Do I Owe My Farm Team Overtime Pay?

August 15, 2016 12:00 PM
Do I Owe My Farm Team Overtime Pay?

Farming is the kind of job that happens 24 hours a day and seven days a week, year-round. Time on the clock adds up quickly, which is why producers need to educate themselves on the new final rule on overtime pay within the federal Fair Labor Standards Act. 

Agriculture workers are exempt, but some people on your payroll might be subject to the rules that go into effect Dec. 1—particularly if you operate a seed business, a creamery or a farm stand. 

Who Qualifies? Across all industries, 4.2 million workers will be affected by the changes, according to the U.S. Department of Labor.

Farm workers must be paid for all work hours, says Paul Neiffer, CPA and principal at CliftonLarsonAllen and a Top Producer columnist. A farm employee who works 46 hours in a week must be paid for all hours worked, but not at time-and-a-half rates for hours over 40.

The final rule continues to exempt executive, administrative and professional workers for overtime laws. At the same time, it increases the weekly salary required for them to be exempt from overtime. The rule sets the annual standard salary level at $47,476 or $921 per week. Workers who are not farm labor and make less than that are entitled to time and a half over 40 hours. 

Some top operators will discover their operation might employ overtime-eligible team members:

  • Office Workers. “Farmers can only have office workers meet the new exemption if they are paid more than $921 per week,” Neiffer says. 
  • Seed Business Sales Staff. Any team members employed solely by a seed business do not work in agriculture. They must receive overtime if they earn under $47,476. These rules do not apply if you sell only seed grown by the farmer. 
  • Farmstand or Creamery Workers. Vegetable farms often have a farm stand, and dairies frequently have a creamery. People employed in either may be eligible for overtime pay if they are selling products not raised by the farmer. 

Seek Expert Counsel. Producers are exempt from overtime laws if they use less than 500 man days of agriculture labor in a calendar year. Man days are those on which an employee does ag labor for at least one hour. Consult your accountant and attorney on your situation.  

Who Else Is Exempt From Overtime?

In many cases, people working in agriculture are ineligible for overtime pay, according to new rules by the U.S. Labor Department. They include:

           Workers engaged in rangeland-based              livestock production may not receive
      overtime pay under new U.S. Department
of Labor rules. 

Your younger brother and oldest son. Agricultural laborers include those who are immediate family members of their employers, according to guidance from the labor department.

Cowboys and sheepherders. People principally engaged in the production of livestock on the range are exempt. 

Fruit and vegetable harvesters. The “hand-harvest labor” exemption is tricky. It includes “local hand-harvest laborers who commute daily from their permanent residence, are paid on a piece-rate basis and were engaged in agriculture less than 13 weeks during the previous calendar year.” Also exempt are non-local minors age 16 or younger who are hand-harvesters, paid on a piece-rate basis, employed on the same farm as their parent, and paid the same rate as workers older than 16.

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