STATE OF CALIFORNIA

DEPARTMENT OF INDUSTRIAL RELATIONS

INDUSTRIAL WELFARE COMMISSION

 

 

 

 

 

Public Hearing and Meeting

 

 

 

 

 

 

April 9, 2001

Doubletree Hotel

3100 Camino Del Rio Ct.

Bakersfield, California

 

 

 

P A R T I C I P A N T S

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Industrial Welfare Commission

BILL DOMBROWSKI, Chair

TIMOTHY CREMINS

HAROLD ROSE

 

 

Staff

BRIDGET BANE, Executive Officer

MARGUERITE C. STRICKLIN, Legal Counsel

TRACI PILGRIM, Analyst

 

 

 

 

 

 

 

 

 

 

 

I N D E X

Page

Proceedings 4

Public Hearing: Amendments to Wage Order No. 14 - Sheepherders

CYNTHIA RICE, California Rural Legal Assistance 4

MARK SCHACHT, California Rural Legal Assistance 30

Foundation

CHRIS SCHNEIDER, Central California Legal Services 31

SEBASTIAN HUARACA, sheepherder 34

DAVID QUISPEALAYA, sheepherder 36

MICHAEL MORENO, United Farm Workers of America 46

GEORGE SOARES, Western Range Association 55

JIM HOLT, Western Range Association 63

LORON HODGE, Kern County Farm Bureau 68

DARREN INDART, sheep rancher 69

JACK CAUBIN, Tri-State Livestock Credit 74

Corporation

BRUCE CAMPBELL, sheep rancher 78

CATHERINE NYBERG, Agricultural Council of 85

California

DEIRDRE FLYNN, California Wool Growers Association 85

DOMINIQUE MINABERRIGARAI, sheep rancher 87

Adjournment 113

Certificate of Reporter/Transcriber 114

 

 

P R O C E E D I N G S

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(Time noted: 10:08 a.m.)

COMMISSIONER DOMBROWSKI: All right. Iíd like to call the meeting to order.

Let the record show that Commissioners Rose, Cremins, and Dombrowski are present.

The first item on the agenda is consideration and public comment on the proposed employee amendments to Wage Order Number 14. We have a panel. I donít know who wants to start.

Iíd like to keep it to -- each panel to an hour and a half, and then we will have public comment from whoever wants to comment at that stage.

I would say thereís -- this is simply a hearing. There is no -- no decisions, no votes being taken today.

Go ahead.

MS. RICE: Mr. Dombrowski, Mr. Chair, members of the Commission, my name is Cynthia Rice. Iím an attorney with California Rural Legal Assistance. I am also an -- was also an alternate member on the employee side of the wage board established for the consideration of the minimum wage for the sheepherders.

And the presentation today will be comprised of a presentation by me of an analysis and comparison of the two proposals that are before the Commission today, including a request by the employee side that their proposal be amended slightly to incorporate some concerns raised by the ranchers and to comply with certain standards that are already existent under the federal program.

We will then have a number of workers testify about current conditions in the sheep industry in California. It is our intent not to have that testimony be duplicative of what was previously presented to this Commission, but to fill in some of the blanks and some of the areas of issue that were raised by the ranchers, either during the wage board proceedings or during the minimum wage proceedings.

And then we will also have testimony by Mr. Schacht concerning the impact of the H-2A program and other federal issues on this process, and finally, by a representative from the United Farm Workers, who will talk about some general impacts on the agricultural industry at large that an exemption of this type has with respect to the California workforce in general.

We have submitted to you a revised or proposed final regulation regarding sheepherders under IWC Order 14, which, as I indicated earlier, contains two slight amendments, which I will refer to in my comments, and we have also given you a copy of employee wage board membersí analysis of the difference between the rancher and sheepherder proposals.

And at this time, Iíd just like to walk the Commission through the difference between the proposals that are before you and why we, the members of the wage board on the employee side and the workers that we represent, and the community that they come from think that the employee proposal is a superior proposal, both with respect to the protections it provides for these specific workers, but also inasmuch as it continues the general theme of California and IWC protection of workers in general.

At the outset, we would point out that in the rancher proposal, there is an amendment to the definition of "sheepherder." Youíll recall that in the actual wage order now, the exclusion of sheepherders is by definition of "sheep herder." Under our proposal, that would be the definition that would continue, not to be amended. It is the same definition that is contained under the standard industry codes applicable to this particular occupation, and it is the definition that is, in fact, included in the H-2A work order and the advertisements that are issued pursuant to that order for these positions.

The ranchers would suggest that that provision have an added section which extends coverage to persons performing the work of a sheepherder pursuant to an approved job order filed under the provisions of the pertinent section of the Immigration and Nationality Act. This proposal takes us down the very track that Tom Rankin, of the AFL-CIO, raised particular concerns about as an employee member of the wage board. And that is, it takes us away from the IWC acting as a California commission making California definitions covering California workers and instead gives the control to DOL to determine who is going to be covered by an exemption under California law. That is not a path that we want to take.

The current definition under the wage order is inclusive of all sheepherders who are excluded under the FLSA and is something that should be included and preserved within the wage order because it does exactly what this Commission wants to do: it identifies with specificity, and not by incorporation by reference to some other agencyís interpretation, the workers that will be covered by these specific provisions.

So we would recommend that that language proposed by the ranchers not be added.

In contrast, we -- the worker proposal suggests that there be added to the current wage order a definition for "open range." This is important because under the housing provisions, under both proposals, there is a difference between the minimum housing standards that will be applicable depending on whether or not that housing is located in the open range or in a more accessible location.

So the employees are proposing that "open range" be specifically defined in the wage order to include -- in a manner that would specifically refer to uncultivated land which is revegetated naturally or artificially to provide for a forage cover; in other -- in other words, a very specific type of land that, by its nature, is inaccessible and therefore harder to make accessible or available to higher-level standards of housing. This is very necessary because, again, you need to have a specific standard set by California for the purposes of determining whether or not those differing housing standards are going to apply at one location versus another location. This gives the regulators and the inspectors a specific criteria to work from.

The next area of contention, and perhaps, some would say, the largest area of contention, is the difference in the wage proposals between the employee provision and the employer or rancher provision. As indicated in the final report, the employee proposal would propose that minimum wage for sheepherders be $2,060 a month, minus the applicable lodging and meal credits, which amounts to $411 per month, which would result in a net minimum wage of $1,649 per month. We estimate that this comes up to, in our calculations, minimum wage at the current level for the very, very lowest estimate of hours worked on an annual basis, based on the collective interviews and testimony that has been offered before this Commission. These, as is indicated in the final report, which is part of this record, these calculations began with the ranchersí estimates of what the hours worked were, and then -- and adjusted them up to reflect what the actual work time was under certain circumstances by workers who had testified, both on the ranchersí side and on the -- on the employee side at the minimum wage hearings. Based on that, we came up with the $2,060 per month, minus the $411 wage credit.

We estimate, and as the workers will testify later today and in the declarations that will be formally lodged as part of the record, that this actually grossly underpays and under-reflects the amount of hours worked, and that generally speaking, a sheepherder in California can expect to be in active duty 12 to 13 hours a day for most days of the year, and never is on active duty less than 8 hours a day, and for many, many months, is expected to be active, alert, in the field with the sheep from four in the morning until nine p.m.

By contrast, the growers are suggesting once again not that the Commission itself set a specific wage, but rather, that it incorporate, that it adopt, that it refer to and rely upon the actions of the Department of Labor and the U.S. Congress to establish a minimum wage for the sheepherders who toil in California. Again, that is not the charge of this Commission, to adopt and to essentially delegate its responsibilities to another agency. And the ranchersí proposal essentially asks you to do that, and in asking you to do that, under the current standard, which is $900 a month, and calculates basically to $15,732 a year, with the maximum meal and lodging supplemental that are allowed under the wage order, results in an hourly rate of pay, based on the ranchersí testimony, not augmented by our testimony -- the straight ranchersí testimony -- of $5.43 per hour. That is already considerably below the current minimum wage for California workers and on its face is unacceptable.

Again, that is based on the ranchersí testimony with respect to the total number of hours worked, including their estimates that for some days, workers only work three hours a day, and it is based on giving them credit for the food and lodging, although, as testimony before this Commission has already indicated, that food and lodging is not adequate and does not meet acceptable standards. Giving them credit for all of that, they come out offering to pay workers $5.43 an hour, or -- well, almost a dollar less than current minimum wage and over a dollar less than minimum wage as of 2002.

If you do the calculation based on the employeesí estimate of hours, which we would submit is a more accurate estimate -- and the declarations that will be submitted today go through the workday season by season -- it comes out closer to $4.00 an hour, again, including the wage credit, including the housing credit, including the meal credit. It is clearly inappropriate for this Commission, one, to defer its judgment and delegate its responsibility for setting a wage to these workers to the federal government, and, second, to set it at what is already a sub-minimum wage, in light of the onerous conditions under which these workers work.

Proceeding down the side-by-side proposal, there are a couple of smaller differences between the two proposals. Section 15(A) in the rancher proposal suggests that if there is employment outside of the sheepherder classification, that only that employment during the workweek will be credited at the minimum wage, whereas the employee proposal makes it clear that if a sheepherder works outside of a sheepherderís responsibilities, in other words, does something that another worker would be paid minimum wage for, he should be paid minimum wage for the entire workweek. Thatís the standard under FLSA, the Fair Labor Standards Act, and thatís the standard under California law as interpreted by the Labor Commissioner and the IWC at this point in time. The same standard should apply to those workers who do not have a contract.

For those workers who do have a contract and are told, "Come into my country, work, and all youíll have to do is sheepherder work and Iím paying you this special wage because thatís all it is," then we would submit that those workers should then revert back to the non-contract and be paid minimum wage for the entire duration of their contract. And that is the language that is currently proposed under the employee proposal.

And finally, with respect to wages, again, the grower proposal completely relies on the largesse of DOL and the U.S. Congress for determining whether sheepherders in California, doing California work on California farms, are ever going to get an increase in wage. During the period of time that -- during the last decade, sheepherdersí wages under the H-2A program languished at between $600 and $700 per month, for ten years. In the last two years, there has been some activity that brought it up to $800 a month and $900 a month.

By contrast, the California minimum wage increased incrementally during that ten-year period to respond to the economic pressures, inflation, and the change in living conditions and the betterment of our society. We need to have that same type of progressive change apply to sheepherders. Thatís whatís fair. Thatís what this Commission is charged to do. And thatís what the employee proposal does by essentially indexing the sheepherdersí minimum wage to any minimum wage increase. And, in fact, 4(E)(4) of the worker proposal says that minimum wage will be increased automatically in direct proportion to any percentage increase of the minimum wage generally applicable to California workers. Thatís whatís fair. Thatís what happens to all the other workers, and thatís what ought to happen to California sheepherders. And thatís what --

COMMISSIONER DOMBROWSKI: Before you leave --

MS. RICE: Sure.

COMMISSIONER DOMBROWSKI: Before you leave the wages, can you go back to the employee proposal, 4(E)(3), that non-sheep-herder eliminates the exemption "for the entire workweek or contract period" --

MS. RICE:

COMMISSIONER DOMBROWSKI: -- "whichever is longer." Can you explain that to me again?

MS. RICE: Yes. If a -- if a sheepherder is not on a specific for-term contract, is not, for instance, an H-2A worker, and he is on essentially a pay period-to-pay period contract, and he performs 8 hours of non- -- of irrigating work, of irrigating work or builds a corral for cows, then he would be entitled to minimum wage for the entire workweek. And thatís essentially how the Fair Labor Standards Act and how the Labor Commissioner interprets those exemptions from minimum wage.

If, however, he came in under an H-2A contract, then, as we read it, his performance of non-sheepherder work takes him out of that contract protection, and he should be paid for minimum-wage work for the entire contract period.

COMMISSIONER DOMBROWSKI: If he does any non-sheepherding work during that contract period?

MS. RICE: That is how the proposal is written at this point in time.

COMMISSIONER DOMBROWSKI: That voids the contract.

MS. RICE: Essentially, it would revert back to minimum wage, yes.

COMMISSIONER DOMBROWSKI: So a sheepherder could never do anything but sheep herd, to stay under the contract.

MS. RICE: And, in fact -- "Your Honor" I almost called you -- Mr. Dombrowski, Mr. Chair -- Mr. Chairman, Your Honor --

COMMISSIONER DOMBROWSKI: I get insulted --

(Laughter)

MS. RICE: -- in fact, the federal protections are, in fact, very strict. They are not allowed to perform work outside of the contract definition. The problem is, there are -- there are few ways that a sheepherder or any H-2A worker under the federal system can enforce those protections. We think the greatest incentive for a grower not to import a sheepherder from a foreign country, isolate them out there, and then have them do cattle ranching or irrigating or planting or plowing, is to make sure that if

-- that all that person does is sheep herding, and if he does something other than sheep herding, then the benefit of that growerís, that rancherís bargain goes out the window. Thatís the theory behind the proposal.

COMMISSIONER ROSE: I have one question.

COMMISSIONER DOMBROWSKI: Sure.

COMMISSIONER ROSE: Is it not true that there is other H-2A programs other than sheepherder?

MS. RICE: Thatís correct.

COMMISSIONER ROSE: Okay. So doing cows or some kind of agricultural work other than that is covered by that also?

MS. RICE: Thatís correct, Mr. Rose. And in general, the hourly rate for that is set using a different mechanism. Itís the -- and I -- let me defer to Mr. Schacht for that.

MR. SCHACHT: The adverse effect wage rate applies to all other --

COMMISSIONER ROSE: Which rate?

MR. SCHACHT: Adverse effect wage rate, the AEWR. Sheep herding is covered by a special order promulgated by DOL in 1984 in response to requests from the industry to basically have lesser protections and lower wages apply to this industry. And thatís what is in effect in current law now.

