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Gary Kilpatric, Esq.
MONTGOMERY & ANDREWS, P.A.
(505) 982-3873
J. Brent Moore, Esq.
Montgomery & Andrews
(505) 986-2648

WORKERS' COMPENSATION IN NEW MEXICO: THE ELIMINATION OF THE FARM AND RANCH LABORER EXCLUSION

On June 30, 2016, the New Mexico Supreme Court issued an opinion, Rodriguez v. Brand West Dairy, [2] which severely modified the New Mexico’s established workers’ compensation law. Until this decision, the New Mexico Workers’ Compensation Act carved out an exception to the mandated workers’ compensation participation for all private employers with four or more employees. [3] The exception exempted employers of private domestic servant and farm and ranch laborers from the mandate. [4] The New Mexico Center on Law and Poverty brought two consolidated cases, challenging the constitutionality of the exclusion. The New Mexico Supreme Court in a majority opinion by Justice Chavez struck down the exclusion as a violation of the workers’ equal protection rights under the New Mexico Constitution. The majority struck down the exclusion due to its disparate effect on farm and ranch workers and the lack of a rational relation to the government’s interest. [5] In the dissent, Justice Nakamura emphasized that this decision threatens to detrimentally impact small farms and ranches by raising costs for employers beyond what small New Mexico farms and ranches can maintain. [6] The decision expanded the workers’ compensation mandate to all farm and ranch laborer employers in the State with four or more workers. [7]

I. The New Mexico Workers’ Compensation Act

The New Mexico Workers’ Compensation Act (“Act”) [8] was first established in 1917. The Legislature’s purpose was to provide workers with a benefit system to provide “quick and efficient delivery of indemnity and medical benefits” to injured workers, which also maintained a “reasonable cost” for employers. [9] It aims to balance the “humanitarian and economical” compensation for an injured worker with financial security for the employer. [10] The legislation reflects the belief that the “industry is best situated to bear the costs of personal injuries suffered by workers in the course of their employment,” while also keeping in mind, a “generally evenhanded consideration of competing policy objectives.” [11]

The Act allows workers to recover compensation from their employers by requiring employers to provide workers’ compensation coverage. Employers who fall within the Act, “shall become liable to and shall pay to any such worker injured by accident arising out of and in the course of his employment.” [12] However, the farm and ranch labor exclusion is an exemption to the mandate. [13] Section 52-1-6(A) states in full:

The provisions of the Workers' Compensation Act shall apply to employers of three or more workers; provided that act shall apply to all employers engaged in activities required to be licensed under the provisions of the Construction Industries Licensing Act regardless of the number of employees. The provisions of the Workers' Compensation Act shall not apply to employers of private domestic servants and farm and ranch laborers. [14]

The exclusion was added in 1937, when the Act only applied to “extra-hazardous occupations or pursuits.” [15] It was not until 1975 that the Act was expanded beyond just “extra-hazardous occupations or pursuits” to include the statutory language it includes today of private employers employing four or more workers. [16] The exception of “private domestic servants and farm and ranch laborers” has remained since 1937. [17]

In 1980, the constitutionality of the farm and ranch laborer exclusion was challenged in Cueto v. Stahmann Farms, Inc. [18] The New Mexico Court of Appels held that the farm and ranch laborer exclusion had a “reasonable basis” and was not arbitrary. [19] The issue of the constitutionality of the farm and ranch laborer exclusion was again raised to the New Mexico Supreme Court in 2016 in Rodriguez v. Brand West Dairy[20]

II. Rodriguez v. Brand West Dairy

a. Factual Background

The case is the result of two consolidated cases in which both workers suffered work-related injuries as farm and ranch laborers. Maria Angelica Aguirre sued her employer, M.A. and Sons, Inc., seeking compensation for a broken wrist while picking chiles. [21] M.A. and Sons, Inc.’s insurance company, the Food Industry Self Insurance Fund of New Mexico, raised the defense that Ms. Aguirre’s claims were barred by the farm and ranch laborer exclusion of Section 52-1-6(A), and the workers compensation judge (the “judge”) dismissed her claims with prejudice. [22]

