Central Valley farmers, contractors brace for new federal mandate

The Fresno BeeSeptember 14, 2013 

Andrew Casado Jr. is administrative manager for Cal West Packing in Parlier. It's a small business, but like a lot of businesses in the Valley, it hires a lot of seasonal employees, which insurance consultants say can make it tough to figure out the size of the business under Affordable Care Act rules.


Some California farmers and agriculture leaders are fretting over the looming deadline for complying with a federal mandate for providing health insurance.

The Affordable Care Act that takes effect in 2015 for large employers will provide health insurance to thousands in the San Joaquin Valley — and many will receive health-care coverage for the first time.

But agriculture employers also are anticipating higher costs, added paperwork and the possibility that a large chunk of their workforce won't be covered.

As part of the far-reaching law, farming operations and farm labor contractors with more than 50 full-time employees will be required to provide affordable health-care coverage. If they don't, they face a penalty and their workers will have to seek insurance through a government health-care exchanges. Covered California is the health exchange in California.

But many farmworkers who are undocumented won't be eligible to participate in the exchange programs or Medicaid.

California and the farm-rich San Joaquin Valley could be hit particularly hard. The state is home to the largest number of undocumented immigrants — 2.7 million. And nearly 300,000 live in the Valley, where many are involved in farm work.

By the industry's own estimates, as much as 60% to 70% of the workforce is undocumented.

Marc Grossman, spokesman for the United Farm Workers union, said the fact that undocumented workers are not eligible for health coverage underscores the urgent need for passage of the bipartisan Senate immigration reform bill.

"Its agricultural provisions were negotiated by the UFW and the nation's growers and would let as many as 1 million undocumented farmworkers earn legal status and thereby qualify for the ACA," Grossman said.

Manuel Cunha, president of the Fresno-based Nisei Farmers League, said he and others in agriculture are planning a lobbying trip to Washington, D.C., in early October to press for a possible solution that would allow undocumented workers to receive health-care coverage.

"I don't think they (federal officials) understand the complexity of this issue," Cunha said. "We have to have an answer to this problem."

Cunha said that even for those workers who qualify, cost is a factor. The government says the employer-provided insurance plan must be affordable and the employee's contribution cannot exceed 9.5% of their total gross income.

"That is going to be very difficult for some workers to afford," Cunha said.

Also struggling for some answers are farm labor contractors, who typically have large numbers of employees and operate on slim margins. Labor industry experts say complying with the law could cost the contractors an additional $1 to $2 per employee.

Some farm labor contractors are trying to figure out if it's cheaper in the longer run to pay the annual penalty of $2,000 per employee instead of providing health insurance.

"People are really looking at this closely and doing the math to see what this will all cost," said Lupe Sandoval, managing director of the Sacramento-based California Farm Labor Contractor Association. "For some, those penalties could amount to tens of thousands of dollars."

Sandoval believes many contractors will try to provide their workers with health insurance.

"This is an important benefit to have for the workers and their families," he said.

Farm labor contractor and farmer Earl Hall is moving ahead with trying to comply, but he admits it won't be cheap. He says he may have to pay nearly $500,000 to provide health insurance for about 100 employees.

"We want to be able to offer health insurance for our workers," Hall said. "The tough part is paying for it."

West Fresno County farmer Joe Del Bosque is among those who could face a more expensive farm labor contractor bill. Del Bosque farms melons, asparagus, cherries, almonds and tomatoes.

"We know we are going to have to face some higher costs and we will have to absorb it. We don't have a lot of choice," Del Bosque.

The new mandate comes at a tough time for some farmers, especially those on the west side of the Valley who are struggling with a reduced water supply. Del Bosque has 2,200 acres but only enough water to farm 1,900.

"And we will probably farm less next year, meaning fewer jobs," Del Bosque said.

Large-scale farmers are in a better position to implement the new health care mandate.

At Paramount — one of the state's largest agricultural companies — company officials are confident their health-care plan can meet the ACA's requirements. The company operates four companies that grow, harvest and process almonds, pistachios, mandarins and pomegranates in the Valley.

In all, 2,700 Paramount employees are eligible for benefits. About 80% of them are enrolled in the company's health insurance plan.

The company also has a no-cost health-and-wellness center at its plant in Delano. (Correction: The original version of this story incorrectly said that Paramount Citrus produces Cuties at its plant in Delano. The plant produces Wonderful Halos.)

"We believe we are fully compliant with what the government says we should be doing," said Kevin Hamilton, benefits and wellness director for Roll Global, Paramount's parent company.


The reporter can be reached at (559) 441-6327, brodriguez@fresnobee.com or @FresnoBeeBob on Twitter.

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