MS. RICE: So if you come in under another type of H-2A contract, your minimum -- your hourly wage is really supplemented above the prevailing wage standard to compensate and put into effect that adverse effect wage rate.

MS. RICE: Moving on to housing -- and as I indicated before, the employee proposal in this respect attempted very seriously to address the concern raised by the ranchers that this is an industry that is not like other industries. One, housing is required. The worker must live in the housing. Therefore, itís critically important for this Commission to consider the condition of those housings because, in effect, it is part of these workersí wages. The ranchers want credit for the fact that they provide this housing, and they have to provide this housing. Therefore, they have to take responsibility and ensure that that credit is worthy of being used for minimum wage.

So, in general, any other California worker would be -- would have his housing subject to the standards, specific standards, of the wage order and the standards of the Employee Housing Act, which establishes very strict standards about heat, temperature, lighting, occupancy, accessibility, drainage, seepage, sewer systems, toilets, plumbing, electricity, and also specifically provides that workers have certain access to certain types of facilities.

Understanding that certain sheep ranches are not in areas where this type of housing is available, the employee proposal essentially offers three different standards or housing to meet the ranchersí concern.

The first refers to fixed-site housing. The testimony submitted by the ranchers, both in the minimum wage proceedings and at the wage board, gives no indication that sheepherders currently housed in fixed-site housing cannot be housed in housing that meets the minimum standards already established under California law. If itís fixed-site housing and has been made for that purpose for employee housing, then it should be susceptible, it should be governed by the employee standards that already exist and already apply to all other workers in California. And the employee proposal suggests exactly that, that if a sheepherder is housed in fixed-site housing, then all of the current regulations applicable to employee housing will be applicable to that housing as a condition of that housing being a part of the workerís minimum wage. Thatís whatís fair. Thatís whatís applicable to other California workers. And thatís whatís critical for these workers, because they have no choice. They cannot say, "I donít want to live in your crummy housing." They have to live here, and itís part of their wage, as part of this proposal and as part of the ranchersí proposal. So it must meet these minimum conditions. And if itís fixed-site, it should meet the minimum conditions applicable to other fixed-site housing in California.

We understand that there are certain situations where itís necessary to use whatís called mobile housing units, non-fixed-site housing units, and under those circumstances, we have suggested very specific protections that are short -- fall far short, in fact, of those protections for fixed-site housing, but include, as a minimum, toilets and bathing facilities -- portable toilets are okay, portable bathing facilities are okay -- heating of some type, inside lighting, potable hot and cold water.

And this is one of the areas in which weíre proposing an amendment. After the wage board proceedings and in conversation with other sheepherders, we found that it may not always be possible for there to be running water or water under pressure. So in the proposed amendment that weíve just submitted to you today, weíve pulled that criteria out. So weíre just requiring that there be potable hot and cold water.

Weíre also requiring that there be adequate cooking facilities and utensils. Youíll hear from some of the workers that they were required to buy their own pots, pans, cooking utensils. That doesnít seem to be an appropriate situation in these mobile housing units, when these workers, again, are forced to live in these substandard conditions as part of their pay.

And weíre requiring that there be refrigeration. Again, this is another aspect of the proposed amendment weíre suggesting. The current H-2A standard says that an operating or working refrigerator has to be available. We understand that these are generally available in the industry, and they run on propane and are not prohibitively expensive. So our amendment proposes that that be required, but that other types of refrigeration can be used in an emergency for up a week while that refrigerator is under repair.

Finally, the employee proposal says, okay, if thatís completely impossible, if, in fact, the condition of this housing in open range is such that it is not feasible, that it is not possible to provide even this minimum -- excuse me -- level of standard, then we revert back and say you can use the standards that include burying your waste in a pit, having only basic seepage and -- excuse me -- and dryness standards, that those standards from the federal program can be used.

But, again, to summarize, if itís fixed-site housing, then the Employee Act -- the Housing Act standards that apply to other California employees ought to -- ought to apply. If itís mobile housing units, and then only if itís mobile housing units used in the open range, as defined under this order -- in other words, it establishes an accessibility issue -- then these less stringent standards can be applied. And finally, if itís completely impracticable because of the specific conditions on the open range to apply those standards, then they would be waived and the employers could revert back to the federal standards.

In contrast, the ranchers are saying, "We donít care what kind of housing it is. If itís fixed-site housing and thereís a sheepherder in it, we donít have to comply with the current wage order requirements or the housing and community development requirements for this housing." Thatís just not fair, particularly since these workers, again, are using this housing as their minimum wage. Theyíre saying that under those circumstances, they need only have toilets and bathing facilities, heating, which can include a camp stove, inside lighting, potable hot and cold water, cooking facilities and utensils -- theyíve even eliminated "adequate" there, and refrigeration, including ice, so long as ice is regularly delivered. Thatís just not acceptable in a -- for a California worker when it is feasible to put fixed-site housing that would comply with other situations.

They then go on to say that if itís mobile housing in the open range, anywhere, under any conditions, even if they are accessible to higher standards, that only the H-2A standards apply. This would mean all they would have to do is provide a well drained site, adequate and convenient water supply with individual drinking cups, pits could be used for waste disposal, there would be no heating requirement unless in the area that they were in, temperatures fell below 50 degrees for a continuous 24-hour period. It meant in -- it means that in those mountain areas where we often get 35- or 40-degree temperatures overnight but it comes up to 60 degrees, no heating would be required.

Again, with respect to those housing standards, itís just not acceptable for them to be able to use this housing as part of the minimum wage but not meet at least essentially humane living standards. And so, we would urge that our proposal be accepted.

Under the ranchersí proposal, even if they didnít meet these very minimal housing standards, it would have no effect on the amount of money that they have to pay these workers. By contrast, and again, consistent with California law, consistent with the wage order applicable to agricultural workers and every other worker, under our proposal, if the housing does not meet the specific standards articulated, it cannot be used as a credit against minimum wage. This is critical. This is the only way that farmers and ranchers have any incentive to provide adequate housing, is if they cannot credit it against minimum wage unless it meets these standards. That is a vital -- vitally important part of the employee proposal. And if it is not adopted as part of this proposal, it will be an aberration in the general wage and hour approach to all -- with respect to all other workers.

Finally, the rancher proposes that the Employment Development Department inspect their fixed-site housing and mobile housing annually "if state inspectors are available." That language is specifically in their proposal. That means if EDD doesnít have an inspector that year, then, "Gee, itís okay; you can house these guys in this housing." As you heard in the earlier proceedings, housing is recurrently a problem here. In a newspaper that will be -- article that will be introduced later in our presentation, thereís a very dramatic photograph of the type of housing that was there and comments about EDD inspection. In fact, EDD has available just a handful of individuals who are available to do housing inspections. And why would they have more? Itís not what EDD does.

Our proposal, the employee proposal, proposes instead that Housing and Community Development, the state agency that currently has responsibility for employee housing inspection, and, in fact, whose budget was augmented last year to add, I believe, thirty additional inspectors, have the responsibility for inspecting all of this housing, and that it be done annually. Again, that is a critical component of any type of wage and hour and conditions package that allows housing to be a part of the minimum wage. And we would urge the Commission to ensure that that be a part of the final order.

EDD has no enforcement power over the housing it inspects, except to give a bad report to DOL related to an H-2A application. HCD, the Housing and Community Development Department, can, in fact, issue a repair order that is not -- that can -- excuse me -- can require the employer to repair the housing or not use it for occupancy. EDD does not have that power. Again, thatís why itís critical that that agency be designated as the inspection agency.

And again, just going back to the original wage proposal, it is also critical that if the housing does not meet inspection criteria and it does not live up to those standards, it not be used as a part of the minimum wage, and that that be part of the package.

In addition to those critical wage and housing provisions, the rancher proposal and the sheepherder proposal both address recordkeeping requirements. We would suggest that the employee proposal is, in fact, more encompassing, it parallels much of the record-keeping requirement that is required for other California workers, and it makes provisions for the specific types of problems that ranchers might have keeping records that are specific and peculiar to the sheepherding industry. For instance, it does not require the keeping of records of hours worked or piece-rate units worked or hourly rate or piece-rate unit rate, unless there is non-sheepherder work performed. It also does not require that Social Security numbers be kept if they are not applicable. However, it does require that during those periods of time that a sheepherding is performing non-sheepherder work, that the rancher keep time records so a sheepherder can determine what amount of minimum wage pay under the other applicable orders he or she is eligible to receive. Itís only fair.

The reason these recordkeeping requirements are so important is that when a wage dispute arises, the employer has all the information and has all the credibility, frankly, on his side. However, under California and federal law, when there is a specific recordkeeping statute in effect and the employer fails to maintain those records, then the burden falls on the employer to disprove the employee, the workerís testimony, about what his wages are. Thatís why itís so critical. And the IWC in prior years has included these specific recordkeeping requirements in the wage order. And itís as critical for sheepherders who work outside of their job classification, as it is for any other worker, when it comes down to an issue of whether or not theyíve been adequately paid.

Additionally, we have included, as have the ranchers, a number of other working condition issues. The employee proposal requires that the employer provide regular mail service. This is limited to not less than every seven days on open-range sites under the rancher proposal. We would suggest that that type of characterization is -- or qualification is not necessarily appropriate, because at these open-range sites, often a water truck comes out every day to water the sheep. And if thatís the case, why canít the mail come out with it too? So we would -- we would urge that it be made regular mail service, and as regular as can be possible.

Also, specifically with respect to the communication provisions, the sheepherder proposal is very specific. It requires communication through telephone or radio and says that a worker may be charged for non-emergency use. In contrast, the rancher proposal provides for only "an appropriate form of communication." We have grave concerns that in an open-range situation, miles away from anyone else, a rancher might construe "appropriate" as, "Well, Joe is going to be there in two days with the water truck; if anything happens to one of the workers, they can tell him then." That is not acceptable. We need a more precise definition of that. We believe that the definition provided under the sheepherder proposal is specific enough to guarantee communication for emergency purposes through radio or telephone, but not put a rancher in a position that he or she is suffering any kind of huge economic outflow to comply with that provision.

Similarly, with respect to visitor access, it merely -- our proposal merely requires that the rancher provide access to visitors to the housing. The ranchersí proposal wants to pull back from that and say thereís access to fixed-site housing and, when practicable, to mobile housing. "When practicable," by its very nature, will be defined by the employer. No other employee in California has his or her access to visitors subjected to their employerís determination of when itís practicable. And that should not happen to sheepherders either.

With respect to -- there are a number of provisions that the sheepherder proposal addresses that the rancher proposal does not address that are also important and also track current language in the other IWC orders.

We would include coverage under the "Cash Shortages and Breakage" provision of the current orders, which require that no deduction or required reimbursement be made except for willful act or gross negligence or illegal action of the employee. As I believe Mr. Schneider will testify later this afternoon, we have seen check stubs from workers where there are specific deductions for tools, for equipment, for -- to replace things. And these -- this must be done with the same standards done to other workers.

Similarly, the "Uniforms and Equipment" provision, it only makes sense that a sheepherder who has already a substandard minimum wage, of which part of it is housing, cannot be charged for the equipment that is necessary for his job. Again, check stubs provided by Mr. Schneider will show deductions of almost -- of $100 or more for tools and equipment used for doing sheepherding. That is from the $700- or $900-a-month wages that that individual is working. That cannot be acceptable.

Again, the growersí proposal has no -- no elements that address these issues.

Under "Meals and Lodging," under the H-2A special order, meals and lodging must be provided for free. That is the extent to which the ranchersí proposal goes. However, we believe and, we think, consistent with California law, meals and lodging must meet certain standards. Meals specifically must be an adequate, well-balanced serving of a variety of wholesome food. That is the standard that is currently in the wage order with respect to every other worker who is charged for meals. That is the standard that should be applicable to sheepherders. Again, the maximum credits have to be established and applied, particularly with respect to sheepherders, because, again, this is a credit against their minimum wage. They have no choice, they have no bargaining power. If this proposal is accepted, their meals are part of their wage and they have to meet a certain standard, and the charge for them cannot be allowed to exceed a certain amount.

Our provision also requires that they be allowed a thirty-minute meal break for each five hours of work, unless they work six hours a day. That, again, is consistent with all other employees. Thereís no provision for meal breaks in the rancher proposal.

Our provision -- our proposal requires that rest breaks, rest periods of 10 minutes for each four hours of work, be provided, and that if there is a situation where workers can do certain work with seats, that those provisions of the current wage orders that are applicable to all other workers be applicable to sheepherders as well. Itís just whatís fair.

And finally, our proposal suggests that because the IWC in its charge has come here to take a look at what sheepherders ought to be paid, like other workers in California, as a minimum wage, it also ought to establish an incentive for compliance with that law. And accordingly, we have included in the penalty provision that currently exists in the other wage orders, 18, that those penalties be applied to violations of these specific sheepherding provisions. Again, because the housing and food provisions in particular are a part of the minimum wage of the sheepherders, a rancher has to have an incentive to comply with those provisions, and we believe the penalty provisions do that.

In the wage board proceedings and in the proposals that were submitted during those proceedings, it became very clear. Itís clear that there are areas of agreement between the employers and the employees, that, one, that some kind of minimum wage for sheepherders should be established by the Commission; two, that some provision for establishing minimum standards for housing be established by the Commission; and three, that specific protections regarding things like recordkeeping, access, and working condition also be addressed by the Commission. The record before this Commission from the wage board and from the minimum wage hearings is unrefuted with reflect to the conclusion that those three issues need addressing by this Commission. We believe that the sheepherder proposal does it in a manner thatís consistent with the way that other California industries are treated, that specifically establishes California standards rather than adopting and incorporating a federal standard over which you will have no control, and which -- and does so in a manner that guarantees sheepherders a chance at the quality of life and the living standard that this Commission is charged with assuring that California offers its workers.

Thank you.

