On June 1, 2023, a panel of judges for the United States Court of Appeals for the Ninth Circuit held that berry distributors were not liable as “client-employers” of agricultural workers. The plaintiff agricultural workers had been hired by strawberry growers to pick fruit that was then turned over to defendants Red Blossom Sales, Inc. and Better Produce, Inc. for distribution.

In 2018, the strawberry growers stopped paying the plaintiff agricultural workers and filed for bankruptcy. The plaintiffs then sued the distributor defendants as joint employers and client employers. The district court ruled in favor of the distributor defendants on all claims, finding that they were not joint employers under federal law or California law because they did not supervise plaintiffs and did not exercise control over their wages, hours, or working conditions.

The only issue appealed by plaintiffs was the distributor defendants’ liability as “client employers.”  Labor Code section 2810.3, which has been effective since January 1, 2015, creates liability for “client employers.” A “client employer” is defined as a business entity, regardless of its form, that obtains or is provided workers to perform labor within its usual course of business. Labor Code §2810.3(a)(3).

The panel held that the plaintiff agricultural workers were not performing labor within the distributor defendants’ “usual course of business” as defined by the statute. The statute defined “usual course of business” as “the regular and customary work of a business, performed within or upon the premises or worksite of the client employer.” Labor Code §2810.3(a)(6). The panel found that plaintiff agricultural workers did not work on the premises or worksite of the distributor defendants, and therefore were not performing work in the “usual course of business.”

The panel further held that the distributor defendants’ business was “separate in nature as well as location” from the business of growing the produce in which the plaintiffs were engaged. After reviewing the legislative history and intent, the panel held that Section 2810.3 does not “go so far as to extend liability for the wages of workers performing work elsewhere, even if the workers are producing a product necessary to that company’s business.”