The Bottom Line: Contract Farm Labor to the Rescue

August 24, 2012 11:24 PM

One of the most satisfying aspects of my job is working with many of the "top guns" in production agriculture and witnessing their success.

It has been my observation that these top producers have no problem getting the land, equipment and money they need to run a farm operation. However, getting the right people doing the right job with the right skill set at the right time is becoming increasingly difficult.

With the advancements in on-farm technology, finding average talent does not cut it anymore. If at times you feel like you’re trying to "push a log chain" when attracting, training and keeping top-quality people, you might consider hiring contract labor.

We have successfully used contract labor in three of our businesses for more than 14 years and feel the advantages outweigh the disadvantages. For example, all of the associates who work with Russell Consulting Group are independent contractors with a 1099 relationship, as defined by the Internal Revenue Service. This has worked well for us—and them.

In addition, my nephew who currently manages our pork production facilities is an independent contractor.

Independent status. There are definite criteria that must be met in order to qualify as an independent contractor. Independent contractors are often described as people engaged in occupations who contract to perform work according to their own methods. They are not subject to control of the employer, except for the result.

The basic tenet of an independent contractor relationship is that the contractor has an independent occupation and is only responsible for the finished product.

Use the following 10 factors to serve as a guide as to whether a worker is in fact independent, as opposed to being subject to the control of the employer:

  • The extent of control that the employer might exercise in regard to the details of the task.
  • Whether the person employed is engaged in a distinct occupation or business.
  • The kind of work to be performed, compared with whether the work is usually done under the direction of the employer or by a specialist without supervision.
  • The skill set that is required for the work to be completed.
  • Whether the employer supplies the tools and location for the person performing the work.
  • The length of time the person is employed.
  • The method of payment (hourly or by the job).
  • Whether the work is a regular part of the employer’s business.
  • The intent of the parties involved.
  • The opportunity for profit or loss.

Qualities of success. One of the benefits of contract labor is that independent contractors generally possess and display entrepreneurial characteristics. They are driven by goals and often take the time to record and track those goals.

Second, they are willing to take risks—not undue risk but more along the lines of a mountain climber who takes calculated risks and uses tools and techniques to manage the risk.

Third, independent contractors are accountable to themselves. When things go wrong, entrepreneurs look in the mirror for the problem rather than try to blame the problem on someone else.

Last, they are innovators. Each day when they wake, they ask, "How can I do more with less, thereby being more productive and innovative?"

Try a contract labor relationship and see how it works for you. It might add to your bottom line and make farming easier and more enjoyable on your end.

Understand labor law. A word of caution: several states have recently broadened their legal definition of "employee" and have expanded the number of arguments to favor employee status. Consult a local attorney to guarantee that you meet the National Labor Relations Acts and the Fair Labor Relations Act criteria and expectations for independent contractor status.

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