Agricultural exemptions – Do they apply?

By Richard Alaniz, Alaniz Law & Associates
The Fair Labor Standards Act (FLSA) exempts agricultural workers from certain FLSA requirements. The most common exemption is from the payment of overtime. Under the FLSA, “agriculture” is defined as being either “primary” or “secondary” agriculture. Primary agriculture includes farming in all its branches, which generally includes raising livestock, cultivation and tilling of the soil, the production of agricultural commodities and similar activities generally associated with a farm. Secondary agriculture refers to activities performed by a farmer, or on a farm, as an incident to or in conjunction with such farming operations. This would include the processing and preparation of farm products for market, delivering to storage or market, or to a carrier for transpiration to market.

A number of AAMP members actively farm and take advantage of the overtime exemption for their farm workers. Many have a meat processing operation and usually a retail store on their property as well. They process and sell meat products from livestock raised and owned by the farmer, and processed in their plant. The exemption for workers involved in the growing and harvesting of produce and related farm items, including livestock, is rarely an issue. However, whether the meat processing employees are exempt from overtime depends upon whether “it is either performed by a farmer or on a farm”, as well as whose livestock is being processed. If all of the animals processed are owned by the farmer, the exemption generally applies. If livestock from others is being processed along with the farmer’s, the exemption would be lost for every workweek in which another person’s livestock was processed. Hourly employees would be eligible for overtime for all hours over 40 in that workweek. If workers who normally work with farm crops on the farm were to work in the meat processing operation during any of the weeks that another owner’s livestock was being processed, the agricultural exemption would be lost for them as well, irrespective of the fact that their primary work was raising or harvesting crops on the farm. The predicate for the agricultural exemption is that whatever activity is done, it is done by the farmer, on the farm, and on his own products.

In most instances, the farmer operating a meat processing facility is either unaware of the exemption requirement that they only process their own livestock, or believes that the agriculture exemption is all-encompassing and applies no matter how they operate since it is done in conjunction with the farm. The good news is that the Department of Labor (DOL) does not normally do routine audits of employers, whether they are farmers or otherwise. The cases that have arisen were usually the result of a DOL audit prompted by an employee or job applicant complaint about some perceived unfair treatment, denial of a job or other problems with the employer. Irrespective of how it arises, a DOL audit can result in overtime liability as well as additional penalties.

The rules on what is required in these types are operations are fairly straightforward. If there is a retail store it does not qualify for the agricultural exemption. All hourly retail store employees are entitled to the minimum wage and overtime for working more than 40 hours in a workweek. This is true even if the store is located on the farm property. The meat processing employees will be covered by the agricultural exemption from overtime as long as only the farmer’s own livestock is being processed. The exemption will be lost for all hours in a workweek in which livestock owned by another person is also being processed. If an employee works in more than one of the operations during the workweek and they are commonly owned and controlled, which is generally the case, the hours worked at each must be aggregated for purposes of the 40 hours in a workweek.

Another problem that sometimes arises for both the meat processing and retail store operations is the employment of child labor in violation of the FLSA. Employees under the age of 18 may not work on the production floor nor may they handle or clean meat-processing equipment of any kind. This includes equipment parts that someone else may have disassembled. Those types of job duties are considered “hazardous” work, which may not be performed by minors. Similarly, employees under 18 may not operate a meat slicer or similar equipment in the retail meat operation. The child labor laws are strictly enforced and are always a focus of any DOL investigation of these types of operations. A single child labor violation can result in a penalty of up to $11,000. Some farmers erroneously believe that the “immediate family” exemption from the minimum wage and overtime provisions for family farms overrule the child labor restrictions on hazardous work. They are incorrect. The child labor rules apply to the family children as well. It is much easier to monitor the job duties of those under the age of 18 and avoids liability by being proactive and keeping them safe.