MR. SCHACHT: Mr. Chairman and members, I just wanted to give you a little preview for the next segment of our presentation. We have a number of workers whose declarations are about to be submitted to the record by Mr. Schneider, as well as a lawyer from one of the CRLA offices who took a declaration from a worker who is not able to be present. And in this section of our presentation, Mr. Schneider and the workers and -- what is Mayiaís last name?

MR. SCHNEIDER: Thao.

MS. RICE: Thao.

MR. SCHACHT: -- Mayia Thao will provide specific testimony on key issues related to our proposal.

And again, one of the fundamental distinctions that are being made by our proposal versus the ranchersí is that the ranchers are proposing to have only the H-2A standards set by the federal government and the Congress applied to sheepherders in California, regardless of whether theyíre under the H-2A program or not. And weíre suggesting, both with our comparison with their proposal as well as the specific testimony thatís going to be given now, that there is ample reason and thereís ample justification for articulating specific California standards that are consistent with other wage order provisions that should apply to all sheepherders in California.

Mr. Schneider.

MR. SCHNEIDER: Thank you. And good morning.

COMMISSIONER DOMBROWSKI: Wait. Before you do, can I ask one question because I donít remember this? How many sheepherders in California are here not under the H-2A program?

MR. SCHNEIDER: We donít have any -- any real hard figures on that, because itís -- itís been hard for us to be able to determine that. There are a number of people who are resident alien workers that weíve run into. There are a number of people who are undocumented workers that we have run into. And then we also have a wide variety of estimates of how many sheepherders there are in California.

COMMISSIONER DOMBROWSKI: Well, my memory was we were talking 250 to 300.

MR. SCHNEIDER: I -- we believe itís significantly higher than that.

COMMISSIONER DOMBROWSKI: Okay.

MR. SCHACHT: And the -- just for more context, the U.S. DOL prevailing wage survey, which is a survey just of U.S. workers who are working in the industry, found about 10 percent, 30 of those workers, to interview. So thereís a substantial number of H-2A workers from foreign countries and there also appears to be a substantial number of U.S. workers.

And I guess our position is that because the H-2A standard is subject to congressional and federal administrative revision, to write that in as both the floor and the ceiling for conditions here is inappropriate when thereís a significant number of California U.S. workers that arenít part of that program.

COMMISSIONER DOMBROWSKI: Are all of your employees H-2A or are some of them not?

MR. SCHNEIDER: All the witnesses we are presenting today are H-2A.

MS. RICE: However, some of the workers that weíve interviewed for the purposes of completing the -- I believe, the report previously submitted by Mr. Schneider and referred to in our comments are legal residents of California.

MR. SCHNEIDER: Iíd like to start by introducing into the record three declarations. And I have the originals for the Commission, and then ten copies of each. And they are the declaration of Juan de la Cruz Fernandez, Sebastian Huaraca, and David Quispealaya.

MR. SCHACHT: Weíll give the originals --

COMMISSIONER DOMBROWSKI: Just give those -- give the -- give all your documents to Traci, please.

MS. RICE: Those are the originals.

MR. SCHNEIDER: And then I have a set of documents, which I have copies for each of you, that are some wage stubs of some workers here in the Bakersfield area showing that tools are deducted from their wages. For example, one here shows that a worker, for the pay period ending 12/31, 2000, his gross salary was $746, which, of course, is below the $900. And he had $92.74 deducted for remientas, tools. And then it shows the other deductions that were made there. You can -- in the other -- in the other stubs, you can see workers earning $800 per month who had $164 year-to-date deducted for their tools.

We have with us today two of the workers who have submitted declarations. And weíre not going to have them read the declarations to you, since thatís already in the record, but we are going to go over a couple of the key points as it relates to the proposal which the employee members of the wage board have before you, starting with compensation. And weíre going to briefly talk about the average day or a typical day of a worker, because, as you know, whatís been testified to is that at some times, itís

-- the work is only two or three hours a day. That has been the growersí testimony. We contend that is not true. And as the Commission is well aware by this time, thereís basically two seasons, the lambing season and the non-lambing season. And weíre going to talk about the difference between the two seasons.

So, what I want to ask to Sebastian and David is, what is -- in the non-lambing season, what is the -- how many hours do you typically work?

MR. HUARACA: (Through Interpreter) Good day. My name is Sebastian Huaraca. Itís a pleasure to speak to you today.

In the first place, my experience in the season thatís not the lambing season is that I get up at four oíclock in the morning. Then I go out with the lambs, with the sheep, at five oíclock in the morning, and then I return by ten oíclock in the morning. Then I make sure that they have water, for about an hour to an hour and a half, depending on what they need. Then, during this time, I make sure that all of them have adequate water, and Iím preparing my food for the day. Then I later leave with the sheep, take them out again at four oíclock, and Iím with them making sure, guarding them, and we return to camp around 8:30 or nine oíclock. Then, later in the evening, I have to be vigilant to make sure that the coyotes or other animals are not attacking the sheep.

This has been my experience of one day of work that is not the lambing season.

MR. SCHNEIDER: Iíd like to ask Sebastian specifically, have you ever had a work day that is only two hours of work?

MR. HUARACA: (Through Interpreter) It doesnít seem to me that it would be possible for anybody to work for two hours. We have between 700 and 1,000 sheep to take care of. We have to make sure that they all get their food, that they all get their water. It would be impossible to do that in two hours.

MR. SCHNEIDER: What was the least number of hours youíve worked in a day?

MR. HUARACA: (Through Interpreter) At a minimum, the minimum amount of work that I would be doing in a day would be 14 to 13 hours in a day.

MR. SCHNEIDER: Iíd like -- part of the argument thatís been made is that $900 is really quite substantial for these workers, and I want to ask David how he spends the $900 which he earns in a month. How do you spend your $900?

MR. QUISPEALAYA: (Through Interpreter) I would like to say good day to everybody here today. Thank you very much for the opportunity to speak. My name is David Quispealaya.

And $900 a month is not enough for me to survive. I have eight children and a wife back in Peru. I send them approximately $600 to $650 a month. With the rest of that, with the money that I have left over, I spend it on clothing, tools that are not provided by my employer, mail, and other essentials.

MR. SCHNEIDER: Have you ever had to spend money on supplemental food?

MR. QUISPEALAYA: (Through Interpreter) There have been times when the food that has been given to me has not been sufficient, and I have had to use my money to purchase food for myself. The employers donít comply with what is stipulated by the contract.

MR. SCHNEIDER: Thereís been a lot of representations made that a sheepherder who comes here will save money and go back and buy a big ranch or a big house in their country. Do you have a big ranch or big house in Peru?

MR. QUISPEALAYA: (Through Interpreter) What I have seen is that this is false. I have between -- I have approximately twenty friends, compatriots, who have been under contracts, up to five contracts, and all they have back at home is a simple house with simple animals back at the house.

MR. SCHNEIDER: Now I want to move on to some of the housing conditions, and Iíll be asking questions of both.

First of all, at your trailers, do your trailers have toilets?

MR. QUISPEALAYA: (Through Interpreter) Itís my opinion that the trailers that are provided have been discarded, old trailers. There is no bathroom provided. There is rats and insects that have access to the trailer itself because these are old, dilapidated trailers. Thereís not sufficient electricity -- thereís not electricity provided to the trailer itself either.

MR. HUARACA: (Through Interpreter) In the summer, it can be very, very hot, and in the winter, itís very, very cold. We donít have a heater provided for us, and it does not appear to me that the trailers are sufficient to guard us from these weather conditions. Our beds, the beds that are provided are inadequate. Weíre not given a bed cushion to sleep upon. We do not have a bathroom. Weíre provided a shovel to use when we need to go to the bathroom. And when weíre out in the fields, to our own shame, we have to go to the bathroom in front of people when necessity arises because thereís no protection, because there is no toilet for us to use.

MR. SCHNEIDER: I saw a rancher say in the newspaper the other day that some of the workers prefer to have a shovel rather than a toilet because if they had a toilet, theyíd have to clean it. Do you agree with that?

MR. HUARACA: (Through Interpreter) When I hear this, it makes me indignant. I think itís offensive for people to say things like this. Itís as if to say that we are primitive, that we donít need the same necessities as other people.

MR. QUISPEALAYA: (Through Interpreter) This is clearly something thatís offensive, but not just to me, but to all, all of my coworkers, or all the other men that are doing sheepherding. For people to say that we donít want to clean bathrooms is just not true. We want all of the conditions or the accommodations that should be provided to all workers, and we want clean -- clean accommodations.

MR. SCHNEIDER: And then I want to ask both of you whether the trailers that you have lived in have a sticker indicating that they have been inspected by the EDD.

MR. QUISPEALAYA: (Through Interpreter) The trailers that Iíve been in, yes, they have. They show that there was an inspection, but I donít understand how, with these conditions, that these inspections have been approved.

MR. HUARACA: (Through Interpreter) In November every year, someone arrives to make an inspection, but they never talk to us. They never ask us how things are, whether thereís a need for air conditioning or whatever. Then they put up a sticker approving, showing that the conditions are okay. But these are -- this is the inspection that is given to the trailers.

MR. SCHNEIDER: I want to talk -- or ask a few questions about the food that you get. And first of all, Iíd like to ask what type of food is provided to you, David?

MR. QUISPEALAYA: (Through Interpreter) With regards to the food, we receive two buckets of corn and tomatoes with garlic and onions, and about three pounds of meat for the week. We donít receive fruit. This is not in conformance with the contract that we were supposed to be receiving. And this is food for one week, no more.

MR. SCHNEIDER: One of you was telling me this morning about how you stretched out the milk that was provided.

MR. QUISPEALAYA: (Through Interpreter) To make the milk last longer, I will put water, the water that we have available, in the milk so that the milk will last longer. I donít know if this water is purified or not.

MR. SCHNEIDER: And let me ask Sebastian, have you ever had to drink the same water thatís provided for the sheep?

MR. HUARACA: (Through Interpreter) Yes --

AUDIENCE MEMBER: (Not using microphone) Excuse me. Excuse me.

AUDIENCE MEMBERS: Shh!

COMMISSIONER DOMBROWSKI: Quiet, please.

MR. HUARACA: (Through Interpreter) Yes, sir. There are times when we have to share water with the sheep. It happens that they will not provide us with enough water or that we will run out of water and they donít come back with more water, so we are compelled to share the water with the sheep or have -- drink whatever water is available in the -- on the land.

MR. SCHNEIDER: Were you ever provided canned food that was outdated?

MR. QUISPEALAYA: (Through Interpreter) Yes, we have received -- I have received canned food that had an expiration date that had passed, where it had been -- they had tried -- somebody had tried to block it out, and then we were provided the food. My guess is that that food is bought from some dispensary of very cheap food, where the foods are cheap, and then itís given to us.

COMMISSIONER DOMBROWSKI: Can I ask a question of just -- for both gentlemen?

MR. SCHNEIDER: Sure. Youíre the chair.

COMMISSIONER DOMBROWSKI: For both gentlemen, just how many years have they been here doing this? And second, why do they do it?

MR. QUISPEALAYA: (Through Interpreter) I came here and did five years as a sheepherder, and I was not able to earn sufficient money to start a business or to really save money. But it was because of that reason that I had to return, because the first time, I didnít earn enough money. So I came back so I could earn again.

COMMISSIONER DOMBROWSKI: Wait. He was here before. For how many years?

MR. QUISPEALAYA: (Through Interpreter) First -- my first contract was for three years, and then I came back for two and a half years.

COMMISSIONER DOMBROWSKI: And why does he do it?

MR. QUISPEALAYA: (Through Interpreter) Thereís no other work for me to get. I know this work, I like this work.

I simply want justice for myself and others. We just ask that we receive the accommodations necessary and that people comply with the law.

MR. HUARACA: (Through Interpreter) I have six years, and Iíve been under two contracts with the H-2A.

COMMISSIONER DOMBROWSKI: Six continuous?

MR. SCHNEIDER: Six years, two contracts.

COMMISSIONER DOMBROWSKI: Two continued, okay.

MR. HUARACA: (Through Interpreter) For many -- myself, as for many, I come here for the American dream. I want to better myself and my family economically, socially, and culturally. Iím the son of sheepherders, and this is the only source of income for myself and others like me, to come here and do this.

COMMISSIONER DOMBROWSKI: Is his contract finished?

MR. HUARACA: (Through Interpreter) I ended my last -- my previous contract on the 15th of June, and I returned to this country in August. And itís because one dollar in the United States is worth two and a half times, one sol.

We leave our country very -- at a young age to come here and work as sheepherders, and we work as a sheepherder here. And then, to return to your country -- to return to your country at the age of 35, the competition for work back home in Peru is extreme. And that forces us to come back as well.

MR. SCHNEIDER: I wanted to -- Iím sorry.

COMMISSIONER DOMBROWSKI: Harold?

COMMISSIONER ROSE: I can sympathize with the plight of no toilet, but there are other occupations that are going on today that -- people that donít have bathrooms. One is a CDF firefighter on a fire line. Another is logging operations. So I can sympathize with the plight, but there are other people that do that.

I have three questions. The first one: does the employer hold your passport?

MR. HUARACA: (Through Interpreter) In my case, I have my own documents.

MR. QUISPEALAYA: (Through Interpreter) In my case, it depends on the employer. There have been certain occasions where the employer has kept my documents, and there have been other employers who have given me -- let me have my documents to hold onto them.

COMMISSIONER ROSE: Next question: do either of you have communications from your job site to the outside world? Radio? Telephone?

MR. HUARACA: (Through Interpreter) No, we donít have -- we donít have those.

MR. QUISPEALAYA: (Through Interpreter) Despite the fact that there are telephones at the ranch, we donít have any form of communication.

COMMISSIONER ROSE: Okay. The next question is, weíve been discussing the sheepherder issue for at least six months. Has anybodyís wages, living conditions, or working conditions improved in the last six months?

