotta cheese, 2 eggs, mix in separate bowl, add ½ cup parmesan cheese, add ½ bunch parsley, salt and pepper. Mix well.

3. Cover the cheese mixture with plastic wrap and refrigerate for about an hour.

4. While the cheese mixture is in the refrigerator, start making the crepes.

5. Heat a small non-stick pan on medium heat. You can spray Pam. Fill a small ladle with the crepe mix and cover the bottom of the pan. Each crepe should be around 4 inches in diameter. Cook until the crepe is cooked on the bottom, then flip once for around 30 seconds Place cooked crepe on aluminum foil and let it cool. This is very thin (not thick like a pancake) so cooks very quickly. The thinner the crepe, the better.

6. Lay the cooked crepes on aluminum foil, cover with another sheet of aluminum foil and let them cool. You can also refrigerate them in advance and take out when needed.

7. When the pasta sauce is finished, take some of sauce and the coat bottom of a baking pan. Take each crepe and fill the center with 2-3 tablespoons of the cheese mixture and roll like a tube. Lay each cheese-filled crepe flat in the sauce in the bottom of the pan. One the pan is filled with crepes, lightly cover the tops of the crepes with the sauce. Do not use a lot of sauce. Grate parmesan cheese on top to taste. Sprinkle a half a handful of fresh chopped basil and sprinkle over the top.

8. Bake at 350 degrees for about 40 minutes. Don’t burn the bottoms.

Garlic bread

Ingredients:

One good loaf of Italian bread

¼ pound butter

3 cloves of garlic, chopped finely

Grated parmesan cheese

Fresh oregano

Fresh basil

Jarred Italian style roasted peppers (with garlic), finely chopped

8 olives, finely chopped

Cut the loaf in half lengthwise and then into halves.

Lay each quarter in a baking pan, crust side down.

Melt butter in microwave for 15 seconds until soft. Spread butter over all 4 quarters of bread.

Sprinkle the following (in order) over bread: garlic, parmesan cheese (generously), oregano, basil (not too much, just enough to get flavor), roasted peppers, olives.

Drizzle with olive oil.

Cover with plastic and let sit in the refrigerator for an hour or more.

Fifteen minutes before dinner, bake at 350 degrees until lightly browned.

Italian Mixed Green Salad

Ingredients:

2 cloves of garlic, crushed in bottom of bowl

About 1 cup of extra virgin olive oil

¼ cup balsamic vinegar, preferably white balsamic

Salt and pepper to taste

Handful of chopped basil

Juice of ½ lemon

½ cup parmesan cheese

1 tablespoon fresh oregano

Handful of fresh chopped basil

Olives to taste

Roasted red peppers (left over from garlic bread recipe)

Artichoke hearts marinated in oil

Cucumbers and whatever else you would like

Baby spring mix

1. Mix all ingredients together and salt and pepper to taste. Refrigerate. The longer the ingredients marinate, the better.

2. Immediately before serving, add to baby spring mix and mix well.

B Corporations

On January 1, 2012, a new form of doing business was born in California. It’s called the benefit corporation, also known as a “B Corporation”. The benefit corporation came about because businesses wanted to find ways to be profitable and simultaneously take care of their employees, community and environment. 

The traditional way of doing business as a corporation became outdated because for-profit corporations are required to maximize profits for their shareholders. Non-profit corporations are not allowed to operate for the gain of individuals. Another form of business was needed – one that allows for-profit entities to have a social benefit purpose.

Assembly Member Huffman from San Rafael introduced Assembly Bill 361 to create the benefit corporation in California. The bill was sponsored by a nonprofit organization called B Lab whose vision is “to build a new sector of the economy that uses the power of business to solve social and environmental problems”.

Patagonia was the first company in California to become a benefit corporation.  In an interview with The Economist, the founder of Patagonia, Yvon Chouinard, said that the new benefit corporation creates a legal framework for firms like Patagonia to remain true to their social goals – to pursue strategies that benefit society as a whole.

The purpose of a benefit corporation is to create a “general public benefit” (i.e., a material positive impact on society and the environment) in addition to its business activities and any “specific public benefit” such as:

  • Providing services to low income or underserved individuals or communities;
  • Promoting economic opportunity for individuals or communities beyond creating jobs in the ordinary course of business;
  • Preserving the environment;
  • Improving human health;
  • Promoting arts, sciences, or advancement of knowledge;
  • Increasing the flow of capital to entities with a public benefit purpose; or
  • Accomplishing any other particular benefit for society or the environment.

The benefit corporation’s performance is measured against a third party standard that assesses the impact of the business on its employees, community, and the local and global environment. The third party standard assessment is designed to prevent “greenwashing”, where companies call themselves or their products “green,” “responsible,” “sustainable”, or “charitable” for marketing purposes but aren’t genuinely green, responsible, sustainable or charitable.

The new law also provides on the accountability of the board of directors, organizational transparency, and the benefit enforcement proceeding.

Paul Wassgren, our corporate partner in Las Vegas, wrote about benefit corporations in 'B' corporations: Will Nevada be left behind?

Welcome to Legal Tastings!