Noe Rodriguez sued his employer, Brand West Dairy, after a cow caused him to fall on a cement floor. [23] Brand West Dairy’s insurer, the New Mexico Uninsured Employers’ Fund, moved to dismiss Mr. Rodriguez’s claims due to the farm and ranch laborer exclusion, and the judge dismissed his claims. [24]

Ms. Aguirre’s and Mr. Rodriguez’s (“Workers”) appeals were consolidated at the New Mexico Court of Appeals. [25]

b. The New Mexico Court of Appeals Opinion

On June 22, 2015, the New Mexico Court of Appeals held that the farm and ranch laborer exclusion was unconstitutional as a violation of the workers’ equal protection rights. [26] The Court of Appeals distinguished its previous holding in Cueto.[27] It emphasized that in Cueto, the statute’s constitutionality was not squarely before the court, and instead the dispositive issue was whether the worker constituted a farm laborer, as defined by the act. [28] Turning to the constitutionality of the farm and ranch laborer exclusion, the Court concluded that “review of the history of the workers’ compensation statutes back to 1929 [do] not reveal[] an articulable purpose for the exclusion.” [29] The Court determined that the “stated purpose of the Act is not served by creating classifications among the state’s workers.” [30] Since the Court concluded that there was no substantial relationship between the exclusion and the government interest, the Court held the exclusion unconstitutional. [31] Brand West Dairy, M.A. and Sons, Inc., and the Self Insurance Fund appealed the constitutional issue to the New Mexico Supreme Court. [32]

c. The Supreme Court’s Opinion

i. The Majority Opinion

The Workers argued to the Supreme Court that the farm and ranch laborer exclusions violated their equal protection rights under the New Mexico Constitution, and could not survive any level of scrutiny. [33] Under New Mexico equal protection analysis, the Court looks at “whether the legislation creates a class of similarly situated individuals and treats them differently.” [34] If so, the Court applies “the appropriate level of scrutiny to determine whether the legislative classification is constitutional.” [35]

The Court concluded that: (1) the farm and ranch laborer exclusion created differential treatment among a class of similarly situated individuals of agricultural employees; [36] and (2) the farm and ranch laborer exclusion did not pass rational basis because the Workers proved it was not rationally related to a legitimate government purpose. [37] The purported government interest of saving costs for agricultural employees was not rationally related to the means of excluding the farm and ranch workers from workers’ compensation. [38] The New Mexico Supreme Court concluded that the farm and ranch laborer exclusion was “nothing more than arbitrary discrimination,” and accordingly, is unconstitutional. [39]

Considering the reliance interests of employers and the practical difficulty of allowing retroactive application, the Court directed the holding to “be prospectively applied to any injury that manifests after the date that our mandate issues in this case.” [40] The Court modified the holding to allow an exception for Ms. Aguirre and Mr. Rodriguez, since they gave the Court an “opportunity to change an outmoded and unjust rule of law.” [41] Ms. Aguirre and Mr. Rodriguez’s case was therefore remanded to apply the unconstitutionality of the exclusion and allow their case to proceed. [42]

The Dissent

Justice Nakamura dissented from the majority opinion and found that the statute passed equal protection, that invalidating this statute was not in the Court’s power, and that the majority opinion threatened to harm small, “economically fragile” farms in New Mexico. [43]

While the majority framed the statute as an exclusion of the workers, the dissent framed it as an exclusion of the employers. [44] The dissent stated that the Legislature has always allowed employers of farm and ranch laborers to decide whether to participate in the workers’ compensation program. [45] Justice Nakamura reasoned that the issue is best fit for a legislature to determine because the question of what is best for a particular industry within the State’s economy is a legislative question and is outside the powers of the Court. [46] And, the dissent pointed out, the Legislature has been maintaining the Act for the past 99 years. [47]

Notably, the dissent highlighted that the exclusion gives the employers a choice whether to obtain workers’ compensation coverage. [48] Employers could weigh the factors and “elect the option that entails the lowest expected costs.” [49] Given this choice, “29% of New Mexico farms and ranches (including many of the largest agricultural firms in the State) have elected to provide workers' compensation.” [50]

