Morales-Garcia v. Better Produce, Inc., 70 F.4th 532 (9th Cir. 2023)

Agricultural laborers who picked strawberries for several growers sued the growers’ distributors, Better Market Produce and Red Blossom Sales, alleging that the distributors were liable for unpaid wages after the growers went bankrupt.  Under Cal. Lab. Code § 2810.3, a company that outsources work to a labor provider may be held liable for a laborer’s wages as a “client employer” if the laborer’s work is within the outsourcer’s “usual course of business.”  The statute defines 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.”  The district court rejected plaintiffs’ claims, holding that the determination of whether the farms were part of the distributors’ premises required considering the degree of control the distributors exercised over the laborers’ location of work.  The Ninth Circuit affirmed and distinguished typical control tests which focused on control over workers with the control test applied by the district court which considered the distributors’ control of the land, i.e., the premises.  The Ninth Circuit agreed that the distributors did not exercise sufficient control over the land despite having an exclusive arrangement with the growers for the land and retaining entry rights for inspection.  The Ninth Circuit also rejected plaintiffs’ overarching claim that Section 2810.3 extends liability for wages of workers who produce a product necessary to the company’s business.