FAQ: Labor Regulations for Farmers

FAQ: Labor Regulations for Farmers

Many of these answers were provided by Kenneth Miller of Law for Food, LLC.
Disclaimer: the information here is not legal advice. For legal advice, consult a lawyer or accountant.

How is "agricultural work" defined? Is retail, value-added or sales work "agricultural"?
Agricultural work is defined in two parts: primary and secondary. Primary agriculture means farming in all its branches and is “agricultural.” Think of milking cows, harvesting or cultivating crops, beekeeping. Primary agriculture entitles employers of these workers to certain exemptions. For example, the 500 man-day exemption discussed below applies only to “agricultural” labor.
Whether retail, value-added, or sales work is agricultural depends on a variety of factors. They may fall under the secondary definition of agriculture. Secondary agriculture means work performed by a farmer, or on a farm as incident to or in conjunction with such farming operations. That includes preparation of crops for market, delivery to storage or market or to transportation carriers. Retail generally would not likely fall under the secondary definition, but it’s possible if the work is conducted on a farm, or possibly even a farmers market, if supervised by a farmer.
Hours or work falling outside “agricultural work” must be paid Vermont’s minimum wage and overtime.
Value-added or processed agricultural products may not be considered “agricultural”. The answer whether any of these tasks would qualify depends on the circumstances. So, unfortunately, the response can only be given with that notoriously favorite qualifier of attorneys: it depends. Consult a lawyer or the VT Dept of Labor at 802-828-4390.

Do I have to pay the federal or state minimum wage? What is the "overtime exemption" for agricultural workers? Is it federal or state, or both?
All individuals employed in agriculture are exempt from Vermont’s overtime laws pursuant to 21 V.S.A. § 383, regardless of farm size provided, of course that they are employed in “agricultural work” (see above). Agricultural employees may be entitled to the Federal minimum wage if they are employed by a farm that used 500 or more “man days” of agricultural labor during any calendar quarter in the previous calendar year (see below). However, all wages are subject to payroll and income tax.

What is "500 man-days"?
For agricultural workers, Vermont does not have a minimum wage. That means the federal minimum wage applies. However, the federal minimum wage and overtime only apply to agricultural work (see definition above) after the 500 man-day threshold is crossed. If a farm does not reach the 500 man-day threshold, then agricultural employees are exempt from federal wage and hour laws.
A man-day is any day in which an employee works one hour or more of work during a day. One worker who works 8 hours in a day has worked one man-day. Therefore three individuals who work 8 hours in a day constitute three mandays.

For example:
1) A farm employing five employees working seven days a week for one quarter (three months) would not reach the 500 man-day limit.
2) A farm employing 7 full time people (working 8 hours/day, 5 days/week) would just exceed the 500 man hour threshold and would be subject to Wage and Hour laws including the federal minimum wage.

The federal minimum wage and overtime exemption includes those farms that used less than 500 man-days of agricultural labor during each calendar quarter of the previous year.

What are the labor regulations rules regarding interns and apprentices?
“Apprentice” refers to an employer-sponsored worker under a state program. The same laws applicable to employees apply also to apprentices. For example, Wage and Hour laws require minimum wage compensation and records maintenance. Payroll taxes are also due in proportion to the apprentice’s compensation. Though exemptions for small farms may exist, workers compensation and unemployment insurance laws may apply. Additional laws may also include Migrant and Seasonal Agricultural Protection Act, OSHA, and Parental or Family Medical Leave Act. Take a look at the VT Department of Labor’s website for further information about apprenticeship programs in Vermont. 
An “intern” is a legal status of a worker who is working to learn a particular occupation. Interns are protected under the same laws as employees. However, there is a minimum wage exemption available to interns. Interns are defined to include those workers who receive a substantial training. The criteria that must be satisfied are:

1. The training received must be similar to what would be part of a vocational training program.
2. The experience is designed to benefit the intern.
3. The individual does not perform work otherwise be performed by an employee.
4. The business does not receive an immediate advantage. Operations may actually be impeded.
5. Employment does not necessarily result for the trained individual at the end of the training period.
6. The intern understands s/he is not entitled to wages for the time period of the training.

