Strangling the family farm or preventing a ‘great resignation’ of the agricultural world?

In what is quickly beginning to look like a nationwide trend, Oregon, Colorado, and New York have all recently made big decisions in overtime wage laws. Joining five other states, these territories spanning the U.S. are inching closer to providing time and a half to all farm workers clocking over 40 hours in a week.

In five short years, farmworkers in Oregon will be entitled to overtime pay if they work more than 40 hours in a week. On March 3, Oregon House Bill (HB) 4002 passed, granting farmworkers this right. Governor Brown has not yet but is expected to sign this bill. Once that is done, agricultural workers will be guaranteed overtime pay on a phased-in schedule. In 2023, farmworkers clocking over 55 hours a week will start receiving overtime pay, and it will step down on a bi-annual basis until it reaches the standard 40-hour workweek in 2027.

On the opposite coast, this January, New York’s Farm Workers Wage Board voted to reduce the overtime threshold for New York farmworkers from 60 to 40 hours. In 2024, overtime would have to be paid after 56 hours. The threshold would reduce by four hours on a bi-annual basis. The 40-hour threshold would not be in effect until 2032.

Capping off this rash of new overtime laws, Colorado’s overtime portion of their new Farmworker Bill of Rights (highlighted in Sprout, edition 16) will go into effect on November 1, 2022. These rules have different standards for highly seasonal, non-seasonal, and small farms (gross <$1 M). Small farms must pay overtime after 56 hours of work beginning in 2024. Highly seasonal large farms must also pay overtime after 56 hours during the peak season (22-week limit) and after 48 hours outside of that farmer-defined 22 week period starting in 2024. Effective at the same time is one last standard for year-round farms, which must pay overtime at more than 54 hours, dropping to 48 hours in 2025.

The number of states enacting some level of overtime pay protection is increasing. However, only a few have the threshold set to 40 hours a week, even in those states that have had overtime pay protection for several years now. Washington’s threshold for farmworker overtime won’t reach 40 hours until 2025 (currently at 55). Hawaii has a 40 hour a week threshold for only a limited number of farms, and California has that threshold only for employers with more than 25 employees (for smaller farms, it is set at 55 hours/week). Notwithstanding the intricacies and tiered approaches, it is clear there is a trend moving farmworker rights closer to worker rights that are standard in other industries.

We are all aware of what has been called the “great resignation” taking place in other labor markets, with a balance of power tipping towards workers. Other industries can’t be easily compared to the farming industry, but it is hard to contemplate the growing number of states releasing their agricultural worker overtime exemptions and not see a connection to the larger labor-related societal trends. This shift shakes up eighty-four years of established agricultural economics, based on agricultural exemptions from the original federal Fair Standards Labor Act, passed in 1938.

Labor is one of the highest costs of running a farm, and these new rules rightly make many producers nervous about being able to handle the additional financial burden that overtime pay will require. Some of these bills offer tax credits to provide economic support to employers when they pay the required overtime rates. Oregon’s bill does, and such a credit has been proposed in New York. These credits will provide some relief but arrive only annually, whereas labor must be paid continuously throughout the year.

Farmers will have to make tough decisions about how to manage their workforce to accommodate these new laws. Some workers in these states will have their hours cut so that farmers can avoid paying time and a half. Farm-owner advocates predict these laws won’t actually make farm labor more sustainable by protecting workers’ rights but will instead cause a labor shortage as workers find other jobs to make up for their cut hours.

On the other hand, farmworkers engage in backbreaking labor in all types of weather and aren’t rewarded for the long hours farming requires in the same way other workers are. As climate change takes effect, environmental conditions for farmworkers only worsen. Working overtime makes it near impossible to run routine errands or seek healthcare when needed. And, as Colorado explicitly states in the statutory language, the original agricultural overtime exclusions had racist origins.

The farming industry has had over 80 years of exemptions from labor laws and has partially relied on them to keep their operations in the black. Increasing the cost of an input as integral as labor makes razor thin profit margins even smaller. We are entering a new phase where the agricultural industry will have to learn to adapt to rising labor costs as labor laws continue to shift.

Are you having trouble keeping up with state changes, phase-in periods, and exemptions? We have you covered! Check out our new state-by-state index of farm employment laws.