Two high priority areas of employment law for most farmers are minimum wage and workers’ compensation. These are considered high priority because they generally carry the most liability risk if a farmer does not comply with them. The risk includes high costs and stress over facing state and federal enforcement actions and having to pay back wages, fines, medical bills, and attorney fees and other damages from lawsuits. The following provides a brief overview of each.
Minimum wage: The basic rule of thumb is that unless an exemption applies at BOTH the state and federal level, farmers must pay at least the minimum wage to all employees—including interns and volunteers who are considered “employees” in the eyes of the law. The federal law does provide an exemption for small farms –which is called the “500 man day agricultural labor” exemption. Under this exemption, if the farm has fewer than 500 “man days” performing agricultural labor in each calendar quarter of the previous year, minimum wage is not required. One “man day” is when one worker performs at least one hour of agricultural labor. This exemption does NOT apply to non-agricultural labor, which includes off farm activities such as selling at farmers’ markets as well as activities that are tangential to farming such as making value-added products, packing other farms’ products, or activities related to agritourism and farm events. The long and short of it is that if a farmer wants to rely on the federal exemption for minimum wage, she must keep records of hours worked and activities performed, and do some calculations. Farmers need to also look into their state’s minimum wage requirements and any available exemptions. Some states choose to follow the federal 500 man day exemption. However, those states are in the minority.
Most states have a different set of rules for when farmers must pay at least the minimum wage. Some states provide no exemptions whatsoever. Here’s the takeaway: When the state and federal minimum wage laws differ, farmers must adhere to whichever law is strictest. For example, if a state does not provide a minimum wage exemption, farmers must pay their employees at least the state’s minimum wage—even if the farm is eligible for the federal 500 man day exemption. For more details on the 500 man day exemption, and the interplay of federal and state minimum wage laws—including a map showing which states have minimum wage exemptions—review pages 17-24 of Farm Employment Law: Know the basics and make them work for your farm.
Workers’ compensation: Worker’s compensation is a program that provides coverage for persons injured at their workplaces. It works much like an insurance policy. The employer pays the premiums and injured workers are eligible to make claims for coverage. Workers’ compensation programs are established by state law. The majority of states require most businesses to purchase workers’ compensation for all their employees. However, some states provide exemptions to workers’ compensation coverage for small farms that meet certain criteria. Even if it’s not legally required, having workers’ compensation in place for all workers on the farm can be a wise risk management strategy. Accidents and injuries can and do happen. If an intern or volunteer is injured while working on the farm, his insurance company can sue the farm for damages even without the workers’ consent. If the farm carries workers’ compensation for its workers, the farm will be protected. For more details on state workers’ compensation laws, the Farmers’ Guide to Federal Employment Law and the State Employment Basics Series.