All of these criteria must be met to qualify as an internship. The way to look at an internship is that it is educational, not a functionally necessary part of a business. Interns who meet the above test for purposes of the minimum wage exemption still need to be covered by a workers’ compensation policy, and any wages or stipends need to be reported as wages for unemployment insurance purposes, unless your farm is small enough to be exempt from those programs.
It is very difficult for a for-profit business to establish a legitimate unpaid internship, especially in the field of agriculture. That said, if the work meets the definition of “agriculture” and the farm falls under the 500 man-days threshold, neither state nor federal law require that minimum wage be paid regardless of whether the employee meets the 6 criteria for interns. . So it really doesn’t matter whether you call them interns or not at that point. That said, if the farmer is paying them anything at all, he or she needs to comply with all other wage laws, such as timely payment of wages, recording hours worked, wages paid, and deductions, and all required state and federal tax withholding.

Can I classify workers as sub contractors or casual labor?
As a general rule, no. If you use individuals to assist you in any tasks that are integral and necessary to farming, the state and federal labor departments will consider them to be your employees.
An independent contract would be organized and hold themselves as a separate business, have control over how the work is to be done, carry their own insurance, and their own tools or equipment. An independent contractor also usually is not in a stage of learning but rather is brought on a project for a particular expertise.
Another detail that disfavors independent contractor status is the fact they would be doing work that goes very much to the heart of the operaton at which they're working. Under most circumstances, a contractor will have an expertise that more or less falls outside the scope of a business's purpose.

What payroll taxes must I pay for farm workers?
All wages are subject to payroll taxes, both state and federal. If deducting from cash wages the allowable value of housing and education, the values must be included in the gross wages and are still subject to payroll taxes.

What paperwork do employees need to complete?
Employees must complete Form I-9 and tax form W-4.

Form I-9:
Employee fills out on date of hire;
Employer completes within 3 days of hire;
Employer must retain copies of supporting documents for all I-9s
I-9 kept in separate file from personnel file
I-9 kept on file 3 years following date of hire, or one year following termination
Paperwork errors start out at $100 to $1,000 fine

Form W-4:
Employee fills out on date of hire. Used to calculate state and federal payroll taxes. Remember that employer must distribute W-2 forms to all employees and submit Form W-3 according to federal deadlines and guidelines.

Consult a payroll service or accountant for more information.

Do I need to pay and withhold employment taxes and keep records of employee hours?
Regardless of whether the work is legally deemed as “agricultural” or otherwise, the laws regarding payment of wages and maintenance of payroll records still apply. By law, deductions need to be made from paychecks for federal and state taxes, FICA, etc. for all employees. Under Vermont law wages must be paid weekly, bi-weekly or semi-monthly, within a week of the end of the pay period. Records of hours worked, wages and deductions must be maintained.
Yankee Farm Credit is one organization that offers a payroll service to farmers, and gives a discount for the first year. Many other payroll service companies and bookkeepers offer payroll assistance for a fee as well.

Can an employee live on the farm in a yurt? What on-farm housing is legal? What if I don’t charge rent for on-farm housing?
There are housing requirements that will apply to your farm that likely prohibit employees living in tents or yurts. Vermont has its own set of standards that apply. These include the following non-exhaustive requirements:
• floors made of material other than dirt;
• bathrooms that are cleaned daily;
• screened windows;
• automatically closing doors;
• sanitary cooking areas;
• bathrooms that satisfy applicable codes or regulations

If the farmer participates in the H2-A program, USDOL Wage and Hour has minimum housing standards that may differ.
Unless the employees live in your residence, the labor housing qualifies as a temporary or seasonal labor camp, and your farm is ineligible for OSHA’s small farm exemption, which might otherwise apply.

For more information on on-farm housing see The Vermont Farm Worker Wage, Hour and Housing Fact Sheet at http://labor.vermont.gov/wordpress/wp-content/uploads/Vermont-Farm-Labor... If deducting from cash wages the allowable value of housing, the values must be included in the gross wages and are still subject to payroll taxes.