The dissent described the Legislature’s purpose in maintaining this exclusion as an attempt “to contain regulatory costs incurred by economically precarious farms and ranches in New Mexico.” [51] The dissent cited to a 2009 attempt to repeal the exclusion. That year the Legislature contemplated repealing the exclusion but, according to the Fiscal Impact Report, such repeal would have had “a significant financial strain on the farming and ranching part of the industry.” [52] The Fiscal Impact Report noted that nationally, the average cost per claim was approximately $16,876 and the national average net income per farm was $19,373, “only slightly more than the average cost per workers’ compensation claim.” [53] In fact, in 2013 in New Mexico, the average cost per claim was $13,976, [54] and the average net income of farming operations in New Mexico in 2012 was $9,501. [55]

The dissent took issue with not only the majority’s analysis of equal protection under New Mexico law, [56] but also the majority’s “depart[ure]” from the “myriad” of other analogous state farm and ranch laborer exclusions to mandatory workers’ compensation statutes and the other appellate courts upholding those similar statutes. [57]

III. Workers’ Compensation Law in New Mexico Today

One year after the Rodriguez decision, it is too soon to conclusively understand the effect of the invalidation of the farm and ranch laborer exclusion provision on New Mexico. The New Mexico Supreme Court analyzed only one case since the decision, and it merely applied the prospective holding and dismissed the case. [58] Will Justice Chavez and his majority’s view of a victory to workers prevail? Will Justice Nakamura’s image of harm to small New Mexico farms and ranches come to fruition? What we do know moving forward is that New Mexico farms and ranches that used to be excluded from the requirement of providing workers’ compensation have now been incorporated into the same mandatory program of other employers.

References

[1] Alison Goodwin, a summer associate with Montgomery & Andrews, P.A., is a third year law student at the University of New Mexico School of Law.

[2] 2016-NMSC-029, 378 P.3d 13.

[3] NMSA 1978 § 52-1-6(A) (2003).

[4] Id.

[5] See 2016-NMSC-029, ¶ 31.

[6] See id . ¶¶ 54-56.

[7] See NMSA § 52-1-6(A); 2016-NMSC-029, ¶¶ 31, 52.

[8] NMSA 1978 §§ 52-1-1 to -70 (1917, as amended through 2015); 1917 N.M. Laws, ch. 83, §§ 2, 10).

[9] NMSA 1978 § 52-5-1 (1990).

[10] Graham v. Wheller Ranch , 1967-NMS-036, ¶ 10, 77 N.M. 455, 423 P.2d 980.

[11] Kelly Brooks & Paul De Muro, Workers’ Compensation, 22 N.M. L. Rev. 845, 846 (Summer 1992).

[12] NMSA 1978 § 52-1-2 (2003).

[13] Id.

[14] Id.

[15] 1937 N.M. Laws, ch. 92, § 2.

[16] 1975 N.M. Laws, ch. 284, § 14.

[17] Through the years, the Court has defined what classifies as a farm or ranch laborer is under the Act. A worker is a farm or ranch laborer when “the worker’s primary responsibility is performed on the farming premises and is an essential part of the cultivation of the crop.” Holguin v. Bill the Kid Produce, Inc., 1990-NMCA-073, ¶ 9, 110 N.M. 287, 795 P.2d 92 (holding that a worker who primarily filled and stacked sacks of onions was not a farm laborer). The Court has also said that the “exempt status of the employee should be judged from the general character of his work rather than his activity on any particular day.” Cueto v. Stahmann Farms, Inc., 1980-NMCA-036, ¶ 10, 94 N.M. 223, 608 P.2d 535. See also Tanner v. Bosque Honey Farm, Inc., 1995-NMCA-053, ¶¶ 2-3, 119 N.M. 760, 895 P.2d 282 (concluding that a worker who primarily harvested honey by extracting it from bee hives was a farm laborer).

[18] Cueto v. Stahmann Farms, Inc. , 1980-NMCA-036, ¶ 10, 94 N.M. 223, 608 P.2d 535.

[19] Id.

[20] 2016-NMSC-029.

[21] Id. ¶ 3.

[22] Id. ¶ 4.

[23] Id. ¶ 5.

[24] Id.

[25] Rodriguez v. Brand West Dairy , 2015-NMCA-097, ¶ 1, 356 P.3d 546, cert. granted, 2015-NMCERT-008.

