Botanical producers that originated in the farming world are probably aware of what is called “agricultural exceptionalism,” or the concept that farm employers are exempt from providing their workers with many common labor protections. While this is changing in several states (Oregon, Washington, New York, California, and Colorado are all in the midst of sweeping changes in agricultural employment law), it is still quite true in the majority of states.
The agricultural business exemptions have a huge impact on farm workers. Farm owners are allowed to ignore some basic tenets of employment law protections for workers: the right to minimum wage, overtime pay, and worker’s compensation insurance. The agricultural business exemptions have become so routine that many farm owners don’t think much about legal requirements for their employees—they set their pay rates at what they can afford and what will attract employees.
Farm owners in the states that have started to chip away at these exemptions are very aware, however, of the drastic financial changes that can occur when minimum wage, overtime and worker’s compensation are suddenly required. What many farmers do not realize, however, is that the jobs that meet the law’s definition of “agriculture” and therefore qualify for labor exemptions are much more limited than many think. If a task doesn’t fall under the government’s definition of “agriculture,” then the person assigned that task is not exempt – the employer owes them employment law protections. This means that farm owners might be relying on the agricultural exemption when making business decisions that don’t actually meet the exempt criteria. Operating a business out of compliance with employment laws is a very legally risky position.
So, what is the government’s definition of ‘agriculture’? Most pertinent to botanical producers, processing one’s own raw agricultural products into value-added products falls squarely outside the definition of agriculture. Here is the text of the statute that defines agriculture:
On a close read of this definition, it becomes clear that there are two aspects to this definition of agriculture—the “cultivation, growing and harvesting” part of farming that we are all familiar with and then, an additional “any practices performed by a farmer on a farm as incident to or in conjunction with such farming operations.” Doesn’t it seem like processing herbs one has grown on the farm would fall under this rather broad second half of the definition?
Courts have considered this question many, many times. The line that courts have drawn lies between preparation for market and changing the natural state of the raw commodity. That is, a farmer can prepare product in its original form for market and still be performing agricultural labor, but once any physical or chemical properties of the raw agricultural crop are substantially changed, the task has crossed over from agricultural to non-agricultural labor. Anything beyond simply dehydrating herbs in their full state and labeling them would be considered non-agricultural labor in the eyes of employment law. Chopping, cooking, fermenting, and blending, are all seemingly light processes, but they change the physical and chemical properties of the product and thus would fall outside the definition of agricultural labor. Perhaps not surprisingly, these are also activities that trigger further food safety regulations that apply to on-farm processing.
The practical impact of this distinction between agricultural and non-agricultural labor is huge. If you are assigning non-agricultural labor tasks to workers, but assuming the agricultural exemptions apply, then you are probably violating employment laws. Enforcement actions against farms by the US Department of Labor or state agencies do happen. Even if your workers are happy, the government can decide to enforce laws at any time. An even bigger risk is present if and when, workers get disgruntled or injured, which can spark complaints to labor agencies or even lawsuits. Labor departments can issue fines in the tens of thousands of dollars; enforcement actions alone could put a farm out of business.
Labor that occurs on a farm, but would be considered ‘non-agricultural’ under farm labor laws:
- Chopping after dehydrating, and labeling for sale
- Mixing multiple raw agricultural products
- Making hydrosols, tinctures, oxymels
- Using farm products in soaps
- Packing farm products from other farms, i.e., aggregating
The most important question for a farm contemplating employment law compliance is to determine if the tasks you assign are agricultural or non-agricultural.
If you have determined that you assign non-agricultural tasks to your workers, then what legal obligations do you have towards your workers? The answer: it depends. Not only do you need to consider federal employment law, but you also need to look at the law in your state.
Read on for a detailed explanation of Minnesota employment law as it applies to agricultural labor. So that you can see how much it depends and can vary, we’ve included a few other states for comparison’s sake.
All non-agricultural employees are owed a minimum wage. Exactly what that minimum wage is depends on your state laws. The baseline rate, set by the federal government, is $7.25/hour. Many states have a higher rate. See the chart below to compare Minnesota minimum wage rules to four other states.
*There is an exception for two of the farm’s employees—see below for more information. These rates are accurate as of August 2023.
The chart above does not tell the whole story about Minnesota’s agricultural employment law minimum wage rules. Minnesota does exempt some agricultural workers from the state minimum wage law. A farm owner can choose two employees to whom they pay a salary that comes out to less than either the $8.63 or $10.59/hour rate. If a farm only employs two workers, then that farm is essentially exempt from the minimum wage rule. Any more workers, however, triggers the minimum wage rule for all but two of the farm’s employees.
It is important to note that any amount of non-agricultural tasks in a workweek will result in the minimum wage being owed for that entire workweek. In general, the calculations for minimum wage (and overtime, which we will address in a moment) go on a week-by-week basis. Even a mere two hours of processing will change an entire workweek’s minimum wage rate.
Lastly, we need to consider the size of the farm can affect what minimum wage rate to apply to its workers. Federal labor law defines farm size in terms of man-days. If you have more than 500 man-days in any calendar quarter of the previous year, then you will owe at least the federal minimum wage of $7.25/hour for all employees, unless they are exempt. You earn one man-day each time one person shows up for at least one hour of work.