Welcome to “Legal Tastings – A Wine Law Blog” of Fox Rothschild LLP. Our goal is to provide topical information, recent developments, and contacts that will be interesting and useful to those of you in the wine industry. Just as customers visit you and sample your wines through tastings, we’d like to have you sample our legal knowledge and experience on a variety of legal topics through our blog. Many of our postings will be germane to owners of closely-held businesses.

Our colleagues throughout Fox Rothschild will chime in on various topics: tax, estate planning, corporate, partnership, international (trade, tax, private wealth planning), labor and employment, immigration, intellectual property, and family law, to name a few. We’ll share our insight and ideas.

You'll meet our friends in the wine and related food industries through interviews and their on-line feedback. 

We hope you’ll share this sense of community as part of our readership. We welcome your feedback and hope you will find our blog to be a good resource for you.

From Japanese Sake to California Wine (and Taxes)

I’m the granddaughter of a Japanese sake, vinegar and soy sauce brewer and great-granddaughter of a chef/restauranteur. WWII changed all that when my family had to liquidate all business holdings and literally run for cover to the countryside, each child with one suitcase filled with cash. My mother managed to hold on to her suitcase but in the chaos at the train station, my aunt lost hers. She never lived that down but that’s another story.

int1563.JPGTwo generations later, I find myself blessed to live in San Francisco and St. Helena, the center of food and wine. The drive from San Francisco is like music, with the Carneros Highway as a prelude to the sheer beauty and peace of the valley, followed by the vineyards of Yountville, Oakville and Rutherford nestled in the majesty of the Mayacamas Mountains and Mount Saint Helena, and finally, the magic of Howell Mountain.

It’s hard not to live in the present on Howell Mountain. The pace of the valley quickens with the nearing harvest – the ripe grapes, the anticipation of the crush and the smell of fermentation in the air, the winemaker’s art in making wine, and the business of shipping and selling.

But just like the grapes are threatened by the grapevine moth, this land, the vines, grapes and family business are threatened by taxes. To preserve this land and family legacy for future generations -- so that they may live in their “present” moments – it’s important to consider the impact of death and taxes.

Last year, President Obama signed The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The 2010 Act extended the Bush tax cuts for 2 years. Until December 31, 2012, there are higher exemptions and lower rates for gift, estate and generation-skipping transfer taxes for U.S. citizens and residents.

What will happen in 2013? We don’t know. There was talk by House Democrats of “reverting to 2009 estate tax parameters” one year early in 2012 instead of 2013. The best we can do is examine what we know about tax rates and exemption amounts:

2010.jpg

*Reunified after 2010. 

What’s the optimal planning option? The answer depends on the family’s objectives and strategic plan for the business. I’ll be discussing some options, from basic to complex, along with recent developments.

Conflicts Check

The first step in any attorney-client relationship is the “conflicts check” so that will be the starting point of our discussion. Before I represent anyone or any entity (like a corporation, partnership, or trust), I need to make sure that my firm does not already represent an individual or entity with an interest adverse to that person or entity. For example, suppose I want to represent a potential buyer of a piece of property. If one of my partners already represents the seller, that’s a conflict of interest. I can’t represent the potential buyer because my firm would end up on both sides of the transaction.

int82A.jpegWe also have to look out for potential conflicts of interest. In personal planning, husbands and wives have potential conflicts of interest. They could have secrets from each other; or their desires about who should inherit and how much can differ. The difference is generally one of degree, but they can occasionally become diametrically opposed to each other.

Everyone needs to understand who is being represented. What happens if parent and child come to see me for legal advice? Am I representing the parent or the child? Do I represent both? What if their interests don’t conflict now but do later? The answer is important because I have a fiduciary duty and duty of confidentiality to my client. I need to know if I can disclose the parent’s confidences to the child, and vice versa.

If I’m going to represent multiple family members, I have to give full disclosure of the relevant implications of the multiple representation in writing. This means that my written engagement letter will set forth the terms of the fee agreement and fully disclose any conflicts, if any. I’ll suggest that everyone seek independent counsel to make sure all the terms are properly explained before the parties waive conflicts and confidentiality. It’s a lot to digest at the beginning of the relationship, but it’s a very important and crucial step.

It’s because we’re governed by the California Rules of Professional Conduct and the California Business & Professions Code Sections 6000 et seq.  The State Bar website ethics discussion describes various situations where conflicts can occur.

Family Business Succession

A December 2010 Korn/Ferry Executive Survey revealed that 98% of global companies believe that CEO succession planning is an important piece of overall corporate governance. Yet, only 35% of those surveyed have a CEO succession plan in place.

int82C.JPGSuccession planning for family-owned businesses is even more delicate and frail. In the United States, family-owned businesses comprise 80%-90% of all business enterprises, but the succession rate is not encouraging -- more than 30% of all family-owned survive into the second generation; 12% to the third generation and 3% to the fourth generation.

For family businesses, succession planning involves transferring the businesses to the next generation and thus goes hand in hand with estate and tax planning. That's why it's so hard -- you have to talk about your family, death, divorce, and money.  But it's crucial to deal with it sooner, rather than later, so your business can be handed down to your descendants.