[26] Id. ¶¶ 11, 31.

[27] Id. ¶ 8 (discussing Cueto, 1980-NMCA-036). Workers also attempted to rely on Griego v. New Mexico Workers’ Compensation Administration. Workers argued that dismissal of their claims was precluded by the Second Judicial District Court’s order in Griego, which declared the farm and ranch laborer exclusion unconstitutional. Griego v. New Mexico Workers’ Compensation Administration, Second Jud. Dist. No. CV 2009-10130. A subsequent Court of Appeals memorandum opinion let the decision stand and did not reverse. Griego v. New Mexico Workers’ Compensation Administration, No. 32,120 memo. Op. (N.M. Ct App. Nov. 25 2013)(finding the issues on appeal to be moot because the claims had been settled, and the constitutional issue was not raised on appeal). Workers contended that these two decisions were binding on the WCJs. Rodriguez, 2015-NMCA-097, ¶ 7. The New Mexico Court of Appeals did not find these cases to be binding. Id.

[28] Id. ¶ 8 (discussing Cueto, 1980-NMCA-036, ¶¶ 5, 8).

[29] Id. ¶ 16.

[30] Id.

[31] Id. ¶¶ 31-32.

[32] See 2016-NMSC-029, ¶ 8.

[33] Id. ¶ 9.

[34] Id. (quoting Griego v. Oliver, 2014-NMSC-003, ¶ 27, 316 P.3d 865) (internal quotation marks omitted).

[35] Id. (quoting Griego, 2014-NMSC-003, ¶ 27) (internal quotation marks omitted).

[36] Id. ¶¶ 17, 22.

[37] Id. ¶ 28 (citing Wagner v. AGW Consultants, 2005-NMSC-016, ¶ 12, 137 N.M. 734, 114 P.3d 1050).

[38] See id. ¶ 31.

[39] Id. ¶ 2. The Court also determined that the holding be given modified prospective application. Id. ¶ 51.

[40] Id. ¶ 51.

[41] Id. (quoting Lopez v. Maez, 1982-NMSC-103, ¶ 18, 98 N.M. 625, 651 P.2d 1269) (internal quotation marks omitted).

[42] Id. ¶ 52.

[43] Id. ¶ 56 (Nakamura, J., dissenting).

[44] See generally, id.

[45] Id. ¶ 54 (Nakamura, J. dissenting) (citing NMSA 1978, § 52–1–6(A)-(B) (1990); Laws 1917, ch. 83 §§ 2, 10).

[46] Id. ¶ 56 (Nakamura, J. dissenting).

[47] Id. ¶ 55 (Nakamura, J., dissenting) (stating that “this Court has neither the necessary facts nor the institutional mission to substitute our judgment for that of the Legislature regarding what is best for any particular industry within the State's economy.”).

[48] Id. ¶ 56 (Nakamura, J., dissenting).

[49] Id. (Nakamura, J., dissenting).

[50] Id. (Nakamura, J., dissenting).

[51] Id. ¶ 60 (Nakamura, J., dissenting).

[52] Id. ¶ 61 (quoting FIR for H.B. 62, at 3 (Feb. 05, 2009) (2009 FIR) (internal quotation marks omitted).

[53] Id. (citing FIR for H.B. 62, at 3 (Feb. 05, 2009) (2009 FIR).

[54] See State of New Mexico Workers’ Compensation Administration, 2013 at a Glance, at 16, http://www.workerscomp.state.nm.us/research/glance13.pdf (last viewed June 9, 2017).

[55] See United States Department of Agriculture, National Agricultural Statistics Service, 2015 State Agricultural Overview New Mexico, http://tinyurl.com/jjpx7ch (last viewed June 9, 2017).

[56] See id . ¶¶ 57-65.

[57] Id. ¶ 66, (Nakamura, J., dissenting); see also, id. n.5.

[58] Castro-Montanez v. Milk-N-Atural, LLC , NO. S–1–SC–35609, dispositional order of reversal (Aug. 4, 2016) (non-precedential) (applying the Rodriguez decision and holding the invalidation of the exclusion applies prospectively to “all injuries suffered by farm and ranch laborers that manifest after the date [of the decision].”) (emphasis in original).