MR. HUARACA: (Through Interpreter) If weíre talking about basic human needs such as good water or a good house to live in or a good place to live in, I donít think

-- I donít think things have improved at all.

COMMISSIONER ROSE: Thank you.

MR. SCHNEIDER: I wanted to ask about visitor access, about having visitors.

And, David, I wanted to ask you specifically about what has been your experience when someone has tried to visit you.

MR. QUISPEALAYA: (Through Interpreter) In my case, I had a very serious accident and my employer did not want friends or family to come visit me. I was told that if people wanted to visit, that I should go visit them in the street, away from the house.

Four people came to visit me, and they wanted to ask me questions, what were the conditions that I was being maintained under, and they asked about bathrooms and access to communication. When the lady of the house discovered that they were there, she made a phone call. And after the phone call, three patrol officers came to show these people away. And she told me that she did not want others to come visit me, that perhaps it might be an attorney or someone to come visit me, and she did not want that to happen again.

MR. SCHNEIDER: Okay. Finally -- thank you very much, David and Sebastian.

I have something I want to put into the record.

COMMISSIONER DOMBROWSKI: Sure.

MR. SCHNEIDER: This is yesterdayís Fresno Bee, where you can see a sheep camp, a typical sheep camp, and quite an article on here.

One of the things that I want to say, though, and Iím very pleased with, and that is, Tim Indart indicates that he is upgrading all of their trailers at his ranch to have toilets, solar showers, and cooling systems.

Tim, I really appreciate that, because thatís the type of thing that weíre asking for.

And Mr. Indart also shows that what we are asking for is possible.

Iíd like to leave an original with you and then ten copies of the newspaper.

MS. RICE: In transition, if I could just respond to your comment, Mr. Rose, about the fact that there are other occupations where, under certain circumstances, toilet facilities are not available, that is specifically why we have the three-tiered approach to the housing requirements. And so, under those conditions where itís not practicable to have a toilet, under the sheepherder proposal they could revert to the standard, which would allow for pit disposal.

MR. MORENO: Good morning, commissioners. Mr. Chairman, commissioners, Michael Moreno. Iím the legislative coordinator for the United Farm Workers of America.

Prior to that, Iím happy to say that I worked for the Industrial Welfare Commission for fourteen months. I worked alongside you. I saw you deal with very difficult matters. I saw you deal with some good, good recommendations, and I saw you deal with the ridiculous.

My primary responsibility while I was working with the Commission was responding to public questions, employer questions, and employee questions regarding the regulations that you were responsible for, in interpreting, updating, changing, repealing, and appealing some of those regulations that were outdated and because of the new law that came into effect.

One of the responsibilities that I was asked to do was to look into the sheepherder industry, to find out when this exemption was allowed and how it came about. To my surprise, during the hearings that were held in 1976, there was never an opportunity -- this is the first time, this is precedent, that you have sheepherders actually testifying at this hearing. They were not at those hearings. Their voices werenít heard. None of the atrocities that youíve heard over the past six months were ever afforded the opportunity of this Commission to hear. They werenít given the opportunity or they couldnít come because they were working. There wasnít one that came in.

As I span the room this morning, I looked at the people that were coming in, and during the course of the hearings regarding the sheepherders, both sides came up and talked about what they werenít making, how they couldnít make it, and they gave you a pretty good understanding, over and over again, to the point where you probably know it by heart.

And thatís good, because you also heard families talking about this being a family industry and passing it on to their children. In 1976, when they came up and testified and told you that if you did not create this exemption for them, they would go out of business, and I would guarantee you that some of those same people that testified or were at those hearings twenty-five years ago this year, either they are here or some of their families are here. And theyíre still in business. And, yes, theyíve had ups and theyíve had downs, but theyíre still in business. And these people have had to come up to you and tell you how much they make, what they can do with their earnings that they have, the conditions that they live in, and in all the time that I was part of the Commission staff did I hear someone from the other side come up and tell you that they definitely went out of business, theyíre no longer in business. Theyíve always said theyíve had the potential for going out of business.

There have been, through U.S. subsidies, opportunities for these people to be helped. Theyíve been given some money -- not a lot of money -- but itís helped them. When you look at workers and the kind of relief that they receive, yes, Congress did appropriate a disaster relief work for agricultural workers, but it was never appropriated. No monies were ever appropriated to that fund. So whenever thereís a disaster, they have no one to look forward to to help get through and pay their bills or send money home to their families.

And all the whole time that I was with the Commission, I looked at the mission of this Commission. And it was for what? To provide and to ensure for the protection, the safety, and the health, and to provide for the economic advancement of the California wage earner. That is your role. That is something that I think that needs to be remembered when you are looking at the information that is being brought before you.

And I look at what the founder of our organization -- advancement for economic opportunity, protection of their safety and their health. It talks about dignity and respect. It doesnít talk about taking all of somebodyís money, making money, and getting rich off of it, just maintaining a living.

I was a farm worker child growing up in a family of 13, and the only money that we looked forward to in terms of a raise was whenever the federal government raised the minimum wage.

We have an organization, we have a commission here in California. I lived in Arizona for a number of years. This is by far the best opportunity that an individual worker has, and the only protection that a worker has, to come before you, tell you what it sees, whatís happening to it, how it suffers. And itís no different in Arizona, but here -- and this is why it is very important that you look at the issues, that you look at both sides, that you look at what people present to you and whatís fair.

Theyíre not trying to take any money out of anybodyís pocket. They work hard for their money. Last week our governor celebrated and was very, very, very specific in saying that these people deserve this holiday because they work hard and their standard of living is not the best in the world. And he used the words of our founder when he said -- and in English, that means, "Yes, you can do it," but in Spanish itís more, more powerful, because it says that they can, theyíve struggled. And si, se puede. That is a very, very, very important word that helps in this struggle, because itís always been a struggle. Itís never gone before in a corporate setting where you go before your boss and say, "I want a raise." "Well, great; maybe weíll think about it, weíll consider it." People have had to come before you and beg for equal treatment. And that shouldnít be.

And, please, when you think about these statements that these people make on both sides, think about whatís fair, whatís dignified, so that you can feel good about the decision that youíre going to make in the near future.

Thank you.

MR. SCHACHT: Mr. Chairman --

COMMISSIONER DOMBROWSKI: According to my watch, I think youíve hit your limit. But --

MR. SCHACHT: Well, I checked with the reporter and --

COMMISSIONER DOMBROWSKI: I just did too.

MR. SCHACHT: -- she thought that we started about 10:15.

COMMISSIONER DOMBROWSKI: No.

THE REPORTER: No.

COMMISSIONER DOMBROWSKI: 10:08.

THE REPORTER: 10:08, yes.

COMMISSIONER DOMBROWSKI: 10:08.

MR. SCHACHT: Okay. Well -- okay. Well, then, indulge me for my two minutes.

Iím asking to be put into the record testimony by Bruce Goldstein, whoís the co-executive director of the Farm Worker Justice Fund. Heís one of the leading litigators defending H-2A workersí rights around the country. Heís put together a summary of recent abuses in the H-2A program.

And let me just quote his conclusion:

"To conclude this discussion of the impact of H-2A program policies on farm workers, we quote a farm worker from Mexico working in North Carolina under the H-2A program who participated in a recent focus group. He said the employers Ďtake advantage.í ĎThey help us, right, but they also take advantage.í Employers of guest workers provide jobs to people who want jobs, but they often do take advantage. They take advantage of the workersí vulnerability to impose job terms that are utterly inadequate. Unfortunately, the federal government has not stopped these abuses."

The other two materials that youíre being handed, one is a letter to Elaine Chao by Representative George Miller, Congressman Major Owens, and Congressman Howard Berman, who are the ranking Democrats on the Committee on Education and the Workforce in the House of Representatives. And they are essentially accusing Secretary Chao of violating long-standing law that requires the Department of Labor to perform a simple clerical task of publishing the new adverse effect wage rates each year.

A couple of months ago, I suggested to you that if there was a change in administrations, thereís going to begin to be a wholesale assault on H-2A standards thatís going to result in their lowering. This is -- this letter is the first evidence that that is taking place.

The Secretary of Labor is doing what the Reagan administration and the Bush administrations never dared to do, which is to violate a long-standing obligation to publish wage rates that apply to the H-2A program in each succeeding calendar year. The effect of this, according to the congressmen, and we -- we agree thatís correct as well

-- is:

"Failure to publish the new wage rates in the Federal Register means they will not take effect. Consequently, employers can pay farm workers last yearís adverse effect wage rates, most of which are significantly lower than they would be if the new wage rates were published."

This is the beginning. If this Commission locks in the H-2A program standards, and you may -- you do not know this, but we asked the employers specifically in the wage board proceeding, "Are you locking in the H-2A standards as they exist now or are you locking in the standards as they may evolve in the future?" And itís clear from their proposal that what they are locking in is standards that will apply -- that will apply -- that can be defined in the future by the U.S. Congress and the current administration to mean anything, basically, they want.

Thatís the end of our testimony. Thank you for your time.

Well, let me say one last thing. And I appreciate your willingness to come here, to travel this great distance, and to give us an opportunity to address these issues.

And I also want to thank the employers because we had a number of very fruitful meetings with them. I think there is some possibility of some agreement on some issues. But as our, I think, side-by-side shows, thereís still a lot of distance between the two sides.

COMMISSIONER ROSE: I have one more question.

COMMISSIONER DOMBROWSKI: Go ahead.

COMMISSIONER ROSE: Mr. Schneider?

MR. SCHNEIDER: Yes, sir.

COMMISSIONER ROSE: You gave us a piece of paper here from the Diamond Sheep Company.

MR. SCHNEIDER: Yes.

COMMISSIONER ROSE: Why is the salary only $800?

MR. SCHNEIDER: Iím investigating that.

COMMISSIONER ROSE: Thank you.

COMMISSIONER CREMINS: Real quick, if I may. One of the workers mentioned they had to supply their own tools. What kind of tools do they typically supply on their own as opposed to the employer?

MR. QUISPEALAYA: (Through Interpreter) For example, we have to buy the boots, we have to buy the gloves that are necessary for the work that we do. We also have to purchase the weather gear for inclement weather that we wear. I know they say they give us all of the -- everything thatís necessary for work, but this is the truth. This is what we have to provide.

COMMISSIONER CREMINS: Thank you.

COMMISSIONER DOMBROWSKI: All right. Letís have the ranchers/employers.

MR. SCHNEIDER: Thank you.

MR. SCHACHT: Thank you.

COMMISSIONER DOMBROWSKI: Thank you.

MR. SOARES: Mr. Chairman, can we take five minutes to set up?

COMMISSIONER DOMBROWSKI: Sure.

(Thereupon, a short recess was taken.)

COMMISSIONER DOMBROWSKI: Can we get started here?

(Pause)

COMMISSIONER DOMBROWSKI: Okay. All right. Letís get -- quiet, please. Quiet, please.

What time have you got, Mr. Soares?

MR. SOARES: Ten minutes to twelve, Mr. Chairman.

COMMISSIONER DOMBROWSKI: I didnít hear that. What?

MR. SOARES: Ten minutes to twelve.

COMMISSIONER DOMBROWSKI: Ten minutes to twelve. Okay.

(Pause)

COMMISSIONER DOMBROWSKI: Iím sorry. Go ahead, George.

MR. SOARES: Mr. Chairman and members, thank you for this opportunity to join us in Bakersfield. Weíve been together a lot over the last year -- San Diego, San Francisco -- then you got into our turf in the Central Valley of Stockton, and now Bakersfield. I want to welcome you here.

I want to welcome our industry here. We -- as we did in Stockton, Iím sure you recall, we put the word out to the industry and said, "Please come if you can. This is important enough to you; please come." Iím pleased to say that turnout today is like it was in Stockton, with producers and sheepherders and bankers and marketers. The full spectrum of the industry is here today to give you their point of view.

We have a witness table today that is going to speak specifically to some issues, but thereís many others in the audience who share this point. Iíd like to just take a second, Mr. Chairman, and ask those that came today to stand and be recognized.

(Audience members stand.)

MR. SOARES: Thanks very much. I always feel comforted by having an army behind me as we go into these kind of things.

I think something else is clear to the members of this committee: agriculture doesnít do this very much. We tend to produce food and fiber in this country. And so when it comes to interacting with government in this nature, itís a different experience for us. And so, to get people to attend a function like this is pretty significant. I hope thatís not lost on you.

This is more than a business to these people who are in the audience and those who couldnít make it here today. Itís a way of life. But the issues in California today are demonstrating that in order for us to maintain this way of life, weíd better operate it like a business.

Itís not a surprise to anybody in this room the enormity of the problems facing Californians today. When you were all meeting last year and making decisions on other matters, it was a different world in California than it is today. And itís interesting. The rest of California is now catching up to agriculture. Thatís the change for agriculture in the last six months. We heard all kind of wonderful stories about the economy six months ago, but nobody told you about the wonderful stories in agriculture because they didnít exist. Agriculture is a major wreck, and thatís across the board. And finally, that understanding is starting to permeate state governmentís thinking, weíre very happy to say. And weíre happy that the crisis at least is getting peopleís attention to how big of a deal this thing is.

Weíre encouraging you members to understand that weíre trying to work this thing out, but we can only work it out in the context of whatís doable. And weíve given you our best ideas about whatís doable. We want to continue to work with the IWC, but weíve got a real problem in here, in this state.

Weíve talked about energy, but the list goes on and on, again, as you know. The water situation in this state is horrendous, itís absolutely horrendous, not just for agriculture but for the general public. This disease thatís just threatening our borders on hoof-and-mouth, this is a big deal. Itís not a big deal to somebody who just shows up at the supermarket and gets what they need, but itís a big deal for the people who produce what those people at the supermarket get. Weíre facing this kind of crisis in California agriculture and this industry. We donít take it lightly, and weíre asking you not to either.