Do I need to purchase workers compensation insurance?
Workers compensation is insurance that covers wages and medical benefits to employees injured in the course of employment. Employers benefit, because workers’ compensation acts as the exclusive remedy for an employee’s claim to damages if injured on the job. The injured worker is only able to collect money damages from the workers’ compensation policy provider for on-the-job injuries. A covered worker cannot sue the employer for additional damages. Workers’ compensation limits the business’s liability in the instance a worker gets injured on the job.
It is generally a good idea to take out workers’ compensation policies on its apprentices. Farming is a hazardous occupation, especially dangerous for beginning farmer apprentices/employees. Vermont’s workers’ compensation law requires that agricultural employers that have an aggregate payroll greater than $10,000 in a calendar year carry workers compensation insurance. The value of housing is included in aggregate payroll calculations.

Employers must also report all workplace injuries to the Department of Labor within 72 hours. Any questions regarding Workers’ Compensation can be addressed by calling 802-828-2286.

Am I subject to VOSHA (Vermont Occupational Safety and Health Act) and OSHA?
OSHA establishes a general duty to provide employment safe from recognizable hazards. Exempt from inspection but not from the general duty are agricultural operations with ten or fewer employees in the previous 12 months. A complaint triggers inspection. Basic requirements include:
1) Sanitation standards, for example potable drinking water, clean hand-washing facilities and toilet
2) Protective measures for particular on the farm safety concerns

Do I need to provide Vermont Unemployment Insurance? 
Unemployment Insurance requirements apply generally to agricultural employers (again, this is work defined by the federal government as “agricultural”) who employ 10 or more individuals in each of 20 calendar weeks of the preceding or current year, or who paid cash wages of $20,000 or more annually to agricultural employees. [question: 20K aggregate??]
There are two federal taxes to consider: FICA and FUTA. FICA tax withholds Social Security and Medicare, and FUTA tax covers unemployment tax. All employers must withhold FICA tax for wage earners.
The IRS requires that an employer fill out a Form 940 and pay FUTA taxes if the employer either:
1) pays wages of $1,500 or more to employees in any calendar quarter during the calendar year, and/or
2) had one or more employees for at least some part of a day in any 20 or more weeks in the calendar year. This includes wages paid to apprentices. Consult a tax specialist for more details.

I know that discrimination based on a disability is illegal. May I require that employees be able to lift 50 lbs and are not color blind, for instance? Can I ask about health issues in interviews?
You cannot ask about health issues in interviews, at least not directly. You can, however, ask if there is any reason why the prospect would not be able to lift a certain weight with ease or stand throughout the day. You can also ask them to rate their physical condition, or ask about allergies. You can also explain the tasks required to complete the job, and then ask if there is any reason they may not be able to perform physically demanding work, standing for long periods of time during the day in all kinds of weather conditions, good and bad.

Can I have volunteers like wwoofers, school groups or even full time volunteers work on the farm?
A volunteer is one who donates time and labor to a public organization or a government entity. A for-profit farm cannot host a volunteer because it is not, by federal definition, a public organization or government agency. A farm can, however, have a volunteer-like employee working on the farm if Farm is exempt from the state and federal minimum wage requirements detailed above.

Is a break legally required for farm workers?
Neither Vermont law nor federal law does. What Vermont law does require is giving employees a reasonable opportunity to eat or go to the bathroom. There is no set-in-stone time requirement for rest periods or lunch breaks. In these kinds of cases, the law gives the impression of an expectation that the employer act reasonably. A 15-minute break may work for some facilities. Others may require more time. For example, for a larger farm where an employee must walk several minutes to get food and then walk back, 15 minutes may not suffice. A best practice is for an employer to ensure the employee has enough time to eat or use the restroom comfortably. Breaks are on the clock, unless they are 30 minutes or more.

For more information on the legal side of employing:

One-on-one assistance on labor management issues is available to qualifying farmers from NOFA-VT. Contact NOFA-VT for information.

Farm Commons webinar series on employment law https://farmcommons.org/

Contact the Vermont Department of Labor with confidential questions, Dirk Anderson, [email protected] 802-828-4390

Vermont Farm Worker Wage, Hour and Housing Fact Sheet https://www.uvm.edu/vtvegandberry/VermontFarmLaborWageAndHousingFactShee...

Worker Protection Standards: If you use pesticides in the course of your business as an employer of agricultural workers or pesticide handlers, learn how to comply with the WPS at http://agriculture.vermont.gov/pesticide_regulation/WPS