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AB-2956 Income taxes: credits: agricultural employees: overtime pay.(2019-2020)

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Date Published: 02/21/2020 09:00 PM
AB2956:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2956

Introduced by Assembly Members Robert Rivas and Eduardo Garcia

February 21, 2020

An act to add and repeal Sections 17053.100 and 23625 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2956, as introduced, Robert Rivas. Income taxes: credits: agricultural employees: overtime pay.
Existing law, the Phase-In Overtime for Agricultural Workers Act of 2016, creates a schedule that phases in overtime requirements for an agricultural employee, as specified, over the course of 7 years, from 2019 to 2025, inclusive, including a requirement, beginning January 1, 2019, for an employer that employs more than 25 employees, that an agricultural employee receive no less than one and 1/2 times that employee’s regular rate of pay for all hours worked in excess of 9.5 hours in one day or in excess of 55 hours in one week. Beginning January 1, 2022, existing law applies that provision to an employer that employs 25 or fewer employees. Existing law authorizes the Governor to delay the implementation of these overtime pay provisions if the Governor suspends the implementation of a scheduled state minimum wage increase, as specified.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including a credit in an amount measured by the amount of wages paid or incurred to prisoners employed in a specified program and a credit in an amount measured by the wages paid to certain employees within a designated census tract or economic development area.
Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2020, and before January 1, 2023, in an amount equal to the overtime wage premium paid or incurred by the taxpayer in the taxable year to an agricultural employee, as defined, in the taxable year pursuant to the specified provisions of the Phase-In Overtime for Agricultural Workers Act of 2016. The bill would also include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 This act shall be known, and may be cited, as the Agricultural Overtime Premium Tax Credits Act of 2020.

SEC. 2.

 Section 17053.100 is added to the Revenue and Taxation Code, to read:

17053.100.
 (a) For each taxable year beginning on or after January 1, 2020, and before January 1, 2023, there shall be allowed to a taxpayer as a credit against the “net tax,” as defined in Section 17039, an amount equal to the overtime wage premium paid or incurred by the taxpayer in the taxable year to an agricultural employee.
(b) For purposes of this section:
(1) “Agricultural employee” means a person employed in an agricultural occupation, as that term is defined in Section 859 of the Labor Code.
(2) (A) “Overtime wage premium” means the portion of the amount paid to an employee for overtime hours determined by multiplying the number of overtime hours by the difference in the employee’s regular rate of pay and the rate required to be paid to the employee for those overtime hours pursuant to Section 860 of the Labor Code or by subdivision (a) of Section 862 of the Labor Code.
(B) “Overtime hours” means the amount of hours an employee worked in excess of the daily or weekly limits specified in Section 860 of the Labor Code or subdivision (a) of Section 862 of the Labor Code for which the employee is required to be compensated at rates specified by those provisions.
(c) This section shall remain in effect only until December 1, 2023, and as of that date is repealed.

SEC. 3.

 Section 23625 is added to the Revenue and Taxation Code, to read:

23625.
 (a) For each taxable year beginning on or after January 1, 2020, and before January 1, 2023, there shall be allowed to a taxpayer as a credit against the “tax,” as defined in Section 23036, an amount equal to the overtime wage premium paid or incurred by the taxpayer in the taxable year to an agricultural employee.
(b) For purposes of this section:
(1) “Agricultural employee” means a person employed in an agricultural occupation, as that term is defined in Section 859 of the Labor Code.
(2) (A) “Overtime wage premium” means the portion of the amount paid to an employee for overtime hours determined by multiplying the number of overtime hours by the difference in the employee’s regular rate of pay and the rate required to be paid to the employee for those overtime hours pursuant to Section 860 of the Labor Code or by subdivision (a) of Section 862 of the Labor Code.
(B) “Overtime hours” means the amount of hours an employee worked in excess of the daily or weekly limits specified in Section 860 of the Labor Code or subdivision (a) of Section 862 of the Labor Code for which the employee is required to be compensated at rates specified by those provisions.
(c) This section shall remain in effect only until December 1, 2023, and as of that date is repealed.

SEC. 4.

 (a) For the purposes of complying with Section 41 of the Revenue and Taxation Code, the Legislature finds and declares as follows:
(1) California remains the largest overall producer of agricultural goods by value in the country, and is one of the largest agricultural producing regions in the world. Unfortunately, the farmworkers that make much of the production possible face a number of disadvantages compared to California’s population as a whole.
(2) Agricultural employers contributed more than $263 billion to the state economy through direct sales and employed 1.2 million people, benefiting both rural and urban regions, but these employers are under extreme pressure from new economic and environmental challenges.
(3) Farming and ranching are based on managing biological systems, which are dependent on weather. As such, they often demand harvesting, pruning, and planting be conducted within sometimes very tight and unpredictable windows. In order to meet these demands, at times this necessitates that the work gets done in excess of 8 hours per day or 40 hours per week.
(4) Currently, competition in the marketplace from other states and countries that do not yet provide overtime compensation for farm employees creates a competitive disadvantage to California’s farmers and ranchers who must utilize employees during these overtime periods.
(5) Therefore, the purpose of the Agricultural Overtime Premium Tax Credits Act of 2020 is to ensure fair wages and hours for farmworkers by providing tax credits to California’s agricultural employers of farmworkers.
(6) The performance indicator for the Legislature to use when measuring whether the credits meet the goal, purpose, or objective specified in paragraph (1) is how many taxpayers are allowed the credits.
(b) Notwithstanding Section 19542 of the Revenue and Taxation Code, the Franchise Tax Board shall annually publish anonymized data on the Agricultural Overtime Premium Tax Credits Act of 2020 through the 2024 calendar year.

SEC. 5.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.