Declining prices youíre going to hear about. If you have better numbers, if anybody has better numbers, happy to share, happy to debate the subject. But the numbers weíve been presenting to you people have been real. We donít make them up. And weíre just asking for you to give them the credibility that they deserve.

Weíre in the position now that weíve got to protect our industry or lose this way of life thatís important to us. Thatís why weíre here. Weíre trying to protect this industry.

The truth of the matter is that world markets determine whether these people stay in business any more. Thatís just the simple truth of it for agriculture, including the sheep industry.

Thereís another truth, and that is that the cost of production for a farmer is the highest in the State of California of any state in the union. Weíre number one. You heard a lot of testimony a while ago about California, California. Well, weíre California and weíre number one, and weíre number one in the cost of production in the United States.

The income line is declining constantly because of the world market, and our cost line is going up constantly, and the lines have crossed. Thatís what we face. Thatís what you face as you evaluate this issue.

We are at a competitive disadvantage, and weíre trying mightily to make sure that your decision does not add to that load.

We are the sixth largest economy in the world, and that suggests wealth and prosperity, at least it did until about six months ago. The sixth largest economy in this world is in big trouble. And agriculture has been leading the way in that trouble now for quite a while, and itís not getting better for us. We didnít enjoy the run-up in the Ď90ís like a lot of industries did. Now theyíre retreating to our level and they donít like it. And we donít blame them. We donít like it either. Weíve been living it for a long time, and the prospects for our future are dim, at best.

I know this counterargument: "Well, farmers always talk doom and gloom." I think all you need to do is read the papers in this state and youíre going to see the reality of agricultureís situation. We do not believe that this state can operate in a vacuum any longer. We think this state is guilty of doing that way too much. Our borders are connected to other borders. People in those other locations are making decisions. To the extent California is making different decisions, weíd better make sure that somehow they mesh together in a way that we can all function together.

Even the Legislature is now recognizing the extreme plight of agriculture. SB 5X, that was just passed by the Legislature, has some special consideration for agriculture, not because weíre making a lot of money and they want us to make more, but this industry is on its knees. AB 19X, which has just been approved by a couple of committees of the Legislature, would stay the sales tax on diesel fuel, just a couple of cents to farmers on diesel fuel. But itís a good deal because a couple of cents any more may be all there is in the deal. AB 7 has just been approved by some committees of the Legislature. We have the most horrendous sales tax on farm equipment in the nation. Thirty-eight states have none. We have the worst.

Thatís what California decisions have now accumulated to create. This industry is paying the price, not only the producer, but the workers are paying this price. We ask you as sincerely as we can that you take that into consideration as we start to meld together a proposal where we can all coexist.

Thatís why weíre asking that our proposal be the one that be advanced by the IWC as you go into your final hearing. We think itís fair, we think itís reasoned, we think itís balanced. We think one other thing: weíre happy, in light of some of the comments we heard today and in the past, to still make modification. We think thereís room to do that if we can ever create the atmosphere where weíre solution-oriented rather than conflict-motivated.

I have to tell you that itís my impression in this business that weíre all in that thereís ways and thereís ways to convey a message. Sometimes itís a dropped word, itís a -- itís a thought thatís not completed. Youíve heard about enough distortions this morning to fill a bag, and Iím not going to spend time going through each one of them.

But I know the first distortion that occurred, and that was in San Diego: $900, thatís all workers get, they get nothing else, and thereís a shovel on somebodyís shoulder, $900 and a shovel. Weíre going to give you some information that tries to explain what people receive, what people pay. Is it enough for everybody? Theyíll have to speak for that. Would we like to do more? Everybody wants to do more for the people that they work with when they can.

But these distortions have to stop because itís leading us down a road thatís put California where it is on so many issues today. Theyíre little, theyíre big, but theyíre all distortions.

No enforcement on housing, itís nonsense. But Iím not going to take our time to refute their nonsense. Itís nonsense.

Daily mail, weíre happy with daily mail. We put in "up to seven days" only because we wouldnít -- in extreme circumstances, we didnít want to be in violation of the law, so we put in seven days at the outside. Weíll deliver it daily if we can.

Phones, we put "appropriate means" to -- not to not address the issue, but to give flexibility, if not to us, to our discussions to decide what works in one place may be a different thing in another place, and so on and so forth. Itís been characterized that weíre trying to isolate these workers and communication isnít real. We took Commissioner Rose seriously at his comments in San Diego when he focused on communication. Thatís part of our proposal. And thatís one of the reasons why. Furthermore, it just makes sense.

Visitors, the same issue with visitors. In some of these locations, itís remote. If we buy into a deal that says we will provide access to visitors and somebodyís 75 miles from somewhere, all of a sudden weíre bound by a standard that we may not be able to comply with even though we want to. So weíre looking for words that allow flexibility.

Weíve seen in -- this California business that we hear about a lot -- this is California, this is California. Well, it sure is. It seems to us that California is protecting everything and everyone except California farmers and ranchers and the people who work for them. And we want to get some balance back into this deal as soon as we can, because weíre all in trouble. The farmer and the worker are both in trouble. Thatís the long and the short of it.

It was stated that we need California standards so we can control. Well, we already know about how much California can control on big issues. Thatís a myth thatís now gone by the wayside. California canít force people to do business in California that canít make a living here. You canít do it. Pass all the rules you want. You canít force a sheep producer to hire somebody if they canít afford to do it. So the state has to accept that it has its limitations as well as we go through trying to put this thing together so that -- so that we can coexist.

And so, with that, I want to go to our first speaker.

And we will stay on time, Mr. Chairman, and I know youíll keep us to that.

And so, I want to first introduce Jim Holt.

MR. HOLT: Thank you, Mr. Chairman. Iíve spoken to you before about the economic situation in the industry. We wanted to review that briefly for you today. One of the advocates on the other side is fond of saying itís about the money, we want the money. And I think we want to make it clear that the money is not there.

And so, Iím going to -- with the help of a few charts here, Iím going to just briefly review the situation. We also heard testimony a few moments ago that suggested that maybe growers are crying "wolf," that growers were saying twenty years ago, and ten years ago, and five years ago, and so forth, they were going out of business, and lo and behold, theyíre all still here. Well, I think we can show that, in fact, thatís not the case.

We have just a few charts here. This one here shows -- and by the way, weíre talking here about California -- this is the sheep and lamb inventory in the State of California over the last twenty years. This economic decline that this industry is in -- and I am sorry to say that the sheep industry has led the decline in -- economic decline in California agriculture -- this has been going on for a long time now, more than twenty years.

We had 1.2 million sheep and lambs on inventory in California twenty years ago. Thatís now gone down to 800,000. Thatís a decline in twenty years of one third of the sheep and lamb inventory.

Now, what does that mean in terms of farms? The suggestion was the farmers are still here. These are -- these are the data from the U.S. Censuses of Agriculture on the number of commercial sheep operations in California over the last four censuses, 1982 through 1997. There were 245 commercial sheep operations, which the Census of Agriculture defines as farms with sheep -- with 1,000 head or more of sheep and lambs, 245 commercial operations in the 1982 census. By the 1997 census, that was down to 110. Thatís a decline of 50 percent in the number of commercial sheep operations in that -- in that twenty-year period -- well, actually fewer than twenty years. So, yes, they have gone.

And the reason for this decline is really simple economics. It has to do with the prices farmers are getting for the two products that they sell, lamb and wool, and the prices theyíre paying for their inputs.

Here weíve got the price of -- the farm price per pound, again, in California for wool for the last twenty years. In 1980, the price was 88 cents a pound for wool. By the year 1999, that price was 38 cents a pound for the same wool, and thatís if you could find a market for it. Thatís a decline of about 50 percent over that twenty-year period in the price of wool.

Letís take a look at the other product, and thatís lamb meat. The price of lamb meat in 1980 was $68 a hundred-weight -- Iím sorry -- $63 a hundred-weight. By 1999, that had gone up to a massive $74.50 a hundred-weight, about an 11 percent increase over a twenty-year period.

Now letís take a look at what that all means in terms of prices and costs. And here Iíve had to resort to an economic -- Iím sorry to do economics here -- but the index of prices paid and the index of prices received.

Starting with 1980, itís 100 for all of them. This top line is the index of prices paid. By -- actually, this goes to 2000 -- by the year 2000, from 1980 to 2000, the index of farm inputs, the cost of farm inputs, was -- started out at 100 -- these all start right here at 100 -- started out at 100 and rose to 160. The index of price received for lamb meat was 126. And the index of price received for wool was 38 in the year 2000 compared to 100 twenty years ago.

That spread is the reason for the disappearance of 50 percent of the operation and a third of the inventory over the last twenty-year period. The prices simply arenít there.

Now letís look at wages, just to put a little -- a little context on this on wages. This shows the percentage increase in -- from 1980 to 1999 in nonsupervisory manufacturing workers, in farm work -- and again, weíre talking about California -- for farm workers, and then for sheepherders.

And in the nonsupervisory production manufacturing workers, during that ten-year period, went up 81 percent. These, of course, were protected by an IWC wage order. Farm workers, also protected by an IWC wage order, went up 71 percent during that period of time. Sheepherder wages went from $450 a month twenty years ago to only -- to $800 a month in 1999. Theyíve gone another $100 to $900 a month in the year 2000. But this only reflects the increase -- to make it consistent with these two, only reflects the increase to $800. It went up 78 percent during this period of time.

Now, of course, these are -- this is the cash wage. It doesnít account for the -- for the food and housing and other benefits, whereas, for the most part, this -- this cash wage here and this cash wage here, particularly for farm workers, is all theyíre getting.

So the fact of the matter is that the IWC wage order and the absence of -- or the presence of this exemption in the wage order has not adversely affected sheepherders. In fact, theyíve done better than farm workers generally in California during this twenty-year period.

And so, I think that gives you thumbnail sketch of the economics, the economic situation weíre trying to illustrate here. The fact of the matter is that the money is not there. And we have tried to be responsible and responsive in the proposal that weíve put forward here in terms of things that can be done that will not economically disadvantage any further, any more than it is, this industry, which is already in serious economic distress. But there is not money there to be -- to be passed around.

Thank you.

MR. SOARES: Mr. Chairman, one of our witnesses needs to leave, so Iíd like to now go to the Kern County Farm Bureau.

MR. HODGE: Thank you very much. My name is Loron Hodge. Iím the manager of the Kern County Farm Bureau. I would like to just state for the record that on behalf of the state organization that I represent, Kern County Farm Bureau as well as the California Farm Bureau Federation, we support the current sheep industryís compensation structure and the newly proposed working condition enhancements. And we ask for your "aye" vote on this proposal.

I also would like to say that I very much wholeheartedly concur with Mr. Soaresí opening statement. The industry of agriculture is in dire straits in Kern County and across the State of California. And we face these water shortages, the energy shortages, the weather problems that weíre experiencing right now, we really donít know what our future is going to be.

So we ask for your support on these -- these structure enhancements, and we support the sheep industry. In Kern County, thereís been a long, long association with Kern County the sheep industry has, even back to the Edward F. Buell years, the forming of the Tejon Ranch. They first grew and raised sheep, before cattle. So we go back a long ways and we really ask you to look very favorably on this proposal.

Thank you.

MR. SOARES: Thank you.

Iíd like to next call on Darren Indart.

MR. D. INDART: Good morning. Darren Indart. Iím a third-generation sheep rancher from Clovis. Iíd like to stay in the business.

We -- what Iím going to is -- is give you a quick overview of what it -- what it costs us, in actual dollars, to employ sheepherders. Throughout the procedures and the wage board, we put together our best efforts on averages for wages and benefits paid out to sheepherders. Some people pay more, some pay less. But we feel weíre definitely in the ball park and have, actually, a chart over here, which Iím going to step over to, if I could steal your microphone, Jim.

Okay. What we have here is the -- a breakdown on the monthly cost of sheepherder wages and benefits. Again, these are actual dollars paid out by employers to the herders in the form of either wages or benefits. The top -- top number, weíre familiar with, the $900 a month. Moving on down are other items that are benefits to the sheepherders which are funded by the employers, are housing and housing maintenance, food, transportation to and from their home countries, health insurance, and two weeks paid vacation a year.

Interestingly, on a couple of these items, the health insurance numbers just increased to $19.00 a month -- I think that reflects some of the trends that weíre going to be seeing on other items that are also on this chart, mainly housing and housing maintenance. As you know, the housing is run on butane with some electrical inputs. And those costs are really skyrocketing for us, as well as the rest of the State of California. Thatís going to be an item that I expect to see go up significantly too.

That brings us down to a bottom-line number currently being paid out of around $1,623 per month.

Iím going to step back over to my chair.

COMMISSIONER DOMBROWSKI: While heís doing that, George, are you going to have these charts for handouts? Do you have copies of these for us?

MR. SOARES: Yes.

MR. D. INDART: Iíll just finish up by saying that changes to the -- to the bottom-line number will -- speaking from the experience of our own operation -- will have some pretty drastic changes and pretty drastic impacts.

We have seven sheepherders under our employ, three of which are here today. You canít see them because theyíre behind the charts, but theyíre in the front row.

COMMISSIONER DOMBROWSKI: Yeah, I saw them.

MR. D. INDART: But, you know, like I say, changes in this bottom-line number, you know, along the lines of what the petitioners are proposing will -- will definitely lead to one, maybe two, of our herders losing their jobs. Itís -- itís not something that we want to do. We like employing our people, and theyíre good men, and weíd like to keep them employed.

But if our -- our bank keeps seeing net loss after net loss, weíre all out of jobs, not just the herders. My dad and myself, weíre going to have to find something else to do for a living. So I donít think any -- anybody really benefits. Itís hard enough under current conditions right now for us to keep getting refinanced.

I guess thatíll conclude my testimony for today.

