Today’s blog post concerns the recent crackdown on how agricultural labor exemptions are applied to farms with Community Supported Agriculture (CSA) operations. If you are thinking of starting a CSA or are already operating one, in addition to your farm, you could be unknowingly committing expensive labor law violations.
It’s no wonder that more farmers are looking towards CSAs to help market and sell their products. They are able to sell directly to their customers without having to deal with vendors and avoid the time consuming and often unpredictable nature of farmers markets. Although CSA programs are not new, their popularity is rising and the existing models are changing to adapt to consumer needs.
Growth and changes within any industry often bring about regulatory issues as often times laws have not caught up with industry practices. Recently, several farms using a CSA program have run into issues regarding labor law violations due to the complexities in labor laws.
First, what is Community Supported Agriculture?
Community Supported Agriculture (CSA) is an alternative, locally-based economic model of agriculture and food distribution. A CSA also refers to a particular network, or association of individuals, who have pledged to support one or more local farms, with growers and consumers sharing the risks and benefits of food production.Typically, members or "share-holders" of the farm or garden pledge in advance to cover the anticipated costs of the farm operation and farmer's salary.
In return, they receive shares in the farm's bounty throughout the growing season, as well as satisfaction gained from reconnecting to the land and participating directly in food production. Members also share in the risks of farming, including poor harvests due to unfavorable weather or pests. By direct sales to community members, who have provided the farmer with working capital in advance, growers receive better prices for their crops, gain some financial security, and are relieved of much of the burden of marketing.
The labor problem occurs when agriculture exempt employees perform “non-agricultural work” under the Fair Labor Standards Act (FLSA) when putting together CSAs. Often, in addition to their own produce, farmers will aggregate products and produce from other farms and food businesses to add to their member’s shares, creating a more diverse CSA delivery for their members. However, if an exempt employee performs any work not directly on their employer's farm, they could be violating their exempt status under the FLSA, which could have huge financial repercussions.
FLSA is the federal law that establishes minimum wages (currently $7.25 and maximum hours worked per week (40 hours, over which amount employees must be paid time and a half aka overtime). However, there are exceptions to these laws for agricultural employees.
Agricultural employees are exempt from both the federal minimum wage and overtime requirements if any of the followings apply:
the employer did not use more than 500 man-days of labor during any quarter of the preceding year;
the employee is an immediate family member;
the employee is a hand laborer paid on a piece-rate basis who commutes from his/her home each day and was not employed in agriculture more than 13 weeks in the preceding year;
the employee is a family member under the age of 16 working on the same farm as the parent or surrogate parent who is paid on a piece-rate basis and is paid at the same rate as those over 16, OR the employee is principally engaged in the production of range livestock.
For an employer qualify for an agricultural exemption the employee’s activity must fall under the Act’s definition of agriculture, which is "farming in all its branches and among other things includes the cultivation and tillage of soil, dairying, the production, cultivation, growing and harvesting of any agricultural or horticultural commodities. . . the raising of livestock, bees, fur-bearing animals, or poultry, or any practices (including forestry or lumbering operations) performed by a farmer or on a farm as incident to or in conjunction with such farming operations, including preparation for market, delivery to storage or to market or to carriers for transportation to market”. The United States Department of Labor (DOL) bifurcates its definition into two categories: primary agriculture and secondary agriculture. The primary definition includes farming in all its branches, and the specific farming operations enumerated in the definition above. These activities always qualify for the agricultural exemption, regardless of the employer’s purpose in performing the activities.
The secondary meaning of “agriculture,” which encompasses operations that do not fall within the primary meaning of the term, requires that work is “performed by a farmer or on a farm as an incident to or in conjunction with such [primary agriculture] farming operations”. Where the issues lie for CSA operations is the question of whether the work is performed “by a farmer” or “on a farm” and is “incidental to or in conjunction with” the primary agricultural farming operations.
The Act also exempts from the overtime requirements a significant number of agricultural-related activities, including: (1) drivers or driver's helpers making local deliveries if the employee is compensated on a per trip basis; (2) agricultural employees who are also employed in affiliated livestock auctioning; (3) employees involved in the processing of maple sap into sugar or syrup; (4) employees engaged in the transportation of fruits or vegetables from the farm to the place of first processing or first marketing within the same state; and (5) employees who transport other employees to any point within the same state for the purpose of harvesting fruits or vegetables.
An employee who performs any activities that do not qualify under the definition of agriculture would not be exempt from FLSA rules (under the Agricultural Labor Exemption) for all work performed during that workweek (meaning even if an employee only did one hour of non-exempt work, all their hours are considered non-exempt).
This distinction has caused concern for Community Supported Agriculture (CSA) operations who are unknowingly violating their exemption status by not providing overtime and minimum wage to their employees if they are involved in CSA operations. 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.
This has been the case with CSA programs because the DOL has interpreted work that includes collecting agricultural product from other farms, packing CSA boxes that included products not just from the employee’s farm, and distributing CSA boxes that contain products from other farms or local businesses to delivery points as non exempt. For example, an hourly agricultural employee is sent to pick up zucchini from a nearby farm to supplement his employers CSA baskets.
During that week the employee spent 20 hours driving back and forth to different farms to pick up produce and helped put together the boxes to be delivered to the CSA customers. He also spent another 40 hours that week performing his normal duties on the farm. If the farmer did not pay this employee 20 hours of overtime they would be committing a labor law violation.
You may be thinking this seems arbitrary because the employee's actions are all closely related or identical to his duties performed on the employer’s farm or agriculture in general. However, the law doesn’t care if the zucchini didn’t grow on the employer’s land, the business model changes and so do the labor laws. Just like we said the law hasn’t caught up to the growing CSA economy, they were written before the modern CSA existed.
How can farmers avoid violating the law and end up owing thousands in fines? First, make sure employees are aware of their rights under the law concerning their exempt status. One way is for the farmer to perform all of the CSA related work himself or delegate that works to any non-exempt employees.
This work could also be delegated to any family members who work on the farm, FLSA does not provide standards for compensating a family member for agricultural work. Until these laws catch up with industry practices, it’s best to err on the side of safety and speak to an attorney to go over your rights and obligations under FLSA.