Employment: employer contributions: employee withholdings: credit: agricultural employees.

Plain English Breakdown

The bill has failed passage in committee and is unlikely to become law.

Employment: Employer Contributions and Reporting Changes for Agricultural Workers

The bill allows employers to claim tax credits for overtime wages paid to agricultural workers, changes payroll reporting requirements for farm labor contractors, and specifies no state reimbursement is needed.

What This Bill Does

• Allows employers to get a tax credit equal to the amount of overtime pay given to certain farmworkers during each quarter.
• Requires employers to report this credit on their quarterly tax forms or through electronic funds transfer.
• Changes payroll record requirements for farm labor contractors, requiring them to show net and gross wages minus any tax credits received by the employer.

Who It Names or Affects

• Employers who pay overtime wages to agricultural workers.
• Farm labor contractors and the people they hire.
• The Employment Development Department which collects taxes from employers.

Terms To Know

overtime wages

Extra money paid to employees for working more than a regular work week, usually time-and-a-half or double pay.

tax credit

A reduction in the amount of tax an employer has to pay based on certain expenses or payments made.

Limits and Unknowns

• The bill needs approval from the Legislature and a final vote before it becomes law.
• It is not clear how much money employers will save with this new credit.
• Farm labor contractors may need to change their payroll systems to follow the new rules.

Official Summary Text

SB 921, as introduced, Grove.
Employment: employer contributions: employee withholdings: credit: agricultural employees.
(1) The Personal Income Tax Law imposes taxes on taxable income, as provided. Under existing law, every employer who pays wages to a resident employee for services performed either within or without this state, or to a nonresident employee for services performed in this state, is required to deduct and withhold from those wages, except as provided, for each payroll, a tax computed in an amount substantially equivalent to the amount reasonably estimated to be due under the Personal Income Tax Law. Under existing law, every employer required to withhold those taxes is required to, for each calendar quarter, file a withholding report, a quarterly return, and a report of wages in a form prescribed by the Employment Development Department, and pay over the taxes required to be withheld.
This bill would authorize an employer to
claim a credit in an amount equal to the amount of overtime wages, as defined, paid during that quarter to specified agricultural employees covered by a certain wage order. The bill would require the credit to be claimed on the employer’s report of contributions, quarterly return, and report of wages, or in an electronic funds transfer, as specified. The bill would specify a refund of any credit amounts exceeding the amount that would have been remitted for that quarter to the Employment Development Department for employee withholdings. The bill would make implementation of the above-described refund contingent upon appropriation by the Legislature.
(2) Existing law requires farm labor contractors to be licensed by the Labor Commissioner and to comply with specified employment laws applicable to farm labor contractors. Existing law requires a person acting in the capacity of a farm labor contractor to provide a grower with whom the contractor
has contracted to supply farmworkers a payroll record for each farmworker providing labor under the contract. Existing law requires the above-described payroll record to include certain disclosures, including the net and gross wages earned by each farmworker. Under existing law, a person who violates farm labor contractor requirements is guilty of a misdemeanor.
This bill would, instead, require the above-described disclosure to include the net and gross wages earned, less the amount of credit the farm labor contractor received pursuant to the above provisions, by each farmworker. By imposing a new requirement on farm labor contractors, the violation of which is a crime, the bill would impose a state-mandated local program.
(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions
establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Current Bill Text

Download Bill PDF