Department of Labor Overtime Rules, and Agriculture

DTN Executive EditorĀ Marcia Taylor reported last week that, “Agriculture’s 24/7 workload poses special issues for payroll. Most farmers assume they are not required to pay overtime for any farm work performed by their employees, points out Paul Neiffer, a CPA with CliftonLarsonAllen in Yakima, Washington. But given the new rules imposed by the Department of Labor starting December 1, you need to carefully review that policy and the impact on your labor expense, he advises.

“The Department of Labor announced final regulations on new overtime rules May 18, greatly expanding who qualifies for overtime treatment.

“‘Direct’ agricultural work still is generally exempt from overtime, so if you’re pressed to run full speed during planting and harvest, you simply pay field hands their hourly rate multiplied by time worked. Immediate family members employed on farm also are completely exempt from overtime rules. Neither of those exemptions have changed, says Angie Ziegler who advises clients on payroll issues for the accounting firm of EideBailly in Mankato, Minnesota.”

The DTN article indicated that, “However, today’s farms also include a number of business entities, some which will qualify as ‘farm’ and some which may not. Frequently non-farm sidelines can include commercial trucking, custom hire work or perhaps a commercial grain elevator. In those cases, the work performed is no longer exempt from overtime rules.”

Ms. Taylor explained that, “The big change in a new Labor Department rule is white-collar employees who have been paid more than $455 per week ($23,660 per year) and were exempt from overtime in the past because of their job category. In the past, managers, administrative staff and technical workers who worked on farms were still considered farm labor. ‘As long as they were paid at least $455 per week, they were entitled to nothing for overtime,’ Neiffer says.

Beginning Dec. 1, 2016, however, the overtime-wage standard for white-collar jobs jumps to $913 per week, or $47,476 per year. ‘White-collar’ employees who earn less than $47,476 a year and who work in non-farm businesses must be paid overtime at time-and-a-half for all hours above 40 hours a week.

However, ‘white-collar’ employees who work for the farm and earn under the $47,476 salary threshold — and are not involved in any non-farm sideline businesses — won’t need to be paid time-and-a-half, Neiffer emphasizes. Still, these workers will need to be paid their flat hourly wage for all hours above 40 hours per week, he says.”

After additional analysis, the DTN article noted that, “For agriculture, the new rules may be more complicated than they look, especially farms with a mix of custom work and rental farms or with ag-related businesses. Consult an attorney or accountant to make sure your farm employees actually qualify for exemptions.”

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