The man-day question will work in conjunction with the agricultural versus non-agricultural question to determine the minimum wage rate for your farm. Consider a Minnesota farm that only assigns agricultural labor. This farm also has more than 500 man-days in a calendar quarter of the previous year. In this case, the farm owner can still exempt two salaried employees from the higher Minnesota minimum wage rate, but their salary must be at least equal to what they would have been paid at the federal $7.25/hour rate. Any other of the employees, over and above the two exempted, salaried employees, must be paid the higher Minnesota minimum wage rate, which varies based on gross income of the business (see the above chart).
Minnesota’s exemption of two salaried employees from the agricultural minimum wage is unique. No other state has such a scheme. We will now briefly examine four other states that have distinct characteristics about the mechanics of agricultural minimum wage obligations. This group—Oregon, Massachusetts, Michigan, and Georgia—include a state that has no agricultural exemption from minimum wage requirements, one that has no minimum wage rate at all for agricultural workers, another that has a special minimum wage rate for agricultural workers, and another that determines the minimum wage rate based on the total number of employees.
Oregon is really the simplest of the states we examine. There is no distinction between agricultural and non-agricultural labor. The only variation in the applicable minimum wage rate is due to geographic location within the state. The minimum wage for non-urban counties is $13.20/hour, the minimum wage for the Portland metropolitan area is $15.45/hour, and the minimum wage for all other standard urban counties is $14.20/hour.
Massachusetts has much more complicated minimum wage rules. There are three factors that complicate their rules. One, they have a special agricultural minimum wage rate of $8.00/hour, which is higher than the federal minimum wage rate but vastly lower than the state’s non-agricultural minimum wage rate ($15.00/hour). Secondly, Massachusetts has adopted a much narrower definition of “agriculture” than the definition we discussed above. And finally, in Massachusetts, an employer can calculate two wage rates in a single week!
Massachusetts farm and ranch businesses must pay workers performing agricultural labor at least the state’s agricultural minimum wage of $8.00/hour. Agricultural work in Massachusetts is defined as work conducted on the farm involving growing and harvesting agricultural, floricultural, and horticultural products. Therefore, any post-harvest tasks are considered non-agricultural. This includes labeling and packing products. For non-agricultural, i.e., post-harvest, activities, the employer must pay the worker the Massachusetts non-agricultural minimum wage rate of $15.00/hour. If the worker does both agricultural and non-agricultural work in the same week, then that worker will be paid at least $8.00/hour for the agricultural labor, and $15.00/hour for the non-agricultural or post-harvest work. This dual-rate policy is only used in Massachusetts.
Michigan does not exempt agricultural workers from their minimum wage rates. However, very small businesses with only one employee do not have to pay the state minimum wage to their employees, whether those employees are agricultural or not. Therefore, Michigan farm and ranch businesses with two or more employees are obligated to pay at least $10.10/hour to their employees. A Michigan farm with only one employee that only assigns agricultural labor will not have a minimum wage rate. That same one-employee farm that does assign any amount of non-agricultural labor in a work week will owe at least the federal minimum wage rate of $7.25/hour for all hours worked during that work week.
Georgia’s state minimum wage rate is lower than the federal rate, so its rules default to the federal minimum. Agricultural workers are exempt from minimum wage as long as the farm has fewer than 500 man-days in any calendar quarter of the previous year. Therefore, for a smaller farm that only assigns agricultural labor, there is no minimum wage rate in Georgia. If a farm did surpass the 500 man-days threshold in any calendar quarter of the previous year or assigns any non-agricultural labor, then that farm will owe at least the minimum wage rate, which is the federal rate of $7.25/hour.
Minimum wage is not the only employment law obligation that is impacted by the distinction between agricultural and non-agricultural labor. Historically, overtime protections have not applied to agricultural workers, although there are several states that are slowly phasing in these protections. Different states have established different thresholds for when an overtime rate (which is 1.5 times the regular rate of pay) kicks in.
Minnesota protects hourly agricultural employees that work more than 48 hours in a work week. In limited circumstances, agricultural employees are exempt from Minnesota state overtime obligations. If an agricultural worker is paid a salary of $618.87/week for businesses that gross less than $500,000/year, then they are not owed overtime even if they work over 48 hours in a week. If the business grosses more than $500,000/year, then that salary must be at least $759.26/week for the employer to be exempt from overtime obligations. These rules are applicable to any number of agricultural employees on the farm (not limited to 2, like for minimum wage), but are only applicable to workers assigned exclusively agricultural labor. If any non-agricultural labor is assigned at any time during a particular work week, then the worker will be entitled to overtime pay after 40 hours of work during that week.
Since the beginning of 2023, Oregon farms are obligated to pay their workers overtime; the threshold for this obligation will change over time. As of this writing, farms must pay overtime to their agricultural workers after 55 hours of work in a work week. Since this is new legislation, the state is slowly pushing employers to meet the 40 hour/week threshold. In 2025, overtime will be required after 48 hours of work. In 2027, farm workers will be owed overtime in Oregon after working 40 hours in a work week. All of this changes, though, if the worker is assigned any non-agricultural work. In that case, the worker is immediately owed overtime for all hours worked over 40 hours in that work week.