COMMISSIONER DOMBROWSKI: Are any of your sheepherders non-H-2A?

MR. D. INDART: No, theyíre all H-2A, all H-2A from Peru.

COMMISSIONER DOMBROWSKI: Have you ever employed a sheepherder whoís not H-2A that you know of?

MR. D. INDART: No. No, we havenít.

COMMISSIONER DOMBROWSKI: Can I ask -- I guess you have a lot of employers. Does anybody employ a sheepherder who isnít H-2A?

MR. HOLT: Mr. Chairman, can I just make a quick observation on that? This sheepherder program, actually the H-2A sheepherder program, the sheepherder program predates the existence of H-2A legislation thatís been going on for decades, about seventy years now. The H-2A regulations apply to all of the herders that are employed by a sheepherder -- by an H-2A employer, whether theyíre domestics or alien workers.

As -- thereís several hundred sheepherders, between 300 and 400 sheepherders, employed in California at the present time. As Mr. Schacht testified, thereís probably somewhere in the neighborhood at this point of about thirty of them that apparently are domestic herders, based on EDDís wage surveys. Whether that number is precisely accurate or not, I donít know, but certainly the order of magnitude is. So about 10 percent or fewer of the -- of the population of sheepherders are domestic at this point. And thatís been true for at least fifty years, those kinds of proportions.

But all of those domestic sheepherders that work for H-2A employers, which is almost all of them -- in fact, we all wracked our brains trying to figure out a domestic herder that isnít employed by an H-2A sheepherder, and there probably is one somewhere, but -- weíre unsure, but there probably is one somewhere, but none of us were able to think about one. All of those H-2A -- all of those that are employed by H-2A employers are protected by the H-2A program.

COMMISSIONER CREMINS: Of your total costs, how much do you roughly think is labor cost, roughly?

MR. D. INDART: Total operating cost?

COMMISSIONER CREMINS: Yeah. How much of that is labor cost?

MR. D. INDART: We run at about 41 percent, is --

COMMISSIONER CREMINS: Your labor cost?

MR. D. INDART: -- rigged to labor, yeah. There are quite a few other costs that arenít illustrated on this sheet, by the way, that are rigged directly to wages. One is workersí comp, which is going up too, payroll tax. So there are additional items. But, yeah, we run about 41 percent.

COMMISSIONER CREMINS: 41 percent.

MR. SOARES: All right. And, please, I want to invite the commissioners to interrupt us any time they want, because weíre trying to get to the bottom-line here as much as you are.

Iíd like to introduce our next witness, Jack Caubin.

MR. CAUBIN: My name is Jack Caubin. Iím president of the Tri-State Livestock Credit Corporation. This is a corporation thatís been lending to sheep, cattle, and dairy operations since 1931, so weíve been involved a long time in the finance of this particular industry.

As weíve seen, weíre working with an industry thatís in decline. And thereís -- the key in what you looked at in the decline are two things that come in that decline that are causing income reduction, and thatís competition from the foreign meat and foreign wool and the competition for feed, which hasnít even been mentioned. And then we have the other aspect of one of the things thatís impacting our decline, and thatís cost increases, which youíve already seen.

Another thing that hasnít been mentioned that we see from our end is the demographics of the people weíre working with. We donít see too many young people like whatís sitting right next to me. As you probably know, in agriculture in general, weíre looking at for one under 35, thereís three over 65. So continuity of the industry is very much of a concern.

Now, the unknowns in that is -- of course, we used to talk about weather and market, and now we have energy impacts as well, as all of us living here know.

The other thing thatís unique to the sheep industry as lenderís look at it is, "What is your risk management?" In the cattle industry, we have futures, we have longer-term contracts we can work with on the sale of the animals. In the sheep industry, thatís unavailable.

So what does that make the sheep industry? It makes it a price taker. What the market offers it, thatís what it has to take. The reason why lenders look at that is then that becomes a risk factor in the other assets that are being offered for security in your lending and in your criteria of lending that youíre making your decision on as to a credit decision.

Therefore, the real key factor in the sheep industry is cost management, what we call gate-to-gate. They can control the best they can gate-to-gate, but we have other factors, as weíre already hearing, increased costs that are beyond our control.

The lending atmosphere that weíre facing now nationwide and in our state is the condition of agriculture. Probably this year is -- and Iíve been lending to agriculture and the livestock and sheep industry since the Ď60ís -- is that weíre probably on the closest edge of determining, not only in this state but nationwide, are we going to have an agriculture in this United States or not.

Now, I know thereís people that have come here before, as was mentioned, a long time ago, that we may go out of business. But, folks, people are going out of business every day. So we see it. Weíre involved in nine states, you know, nine western states. So we see this all over the nine-state area. So itís not just unique to California. And what does that cause? It causes bank examiners and auditors to look harder at what the lending situation is in each of those lending shops that are providing funds to the finance of the livestock sheep industry. So therefore, we have to look at our own loan portfolios and our own risk management, and we look at the industry and whereís it headed in the criteria thatís handed down to us that we have to deal with.

One of the biggest factors we see is a shrinking profit margin, if any at all. The other thing you see is, typically in the sheep industry, you donít have a big landing mat, you donít have real estate. Most of the real estate thatís held probably by most of these people back here is a little farmstead that becomes the home base. Therefore, the asset thatís being presented as collateral is the herd itself. And again, reconsider that weíve got increasing costs and shrinking income from that side.

As lenders, weíre stretching it. Weíre stretching those factors that get us through the criteria to be able to continue to lend. By adding costs, we stretch the ability to qualify for these people.

The trades are not an option. Some of our industry can go to the trades, of fertilizer -- can go to the trades of other things to support that financing. And that isnít an option.

Yes, itís unfortunate whatís happened to this industry. Every aspect is very serious. We donít take it casually. We do not consider these issues as minor issues, but major issues. And therefore, as we see it, we support what the sheep ranchers are offering the Commission to take a look at.

MR. SOARES: Thank you.

Now Iíd like to introduce Bruce Campbell.

MR. CAMPBELL: Thank you. I normally introduce myself as a sheepherder from Sonoma County, and that makes me unique in most rooms. But in this room, I think it doesnít really make me special. Thereís a lot of sheepherders back there -- maybe not from Sonoma County.

I own CK Lamb. We raise lamb, we purchase lamb, and we direct market that to high-end restaurants and supermarkets throughout the United States.

Because of the vertical integration, Iím just another example of a non-typical sheepherder. Itís very difficult to paint a picture of a sheepherder, or a sheep rancher or a sheep operation, because we all rely on different -- different feeds, different areas, different types of pasture.

Historically in the sheep business, itís been easy to loan money to sheep ranchers because they had two crops, as opposed to cattle, who only had one. We had food and fiber. And over the years, itís been a kind of a standing joke with many bankers that if a cattleman comes in to borrow money, they ask him what his collateral is, and if a sheepherder comes in, they ask him how much he wants. And the difference, I think, has eroded because of the difference in the markets in the last twenty years.

Weíve seen examples of whatís happened with the wool price. The thing that doesnít show there is that many of the ranchers behind me have three or four yearsí worth of wool in storage because they couldnít -- they couldnít, in all honesty, sell the wool, they couldnít get a bid. Some of us spend more time with the meat aspect of what we do than the wool.

My own wool, I throw away. Well, actually, I call it composting. That makes it environmentally sound. I take it off the sheep and throw it on the ground and wait for it to rot because I canít get a bid that will justify me putting it in a bag, let alone hauling it away. So the wool industry -- you see a 30-cent bid. Thatís if you could get it, and many people cannot get it. The people who are focused on fine -- you know, good wools, good marketable wools, and have done a good job in putting them up, many of them have three yearsí worth sitting in a storage facility somewhere. So thereís been zero cash flow generated from the wool.

Usually the income from the wool, we used to figure, paid for feeding the ewes. And thatís how we kind of got through it. We figured, okay, the wool income in the Ď70ís and Ď80ís was 75 -- or $15 to $20 per ewe, and usually that covered keeping the ewes fed. The income derived from the lamb sales we divided up and figured we could cover our drugs -- medicines.

(Laughter)

MR. CAMPBELL: Itís always hard to get by that one.

COMMISSIONER DOMBROWSKI: If you come in front of this Commission often, youíll need them.

(Laughter)

MR. CAMPBELL: Yeah. Yeah.

MR. HOLT: Thatís Sonoma County.

MR. CAMPBELL: Yeah, Sonoma County. There you go. We budget for the drugs; the sex and rock and roll are extra.

(Laughter)

MR. CAMPBELL: The lamb market has declined, the sales ability, primarily based on the New Zealand imports and Australian imports that have been coming in. In the last five years, Iíve lost two accounts, one with Whole Foods markets throughout the North Bay, and the other with Andronicoís Markets. Both of those store chains went strictly to New Zealand lamb. And we have one Whole Foods market that still carries our lamb next to the New Zealand lamb.

I was dismayed to learn that theyíre not going to need any extra legs from me this Easter because New Zealand is putting their leg of lamb on sale for $2.49 a pound, and our lamb sells for $5.99 a pound. And of all times, Easter is the one time of the year where two percent of the people, you know, eat lamb. Itís our big -- itís like Thanksgiving used to be for turkeys. And New Zealand is coming in -- besides beating us up the rest of the year, theyíre putting lamb on sale at Easter time. And itís affected my sales, and itís, of course, affected the people that I buy lambs from because Iím not needing quite as many lambs.

One of the things that I -- regardless of your decision here today, I fully expect 10 percent of the people that raise lambs for me not to be in business next year, just based on whatís happening right now. Thatís been true in virtually every year in the last twenty years, about 10 percent of the people that raise lambs for me are no longer in business the following year. And thatís just based on what youíve seen here: the wool market, if you can sell it, and the lamb market, of course, is being depressed by imports that come in at between a third and a half of our cost of production. And it doesnít look like itís getting any better.

The third -- weíre in the second year of a tariff situation -- itís over next year. In spite of the tariff, imports are increasing at 30 percent a year. I mean, it doesnít even matter any more.

And thereís another situation that makes it even more difficult for us to market our product in the supermarkets, and that is because domestic lamb costs more because we have higher costs to produce it. The butcher canít make the mark-up. Right now, 30 percent is considered a minimum mark-up in the supermarkets. With the New Zealand or Australian products, they can mark it up 80 to 90 percent and still sell it for half of what it costs us to put that meat in the counter. And that -- you know, Iíve known some of these butchers for years and years, and when they say, "You know, we just canít afford your product any more," I have to understand that, because theyíre in the business to make money too.

I have had a lending relationship with the North Coast Farm Credit for 25 years now, and I have always borrowed money from them. And they realize that because of the way CK Lamb operates, that we have a little different situation than many of their sheep operations. And weíve always borrowed money from the same bank, and weíve always paid them back. And just about two weeks ago, I was sitting down with my loan officer, and after weíd gone through and gotten all the stuff together and signed the papers, he looked at me and he said, "So how much of this do you think youíre going to need this year?" And I kind of smiled and I said, "Gee, I hope I donít need any of it." And he wasnít smiling when he said, "You know, I hope you donít either, because," he said, "youíre the only sheep loan thatís going out of here this year." And thatís in Sonoma County.

So I just -- the gravity of the situation is really demonstrated by the charts that weíve seen, but those of us in the business have been going through this for a while. And as I say, there is -- if anything, imports are going to increase when the tariff is taken away. And the wool market is still not out of the woods.

We talked about how, you know, weíre just a bunch of sheep ranchers here in California trying to make a living when, six years ago when the Japanese economy went in the tank, thatís what started the importing of -- spurred the importing of New Zealand lamb, because that used to be one of their markets. And, well, okay, letís worry about whatís happening in Tokyo, but letís still raise our sheep here in California. And then, the next year, when the Russian ruble went south, pelts that we were selling for $15 a head went to 50 cents a head, in one week. We got a call from the people that we sold our pelts to, and he said, "Oh, by the way, donít send them any more because we donít want them." And that amounted to a difference in my income of $60,000 that year. Of course, I didnít have to pay tax on it, which is the good news, I guess.

(Laughter)

MR. CAMPBELL: But I donít think paying taxes is one of the things that most of the people behind us here are concerned about. Theyíre concerned about staying in the business.

And frankly, for what -- for what we pay ourselves for raising lamb, the American public is damn lucky.

Thank you.

COMMISSIONER ROSE: Mr. Campbell, I have two questions. The first one, could you kind of go through the expense of wool?

MR. CAMPBELL: Yes.

COMMISSIONER ROSE: You throw it away, and it -- you know, obviously you donít want to go through that expense. What is the expense to process the wool to get it to the market?

MR. CAMPBELL: It costs $2.50 up in Sonoma County to get the wool off the lamb, to get it shorn. It costs us about 10 cents a pound to put it in a bag, which -- actually, we canít put it in bags any more, we have to bale it, which would be 15 cents a pound to put it in a bale. And then it costs another 10 cents a pound to actually get it to the sales place. There is currently an order where 6 cents a pound is taken out for marketing of the wool by the wool organization, and the bid that I had last year was for 6 cents a pound.

I have several friends up there that, after they

-- they took their wool in last spring, and they just got a bill from Cal Wool for what it cost them to sell it, because the 6 cents was taken out and the handling and the sorting costs of the wool was more than the wool was worth. So instead of a check, albeit a small one, they got a bill.

COMMISSIONER ROSE: Okay. Second question: with all the problems in Europe, canít you take your lambs and sell them to Europe?

MR. CAMPBELL: No. No lamb slaughtered in the United States can be taken into any EEC country. They have rules, ISO-2000, which makes it virtually impossible to -- the rules are made to be not -- not taken care -- I mean, theyíre made to be not won. So, no, no. Iíve had opportunities to sell lamb in Europe on several occasions, and on -- by no -- under no means may we export lambs into the EEC.

COMMISSIONER ROSE: Thank you.

