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Although I have previously posted about the Fair Labor Standards Act (FLSA) overtime exemption for agriculture, a recent federal court decision requiring a farmer to pay $1.4 million for failure to properly pay workers overtime emphasizes the need for all farmers to fully understand the scope of the exemption.
In July, a U.S. District Court judge in the Southern District of Georgia recently found that Bland Farms Production and Packing LLC (Bland Farms), one of the largest producers of Vidalia onions in the country, failed to pay overtime to 460 workers during spring harvest seasons from 2012-2016. During this time, Bland Farms grew approximately 1,500-2,100 acres of Vidalia onions on land it either owned or leased. Bland Farms then packed those onions in its packing shed. In the same packing shed, Bland Farms workers also packed onions grown on land owned or leased by other onion growers who grew onions for Bland Farms (contract growers). Bland Farms did not pay the workers in the packing shed overtime for the 2012-2017 harvest seasons.
Under the FLSA, employees engaged in agriculture are exempt from the law’s requirement mandating employees be paid overtime (29 U.S.C. § 213(b) (12)). It is important to remember that the FLSA provides minimum standards, and does not preempt a state from establishing more protective standards. For example, Maryland requires employers to pay agricultural employees overtime pay for all work over 60 hours per week.
To determine whether farm employees are eligible for the agricultural labor exemption, an employer must compare the work performed by the employee to the FLSA’s definition of agriculture, broken down into either primary or secondary agriculture. Primary agriculture includes cultivation and tilling of soil; production, cultivation, growing, and harvesting agricultural and horticultural commodities; and raising livestock, bees, fur-bearing animals, or poultry. Secondary agriculture includes any practices performed by a farmer or on a farm as an incident to or in conjunction with farming operations, including preparation for market, delivery to storage or to market or to carriers for transportation to market. For the agriculture exemption to apply to secondary practices, "the practices in question must relate to the farmer's own farming operations and not to the farming operations of others . . . ." Mitchell v. Huntsville Wholesale Nurseries, Inc., 267 F. 2d 286, 290 (5th Cir. 1959).
To discern whether a producer is eligible for the agriculture exemption, courts have considered whether the grower in question was engaged in agriculture with respect to growing the product in question. For example, in Mitchell, the court found a wholesale nursery grower was not engaged in agriculture when one-third of the nursery stock processed by its employees was grown by other farmers. The nursery in Mitchell argued it was eligible for the exemption because it made cash advances to the growers and had contract language referencing a leasing relationship with the growers. The Court disagreed and held the nursery was ineligible for the exemption because the nursery did not own or take responsibility for all of the plants and only purchased the plants that were deemed merchantable. In other words the nursery was acting as a buyer rather than sharing in the risk of the crop like a farmer.
When an independent grower is sufficiently integrated with the contracting party, however, the contracting party may be engaged in agriculture. This has been found in the poultry industry where independent poultry farmers raised chickens for a chicken company because 1) the independent growers would not likely have raised chickens if not for the contract, 2) the chicken company retained ownership of the chickens and covered some costs, and 3) the independent farmers were agents of the chicken company. See, Wirtz v. