Farms with Salaried Managers: Look at New Overtime Rule

Many farms and businesses pay employees with a salary as a way to create consistent pay without the need for timesheets, clocking in, and clocking out. However, if the salary pay structure is used as a way of avoiding overtime pay for all hours worked over 40 in the week (which is necessary for any farm assigning non-agricultural labor), new rules apply.  As of July 1, a business can avoid overtime wages only if salaried employees are paid at least $844 in gross wages a week, which is $160 more per week than before. The threshold jumps again in 6 months to $1,128 per week on January 1, 2025.

Most farmworkers who perform only agricultural labor don’t need to be paid 1.5 times their regular wage for overtime hours. This means farm owners (unlike other small businesses) don’t use salary as a strategy to avoid overtime. However, ALL workers who perform non-agricultural labor (e.g., processing farm products, agritourism, food service, and more) must be paid overtime wages for all hours worked over 40 in the week. Diversified farm businesses are more likely to consider using salary to avoid overtime.

However, on a farm, only a few positions are eligible for salary rather than overtime. Farm employees who manage at least three other employees, with the authority to hire and fire those employees, are eligible to be paid a salary in lieu of an hourly wage. If you want to read more about salary eligibility for farm worker positions, see our guide “Wages in the Form of Salary Rather Than Hourly Pay.”

In six short months, employers will be required to pay salaried farm employees at least an equivalent of $58,656 a year; farms paying less than this annual amount will need to pay overtime wages. The current threshold (as of July 1) is equivalent to $43,888/year or $844/week. The new rule also requires automatic threshold updates every three years, so in 2027, this conversation will arise again.

Of course, that is…if the new rule survives. A similar rule was announced in 2016 and faced numerous legal challenges before the Trump administration blocked it. The longevity of this rule depends on what happens in the November election, but farm businesses must still respond to the July 1 changes and consider the second uptick at the turn of the new year.

Are the salary minimums too high to justify the benefit of not having to track and calculate overtime for salaried farm workers? This is the question farm owners must now answer. Keep in mind that these are federal regulations; it’s also crucial for business owners to diligently check their state rules on minimum salary to avoid overtime. If a state’s salary threshold is higher (as it is in California), that rule must be followed.