MR. SOARES: Next Iíd like to call on two association spokespersons.

MS. NYBERG: Good afternoon. Catherine Nyberg, with the Agricultural Council of California. And our members are ag co-ops, including the California Wool Growers Association.

We concur with the previous speakers on the panel and support the California sheep industryís position. Given the current state of the ag economy in California, we feel that the sheepherder proposal is not sustainable for the industry at this time. Therefore, we appreciate your support of the California sheep industry.

Thank you.

MS. FLYNN: Good afternoon. Iím Deirdre Flynn, from the California Wool Growers Association. Iíve had the opportunity to address you before, and I thank you again for that opportunity today.

The California Wool Growers Association was established in 1860 by a group of sheep producers who had a need. They got together, they had their wool, they needed to market it, much like we do today, but the woolen mills were on the East Coast. To get the wool from the West Coast to the East Coast, it was too labor-intensive, too cost-ineffective to ship it via land. The producers got together, organized, purchased a ship to ship the wool around the Horn to get it to the East Coast so they could sell their product.

This industry has been working together for over 140 years to better the industry, to provide opportunities for their families. In this 141st year of our organization, weíre again organizing to try to better the environment for our producers.

Mr. Campbell spoke about an assessment that is being placed on producers. That is something that we as sheep producers in California said weíre willing to pay 6 cents a pound on our wool to help promote our products, to promote our lamb and our wool, to try to increase more of the market share so we can sell our products. This year the California Sheep Commission, which collects that assessment and does the promotion, got together and said, "Weíre shooting ourselves in the foot for right now; we need to re-examine the situation." They took the authority that was granted to them to reduce that assessment from 6 cents a pound on some of the wools to a half a cent a pound. That sounds great. Thatís more money in the producerís pocket. But in reality, after Bruceís testimony that theyíre still not making money on the wool, thatís even less money thatíll go into the marketing channel to promote those products.

Those are two examples of an industry that is working very hard to promote itself, to further itself for future generations. And we ask for your support in our recommendation that we are proposing today on behalf of the sheep industry and thank you for the opportunity to be here.

MR. SOARES: Mr. Chairman, Iíd now like to present to you the wage board, the employer representatives on the wage board. Weíre going to have one of the five members testify. But for purposes of introduction, starting at my far right, Iíd like to introduce Tim Indart, Dennis Richins, Ray Talbott, Richard Hamilton, and then Iíd like to ask the fifth member, Dominique Minaberrigarai, to speak to our proposal.

So, Dominique, if youíd take it now.

MR. MINABERRIGARAI: Yes. Dominique Minaberrigarai, from Bakersfield, California.

As youíve heard, the sheep industry is in dire straits right now. When your input costs are exceeding your price you receive by anywhere from 40 to 140 percent, thatís not a good situation for anybody. And weíve heard ample testimony to that effect here.

When the wage board has approached these hearings and consultations weíve had, we realized that thereís nothing that we can do on the strictly salary side of it. Any -- any increase in the salary would be devastating. However, we have listened to the concerns that have been put forth by the employees and we think in good faith we have come to a position that will work for everybody, that will address the key concerns that the employees have, without devastating the industry as a whole.

And what we came forth with was this proposal, which I believe most of you have copies of. I would just very briefly like to address each of the points there to demonstrate what -- where we were coming from with them.

One of the concerns that the employee side brought up is that, unfortunately, there are some herders that are required to do non-sheepherding duties. We have recognized that fact and -- and although we do not condone it, we have put in a section, Subsection (A) here, I guess, which, in effect, states that if a herder is employed in a non-sheepherding duty, he will be paid for that job that he does for that workweek.

If Iím --

MR. SOARES: Pursuant to Wage Order 14.

MR. MINABERRIGARAI: Oh, yes. Pursuant to Order 14.

My understanding of the other sideís position -- and correct me if Iím wrong -- is that they want at some certain times for the term of the contract to be paid. You have to keep in mind that these herders are here for a three-year contract, which we are obligated to give them a three-year contract. That is a condition that no other farm workers have. They are guaranteed work for three years. In light of that, as a -- we have decided that they should be paid for the week that they work in a non-sheepherding duty.

The second -- Subsection (B) there of our proposed amended order states this, in effect, is to help those domestic sheepherders which are not currently protected in California. As stated, this is -- this Commissionís job is to protect California workers for California work. Currently there is no minimum threshold for California domestic workers. Subsection (B) here would, in effect, guarantee that all domestic herders make equal pay as is now being given to the H-2A herders.

And this will have the effect, we anticipate, of not only helping those who are in the domestic herder situation, but all sheepherders across the board. Labor surveys that are put out that are currently -- as Jim indicated, these surveys have had an upward push on sheepherder salaries. By raising the floor of what the domestic herders are making, these surveys will be affected in such a manner that we feel they will have an upward pressure on salaries, but keeping it within a system that has worked well for the last seventy years or whatever the immigration situation has been in. So this Subsection (B) has the effect of protecting California workers for California work.

Subsection (C), then, which is fixed housing -- site housing, this again was drafted after having listened to sheepherdersí concerns, while keeping an eye to the reality of the situations. The situations out there are so varied that itís impossible almost to say, "You should do this on your ranch," because we donít know exactly. Therefore, we have left perhaps some of the terms flexible.

But if you look at Subsection (C), fixed housing shall include toilets, heating, inside lighting, potable hot and cold water. We shall provide herders with cooking facilities and utensils, refrigeration, and annual inspections. This, I believe, does address the -- excuse me -- employeesí concerns that theyíve had from the get-go. And this is something we -- we as an industry can do without breaking our back.

Subsection (D) affects mobile housing. And again, this mobile housing will be subject to annual inspections by state inspectors. It was mentioned when the employee side was speaking that the last prepositional phrase there, of "if state inspectors are available," pretty much nullified any benefit of Subsection (D).

The reason we have put that in there is there are situations, or have been, I should say, in the past, when a state inspector is not available. And you have 1,000 sheep or 700 sheep or 300 sheep that need to go to the hills, and the state is telling you, "We canít send you anybody." Youíre stuck. What do you do? The reason we have put that in there is so that we will not be bound to a position where we have nowhere to go with these sheep and weíre waiting for the state to take their time to come see us. So that is why we have put there, "if state inspectors are available." It is not anything onerous on our part; we just --

COMMISSIONER DOMBROWSKI: What about their contention of having Housing and Community Development do the inspections as opposed to Employment Development?

MR. MINABERRIGARAI: Iím not familiar with that organization. I donít know if Jim or George would like to address it.

MR. HOLT: Well, under the H-2A regulations, whoever else inspects it, it will -- the federal government will require EDD to inspect it too. So youíre going to have duplicative inspection if you have more than one agency inspect it. So I think thatís the reason that EDD has done the housing standards, and theyíre -- done the housing inspection, and theyíre the ones that promulgate the mobile housing standards in the first place, so that theyíre familiar with the standards, they understand how the -- what they mean. And as I say, under federal law, theyíre going to have -- theyíre going to have to do it anyway.

COMMISSIONER ROSE: Youíre saying that the federal government is saying that EDD has to be the one to do the inspections? Is that what the H-2A program says?

MR. HOLT: Yes, because the H-2A program is administered through the federal Labor Department --

COMMISSIONER ROSE: Right.

MR. HOLT: -- and they specify that the -- that the agency -- that the state -- call them SESA, state employment security agency, is the generic term for agencies like EDD around the country in various states. They all go by different names, the state employment security agencies. The H-2A regulations require that the state employment security agency assure that the housing meets the -- meets the federal standards.

COMMISSIONER ROSE: But thereís -- and itís EDD in California.

MR. HOLT: And the SESA in California is EDD, yes.

COMMISSIONER ROSE: Thank you.

MR. MINABERRIGARAI: I guess that would bring us to Subsection (E) here, which is a list of -- I donít know how to -- basically, the sheepherders will be provided with the following at each work site: regular mail service -- George addressed this a little bit. Some days, it is very feasible to get it out there in one day. Other days, it is not -- we donít see our men every day, as has been stated here frequently. So we didnít want to limit it too much. We thought seven days was an appropriate window period of time, and thatís -- so that one there.

Number two, an appropriate form of communication. Again, George stated what might work for one person doesnít work for everybody. And again, we were not looking to -- with any malintent (sic) when we put in the word "appropriate" and just have Jose with the water truck go there, although sometimes that might be the only form. We donít know. But cell phones could be an option, radios. Thereís a whole bunch of different options that each individual could consider, or maybe we might consider -- and thatís why we did put the form there, "appropriate form," so that there would be some flexibility with the various different organizations and operations that are out there.

Again, the same with the visitor access, when feasible. It is not always feasible, as George pointed out.

And Subsection (F) here addresses the concerns of keeping timely payments, information regarding payroll and timely payments. As you will read, (1) through (4), we will keep name, Social Security numbers. Semi-monthly payment of wages will be provided unless agreed otherwise mutually by employer and employee. All required records will be in English and properly dated, and they shall be available for inspection by an employee upon reasonable request.

Again, these, (F)(1) through (4), are concerns that have been brought up by the other side. And we looked to address those in good faith.

Finally, we look at Subsection (G), which is annual notification of rights, which is another concern employees had. They felt that some employees did not know their rights, were not aware of the rights they did have. Therefore we have provided that employers shall annually notify their sheepherders of their rights and obligations under both state and federal law. And that speaks for itself.

And I donít know if anyone else on the board wants to add anything, but I think we have in good faith negotiated, and we have reached an agreement or a proposal here that is feasible for us to complete. We didnít want to say we would do something and then not be able to do it, for economic reasons or other reasons. We did not feel that would do the system weíre undergoing any justice. I mean, we could promise all we wanted, but if we couldnít complete it, what good was it?

So we feel that this proposal here is a realistic solution to the problems that have been raised during this whole process.

Thank you.

COMMISSIONER ROSE: A question on the records. In some of the other wage orders, the employers are out-of-state. Are all employers here in California? I mean, all the workers would be kept in California? I think itís very important that that happens.

MR. SOARES: Thatís not a problem.

MR. MINABERRIGARAI: I donít know.

Okay. That would be fine.

COMMISSIONER ROSE: Okay.

MR. SOARES: Mr. Chairman, we have just a couple more matters to cover here before we conclude.

I wanted to highlight just a couple of points regarding our proposal you see over on the three charts. Up until this time, there is just one sentence in the wage order that deals with sheepherders, and thatís that theyíre exempt. So I want us to understand that weíre not talking about including sheepherders under certain circumstances in the wage order. I will accept that itís not what some people would want it to be, but we think itís an appropriate level of involvement under the circumstances, and it, we think, addresses some points.

This matter of people being hired to be sheepherders and then being told to do other jobs, we heard that in testimony. Thatís unacceptable. We address this here. Now, we donít address it exactly in the same way as others, but we address it saying that they will be subject for the week. So if a -- if a sheep producer, for whatever reason, for one hour happens to use a sheepherder inappropriately, unauthorized activity, that entire week is going to be compensated pursuant to Wage Order 14. So we think that addresses that issue.

Furthermore, thereís existing penalties right now at the federal level that, if that occurs, that person loses the ability to access H-2A. Thatís the penalty. So itís not a free ride here. And we want to -- we want to address that in the most reasonable means possible.

Thereís only a handful of -- yes?

COMMISSIONER DOMBROWSKI: Wait. Before -- did I

-- I want to make sure I understand. They get paid for that week under the provisions of Wage Order 14. Whatís the penalty on the H-2A there?

MR. SOARES: At the federal level, thereís also requirements prohibiting that very activity.

COMMISSIONER DOMBROWSKI: Okay.

MR. SOARES: But what I was saying is that even while the federal government takes action, or not, but takes action, hopefully, against someone who violates, in addition to that, this person would be compensated pursuant to the order.

COMMISSIONER DOMBROWSKI: But what is -- what does the federal government do to you if you -- what happens?

MR. SOARES: Jim Holt will give details.

MR. HOLT: Yeah. The use of any H-2A worker, including sheepherders -- sheepherders, in duties outside the approved job description that was on the labor certification application is a violation of the H-2A regulations. Thatís enforced by -- and incidentally, all of the -- that and all of the other H-2A regulations are enforced by the Department of Labor Wage and Hour Division, just like -- and that is subject -- will subject an employer to civil money penalties for the violation, and potentially to debar him from the H-2A program.

MR. SOARES: Continuing on with our proposal, on (B), regarding domestic sheepherders, while there are a limited number, we wanted to address that as well. It cannot be that California residents who are not participants in H-2A are treated differently than an H-2A worker who is guaranteed -- and you see it on the board what the guarantees are. And so, we ensure with this language that that person will be brought at least up to that standard. If an employer wants to go higher, thatís always an option of every employer.

The issues regarding housing, I reflect back to discussions at various hearings around the state -- and we think weíve been responsive, Mr. Chairman and members, in all that we have addressed here. Now, once again, we havenít addressed it exactly like others might, but we think weíre in the realm of doability with what weíve proposed here. To the extent you as commissioners have advice, direction in that regard, weíre more than happy to have that interaction. This is our best thinking on it, though.

On the second page, just to reiterate a point regarding "if state inspectors are available," there is a trap here that exists for employers. It just exists, and employers in agriculture know it. The example right now is that there is a body of law that requires certain things to be done in the area of farm labor contractors. Everybody knows that law doesnít work. But instead of solving the problems associated with the agency that administers that, lack of funding, et cetera, et cetera, the idea is to put the blame on the farmer, shift the burden to the farmer because the government agency thatís in charge isnít getting it done.

We do not want to be in that position with this program. And thatís why we put in the words "if theyíre available." We want the inspections to occur. And in fact, theyíre necessary. But if somebody doesnít show up on time, we do not want one of our producers all of a sudden in violation of some standard because the IWC adopted something and the government agency didnít do its job.