Massachusetts farm and ranch businesses are not obligated to pay overtime wages to workers as long as the workers are engaged in agriculture and farming on a farm. Massachusetts has a narrow definition of agriculture for purposes of overtime requirements – no post-harvest activities are included. If the worker performs post-harvest activities or any other non-agricultural labor, the employee is owed overtime pay for all hours worked over 40 in that week.
The rate of overtime pay is based on an employee’s “regular rate.” This “regular rate” is calculated by averaging the rates the employee received that week (they will vary by the type of work assigned). The overtime pay is one and one-half times the “regular rate” of the hours worked over 40 hours that week.
To determine if they own their employees overtime pay, Michigan farm and ranch businesses must consider the type of labor they are assigning, how many employees they have, and how much of their sales are direct-to-consumer. A Michigan farm or ranch business that assigns only agricultural labor and has 2 or more employees must determine how much they gross from direct-to-consumer sales. If greater than 50% of their gross income, then that business is obligated to pay overtime wages to their workers for all hours worked over 40 in that week, at a rate of 1.5 times the regular rate of pay. If that same business grosses less than 50% of their income from direct-to-consumer sales, they are not obligated to pay overtime wages to their agricultural workers.
A Michigan farm or ranch business that assigns only agricultural labor and has only one employee is not obligated to pay that employee overtime wages.
If any non-agricultural work is assigned, however, then the employer is obligated to pay overtime wages for all hours worked during that workweek.
Georgia farm and ranch businesses are not obligated to pay overtime wages to workers, if the worker performs exclusively agricultural labor. If the worker performs non-agricultural labor, non-agricultural rules apply, and the employee is owed overtime pay for all hours worked over 40 in that week.
Farm businesses in Minnesota are required to provide each employee who works eight or more consecutive hours with a 30-minute meal break that does not have to be paid. Furthermore, farm and ranch businesses are required to give employees a break every four hours. The break must be long enough that the employee has time to use the restroom. Farms can exempt two specific employees by paying them a salary; also, any farm employee working on a farm that grosses less than $500k and makes a salary of $618.87 or any farm employee working on a farm that grosses more than $500k and makes a salary of $759.34 is exempt from these rules.
Oregon farm and ranch businesses are required to offer a 30-minute unpaid meal break free from work responsibilities for each 8-hour shift. Two 10-minute paid rest breaks are also required for a shift of that length. If the shift increases up to 14 hours, then the employee is entitled to three rest periods, but no additional meal periods. Once a shift reaches 14 hours, the employee is entitled to two unpaid, 30-minute meal periods. Workers engaged in the range production of livestock are exempt from these rules.
Massachusetts farm and ranch businesses are required to offer a thirty-minute unpaid meal break if the employee works more than six hours.
Farm businesses in Michigan and Georgia are not required by law to offer meal and rest breaks at specific intervals or of specific length to employees performing agricultural work. However, meal and rest breaks may be required when an employee performs non-agricultural work. Georgia’s agricultural employers are also exempt from Georgia’s Common Day of Rest rule and are not required to provide accommodations for religious observant employees on Saturdays and Sundays. In Georgia, religious accommodation may be required when an employee performs non-agricultural work.
Many business owners see workers’ compensation as a regulatory obligation, which it often is. But it is more than that. Many farmers don’t realize that the workers’ compensation system was designed to protect the business owner from lawsuits as well as protect the worker. Workers who have workers’ compensation available to them are prohibited from suing the business owner for the injury. For this reason, some farmers choose to purchase workers’ compensation even if it isn’t a legal requirement.
If your farm or ranch is not obligated to secure workers’ compensation and doesn’t choose to buy a policy, the farm may be sued by injured workers. A resilient farm will have an insurance policy in place that 1) provides for an attorney to defend the farm against injury lawsuits by workers and 2) pays out on the liability judgment that may result.
Note that farms assigning non-agricultural labor to their workers may be required to secure workers’ compensation immediately or as otherwise required for a non-agricultural business.
Minnesota
Michigan farm and ranch businesses are not obligated to secure workers’ compensation unless they have three or more regular employees who were employed 35 or more hours per week for 13 or more consecutive weeks during the previous 52 weeks. The farm is required to have coverage for only those regular employees.
Oregon & Massachusetts
Oregon & Massachusetts farm and ranch businesses are obligated to secure workers’ compensation for agricultural workers just as for other workers. If the farm or ranch fails to secure workers’ compensation as required, the penalties can be severe including responsibility for all costs of the medical treatment plus a hefty fine for noncompliance.
Michigan
Michigan farm and ranch businesses are not obligated to secure workers’ compensation unless they have three or more regular employees who were employed 35 or more hours per week for 13 or more consecutive weeks during the previous 52 weeks. The farm is required to have coverage for only those regular employees.
Georgia
Georgia farm and ranch businesses are not obligated to secure workers’ compensation for agricultural workers.
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