Cornucopia Of Compliance, Part 2: Liability, Terms, And Beers-Oh My!
It’s the time of year where most farmers are out of the field and at the table planning next year’s crops and business plans. To help guide any planning related to on-farm events we started a series on Agritainment. Last month we covered topics related to a farmers' property. Specifically, we mentioned how zoning, the building code, and the Americans with Disabilities Act can impact a farmer’s ability to host agritainment activities.
But, there are still many more considerations that a farm should consider before hosting events such as farm-to-table dinners, festivals, and farm events generally. So, this month, we’re revisiting the topic as the second part in our series. We’ll cover some important labor, food and alcohol considerations.
Are you paying your workers properly?
Sometimes, farmworkers can be exempt from the Fair Labor Standards Act (FLSA) minimum wage and overtime requirements. The exception is complicated, but we summarized the exception in this blog. Essentially, there are a number of ways a farmer can be exempt from paying minimum wage and overtime. However, agritainment/agritourism activities do not count as “agricultural” work.
FLSA’s definition of agriculture is very narrow. FLSA defines agricultural work as incidental to or in conjunction with the farming operations. Therefore, farmworker exemptions do not apply to work that is essentially entertaining guests. For example, a farmworker helping drive the tractor for hayrides would not fall under the exemption and be entitled to minimum wage and overtime for that work.
Can you serve food and alcohol?
Last month we talked about the difference between a public and private event and how that may affect what regulations affect your event, and the same is true for food and alcohol. If you host an event with mostly friends, it is unlikely that any of the regulations we discuss below will apply. However, it is not always clear when an event becomes public. We lawyers often refer to this as “the sliding scale of risk.”
If you are hosting a family potluck, you’re likely safe from meeting state and local food safety requirements and alcohol licensing. But, if you’re having a potluck for CSA members a strict inspector may say that falls into the more public category. However, if you’re having a farm festival that anyone can attend, the regulations DEFINITELY apply. It is up to the individual farm as to how much risk they are ok with, but since we’re lawyers we’re gonna say it’s best to err on the side of following the regulations.
There are many regulations around serving food. We covered Pennsylvania food production laws in-depth in this blog. To summarize, food production is generally regulated by the Food Code. The Food Code is typically enforced by the PA Department of Agriculture. However, depending on what county your farm is in, the regulations may be different.
There are six counties, Allegheny, Bucks, Chester, Erie, Montgomery, and Philadelphia, where the local health department has the authority to create more strict laws or additional requirements.
The Food Code generally requires that a place that prepares or serves food to the public to register with the state. Essentially, to serve food to the public, you will have to register as a retail food establishment. You can read about the processes for registering here. However, there are some exceptions. For instance, if your establishment operates for three days or less per year, there is no need to register. More exceptions and information about retail food establishments can be read about here, in the PA code.
Aside from registering as a retail food establishment, you might also need to register as a commercial food establishment if you serve time and temperature-sensitive food. This type of food requires time/temperature control for safety to limit pathogenic microorganism growth or toxin formation.
For example, serving meat, cheese, juices, milk, and other perishable items may require you to register. However, if you are not selling time and temperature-sensitive food, you can register as a limited food establishment. Also, if you plan to operate for less than 14 days in conjunction with an event, you might be able to obtain a temporary event license.
There are more requirements based on what you will be selling, i.e. meat, cheese, milk, eggs. This blog, about on-farm sales, goes into detail about these distinctions.
Generally, you cannot sell alcohol in PA without a liquor license. There are exceptions to this requirement, but it is unlikely any would apply to an agritainment event. You can read about the exception here.
However, you are permitted to give away alcohol for free to people who are 21 or older if they are not visibility intoxicated. You are not permitted to charge anything but can ask for a donation so long as it is generally unrelated to the direct distribution of alcohol. You can read more about this here. We strongly advise talking to an attorney before involving alcohol to your event.
Having vendors sell food and alcohol
It might not be a bad idea to let others come onto your property to serve food and alcohol. Vendors are typically already licensed and permitted to sell their products. Thus, you won’t have to wait for the approval and can just hire someone to properly serve food.
But, before you allow just anyone onto your property to sell food to your guests, you may want to have the vendor agree to some terms.
For example, you should probably get it in writing that the vendor is legally allowed to serve food. You also should make sure the vendor is solely responsible if someone gets sick from the food. Other terms should include considerations like property damage, insurance coverage, and equipment. The more explicit your vendor terms, the less you will have to deal with ambiguities in liability and responsibilities. You can always talk to us or another attorney about how to draft helpful, but friendly vendor terms.
How else can you limit liability?
Perhaps, one of the best ways to limit your liability is by ensuring your insurance covers agritainment activities. Typically, traditional farm liability insurance does not cover on-farm events. So, you may need to look into purchasing additional insurance such as an “event endorsement.”
Also, if you will be serving alcohol, you should definitely look into getting an additional policy endorsement or requiring anyone serving alcohol at your event to have one. Furthermore, if you are allowing someone else to host events on your farm, you should require them to purchase event insurance.
Another way to limit your liability is by setting up a separate entity to host farm events. By creating another business that will organize, pay for, and run these events, you will shield your farm from any potential claims. For instance, it will be harder for the farm to be connected to the event if an event was hosted by a separate entity that contractually agreed to be solely responsible for the event.
Also, if you’re allowing others to host events on the farm you should have them agree to be solely responsible as well. This is called “indemnification.” If, and when, it makes sense for you to have a separate entity is always a question that is very specific to each farm so we recommend talking it over with a lawyer and accountant to see if it makes sense for your activities.
Finally, you should consider writing waivers or having proper signage with instructions or warnings for people who come onto the farm depending on the type of agritainment.
You should also check out this blog which talks about how in Pennsylvania, there is a special agricultural immunity statute for u-pick operations that helps limit a farmer’s liability.
Farming is hard enough. So, planning these events can be stressful, but it’s important to take the time to figure out all of the nuances with the law, or at the very least understand your risk and get good insurance! Otherwise, you can incur more financial trouble then these events are worth.
Also, there may be additional considerations that apply to your farm that are not detailed in these blogs or you may need help navigating how all these regulations apply to you. So, we always advise talking to us or another attorney about your specific situation and the best course of action for your farm.
DISCLAIMER: This blog post is meant for informational purposes only and does not constitute specific legal advice or create an attorney-client relationship. Readers should discuss their specific situation with an attorney.