Thatís why itís there. Call it paranoia, if you will. But just know weíre living it every day in other areas. We donít want to live it here.

"Appropriate form of communication," weíre more than happy to sit down with all interested parties and try to work through what that means. It will vary from person to person, and we didnít -- we didnít want to guess and then come up with a form of communication that did not work for one particular person or another. And so, with that word, we were hoping to invite the exchange that would lead us to whatever the requirement should be.

One practical -- once again, if youíre 75 miles from the nearest town, it may not be practical to get somebody there, in a visitor standpoint. Weíre very concerned about now that being a requirement in law that we must find a way to get them there, and if we donít, weíre in violation of the law. So again, call us cautious, but we think thereís a reason to be.

And the last point on that proposal that you see there, (G), there was a lot of talk in San Diego and San Francisco about sheepherder rights. And we -- we understand the message there. We think the information is communicated pretty well, so weíre not running from the issue. In fact, weíre specifically stating it, that we want every sheepherder employed in California annually to be told all of their state and federal rights, use their form of communication that will be available to them and call the government regulator if they think their rights are being abused. We think that makes sense, and so thatís the reason behind it.

Weíre almost down to it now, but Iíd like to go back to Jim Holt for a few comments, and then Iíll close.

MR. HOLT: I just wanted to make a few comments on issues that were raised by the earlier panel, just to clarify some things that may be a tad murky.

First of all, the question was raised about when did this exemption occur and what was the reason. Well, you have to go back to the original Fair Labor -- the passage of the Fair Labor Standards Act, the federal Fair Labor Standards Act in 1938, to go all the way back in the history of this. Under the Fair Labor Standards Act, the federal Fair Labor Standards Act in 1938 and continuing to this day, workers engaged in the range production of livestock are not covered by the Act. And the reason for that is because the concept -- in occupations like this, the concept of hours of work and hours of non-work doesnít have meaning. There isnít -- there isnít -- when these herders are out there in the mountains with their sheep, in one sense they are there working seven days a week, 24 hours a day. In another sense, theyíre not, but theyíre -- you know, part of the time, theyíre living there. But you canít -- the concept of hours of work and non-work does not have meaning in these occupations. And the Fair Labor Standards Act recognized this, and the IWC wage order, up until this point, has also recognized this with a separate provision that deals with -- or separate provisions that deal with -- with this issue. So this has a long history and a reason behind it.

Secondly, thereís the number of comments about -- that touch on the issue of enforcement. As I mentioned a few moments ago, the H-2A regulations are enforced by the federal Wage and Hour Administration, the wage and hour investigators, who also have the responsibility for enforcing H-2A regulations. Things like workers being worked -- being employed in occupations outside their job duties, a sheepherder doing non-sheepherding work, or deductions for tools -- the allegation was made that the deductions for tools, where the employers arenít complying with their contract, these -- Iím not going to sit here and say that there arenít employers on occasion that donít violate the regulations. I can tell you that the H-2A -- that the Wage and Hour Division focuses a lot of attention on H-2A employers. Theyíre probably -- theyíre the -- they are the bullís-eye in terms of being the target of agricultural labor law enforcement, so that these provisions are enforced, and there -- and there are significant penalties -- back pay if itís a pay issue, civil money penalties, and ultimately, debarment from the program for employers who violate the regulations.

And incidentally, just as an aside to that, with respect to housing, EDD does the initial inspection of the housing and puts the sticker on the -- on the sheep camp, this mobile housing, to reflect the fact that it was inspected and certified. But the employer is responsible for maintaining that housing in compliance with the regulations during the entire period of occupancy. And once there are employees, the inspection by EDD is done prior to the issuance of a labor certification. And their enforcement mechanism is you donít get a labor certification if the housing isnít inspected and approved.

After is -- once itís occupied, then again, Wage and Hour enforces the continued compliance with those regulations throughout the entire period of occupancy, so that if those -- if the housing falls out of compliance in some way or if thereís noncompliance with that or any other aspect of the H-2A regulations, the employer is cited for a violation.

A minor point, but itís important: in the employee proposal, there are -- it talks about meal breaks and rest breaks. Thatís, I think, an example of something thatís -- that simply isnít workable in the -- in this occupation. If you canít figure -- if you canít really meaningfully talk about hours of work and hours of non-work in the first place, how are you going to distinguish between whether -- what the meal breaks and rest breaks were and whether, in fact, the worker got ten minutes and thirty minutes and so forth, if you canít distinguish hours worked in the first place?

And I guess, finally, Iíd like to say it would be easy -- and this, unfortunately, happens -- it would be easy to pass cosmetic regulations. It would be easy for this Commission to, say, adopt the employee proposal, go home and say, "Now weíve really struck a blow for sheepherders." That, I submit, would be an entirely cosmetic action, because ultimately, it would not protect anybody. It would do the same sort of thing that farm worker advocates in Florida did to the H-2A program in sugar cane cutting, where there are no sugar cane cutters now because the employee proposal was clearly uneconomical, unsustainable, and there simply wouldnít be employment in -- under a proposal like that. So it would be -- it would look good on the books, and you could maybe feel like youíve done something for workers, but in point of fact, you would -- you would not be doing anything for workers. It would be cosmetic.

So I think weíve tried to come up with a responsible proposal here, something that is doable. Itís not grand in scale, itís not dramatic, itís not going to get headlines in the Fresno Bee. In fact, itíll probably get a lot of criticism in the Fresno Bee. But it is, in fact, the responsible way to go.

Thank you.

MR. SOARES: Mr. Chairman, allow me to take just a few minutes to close.

Oh, Iím sorry.

COMMISSIONER ROSE: Yeah. I have a couple of questions first.

I asked this question of the sheepherders, and Iíll ask it of you people -- and I already know the answer

-- Mr. Inhart (sic) has taken care of that. What have you done to improve the wages, working conditions, and living conditions of your employees in the last six months since we started this issue?

And I must commend Mr. Inhart (sic) -- is that right, Mr. Inhart (sic)?

MR. T. INDART: Indart. Yes, sir.

COMMISSIONER ROSE: -- for starting to do something about it. And I really appreciate it.

Another one is, Iíve been told -- rumor -- is there or was there ever a federal program that would pay you not to raise sheep?

(Laughter)

COMMISSIONER ROSE: Now, donít laugh. Donít laugh. Itís a serious question. Has anybody ever heard of that? I was -- I was told this, and I just --

MR. SOARES: Well, our answer is --

MR. CAMPBELL: No. No. Iíve -- Iíve been in the business since 1960, and Iíve never heard of anything like that. There were -- there was a federal program thatís been discontinued that rewarded sheep ranchers who raised higher-quality wool than other sheep ranchers, and that -- that was funded by a tariff on imported lamb. And 50 percent of the money collected as a tariff was redistributed to sheep ranchers. And the better your wool was, the higher percentage you got. And the theory was that that would make our domestic wool quality higher and make it more valuable on the -- on the national wool market. But thatís been discontinued for several years. And -- and thatís the only -- the only one I know about.

COMMISSIONER ROSE: Thank you.

MR. CAMPBELL: But if you are promoting something like that, let me know.

COMMISSIONER ROSE: No, no. No.

(Laughter)

COMMISSIONER ROSE: And my last question is, does anybody at the table or in the room hold the passports of their employees?

AUDIENCE MEMBERS: (Not using microphone) No.

MR. CAMPBELL: No.

AUDIENCE MEMBER: (Not using microphone) Never.

MR. MINABERRIGARAI: I would -- I would address that issue. We offer our herders -- any valuables that they might want us to keep, suitcases, clothing, radios, whatever they feel might be susceptible to theft while theyíre out on the range, we do offer them that service, and we do have lots of suitcases and valuables, which do include passports and that sort of thing, but it is entirely up to the individual whether he wants to give those materials over to us for safekeeping or if he chooses to keep them in his camp. But we do not force them. That is their choice to do so.

COMMISSIONER ROSE: I needed to know that. Thank you.

MR. T. INDART: But could I just address one thing? Iím Tim Indart.

I did bring three of my herders here today. I told them that they probably wouldnít have to say anything, but Iím sure they will answer any questions that -- instead of asking me, you could ask them. And theyíre sitting up here in the front row.

COMMISSIONER ROSE: Thank you.

AUDIENCE MEMBER: (Not using microphone) Canít see them.

COMMISSIONER ROSE: Canít see them, but I know theyíre there.

MR. T. INDART: Stand up. Stand up.

COMMISSIONER DOMBROWSKI: We know. We know. We know.

MR. T. INDART: Okay.

COMMISSIONER ROSE: Thank you.

MR. SOARES: Then, in closing, Mr. Chairman, I wanted to extend that same invitation, but I also want to be mindful of how that invitation was treated the last time we did that. It was suggested that -- well, because the employers are here, it couldnít be that employees could speak their own free will. I donít know what to say about that to you commissioners, except to say that various people have made comments, both from the producersí standpoint and sheepherder standpoint. We invite you to talk to these people at your convenience if you have any questions whatsoever about their impressions of their employment here.

Secondly, and once again mindful that this all may be very suspicious to some people, but weíre trying our best to let you know what the industry thinks about this, not only the producer but the sheepherder. I want to submit to the Commission 17 letters containing 22 signatures. Weíre not in a duel of numbers here, but I want you to be impressed by the numbers of people who wrote these letters, saying what they want to say about their circumstance. Theyíre not translated. We can provide that service if you want. But they were written by sheepherders and to be presented to you, and now you have them.

Thereís just a few things that need to be further cleared up here, and then I close.

Itís been suggested more than one time in these hearings that, well, you know, itís tough in sheep, but a lot of these producers have other things. And so whatís $100? Whatís $200 to pay their employees more on the sheep side? Just pull the money from the wine grape side, or pull the money from the cotton side or what have you. I hope this Commission is not going down the road to make judgments about peopleís economic viability in the various enterprises that theyíre in. Weíre attempting to show here not only how desperate sheep is, but how the entire agricultural community is just in tough, tough times. And it seems that itís going to be that way for a while.

Regarding working conditions, Commissioner Rose, you have been consistent since San Diego on those points, and I compliment you for that. Let me say that it should not have taken this process for us to get to this point, but we are here now, and we have a proposal that we think fairly addresses the issues. And so, I think youíre correct. If you have private thoughts about, "Gee, whiz. Why are we in Bakersfield today? Why didnít the industry just do it?" I have no counterpoint to that. Let me say that weíre doing it now, and weíre prepared to engage in the kind of dialogue with the Commission and others that will produce something that we can all be proud of.

This whole business of H-2A is also a factor here. I understand people want exemptions from minimum wage, and the IWC eliminated it in California. Itís kind of a cause with some people, less with others. Part of itís driven, I think, because they donít want this H-2A standard. Part of it is, is that -- well, let me not go into politics. They donít want the H-2A standard to be in existence because theyíre fearful that somehow producers will counsel government officials into a way thatís detrimental to workers. We donít think thatís the case. I think weíve been candid with you in our testimony that weíre looking for a situation where producer and worker is working together, coexisting.

A brief aside. I remember when we had the citrus crisis in California, the citrus freeze just a few years ago. I remember sitting with the UFW in the Governorís office working out a problem, because we were all in big trouble. Itís that sort of mindset, in my opinion, that is necessary to end up at a spot where we can all make it work. We did it in the case of the citrus freeze. But then, you know, that crisis went away and we were all back to being polarized again. And so, unfortunately, to a great extent, weíre polarized here.

I am pleased to say, on a positive note, that some of the provisions in this -- our proposal, even though not totally embraced by others, it is reflective of a concern that not only they have, but we have. Itís our effort to address those. Hopefully, we can together.

I want to give you an example, a non-sheep example, to make this following point. It is -- you can bring garlic -- garlic from China and serve it to someone in their home in Fresno, California, for less money than you can bring it from the west side of Fresno and put it on that same plate. I give you the garlic example, and there are hundreds more like it. Bruce Campbell talked about it, others did. Foreign trade, international trade for agriculture, it means being traded away. This deal doesnít work for us in agriculture, in garlic, and not in sheep. The money isnít there, and itís bigger than all of us. And so Iím asking you that, as you evaluate this circumstance, to consider beyond our borders, because beyond our borders are impacting us every day.

Weíre asking for something thatís fair, reasoned, and balanced. Thatís what we think we have presented to you. And we look forward to working with you in the future on this matter.

Thank you very much.

COMMISSIONER DOMBROWSKI: Okay. Is there anyone not affiliated with either of the panels who has come to testify today?

(No response)

COMMISSIONER DOMBROWSKI: All right.

Any other questions?

COMMISSIONER ROSE: None from me.

COMMISSIONER DOMBROWSKI: Okay. Iíll ask for a motion to adjourn.

COMMISSIONER ROSE: I move we adjourn.

COMMISSIONER DOMBROWSKI: Second?

COMMISSIONER CREMINS: Second.

COMMISSIONER DOMBROWSKI: All in favor, say "aye."

(Chorus of "ayes")

COMMISSIONER DOMBROWSKI: Thatís it.

Oh, Iím sorry -- I forgot. Let me just get a little procedurally -- procedurally, our next meeting is scheduled for April 24th in Sacramento. We will be distributing a notice of that meeting no later than this Friday, and attached to that notice will be the background information for that meeting.

(Thereupon, at 1:13 p.m., the public

hearing and meeting was adjourned.)

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CERTIFICATE OF REPORTER/TRANSCRIBER

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I, Cynthia M. Judy, a duly designated reporter and transcriber, do hereby declare and certify under penalty of perjury under the laws of the State of California that I transcribed the three tapes recorded at the Public Hearing and Meeting of the Industrial Welfare Commission, held on April 9, 2001, in Bakersfield, California, and that the foregoing pages constitute a true, accurate, and complete transcription of the aforementioned tapes, to the best of my ability.

Dated: April 20, 2001 ______________________________

CYNTHIA M. JUDY

Reporter/Transcriber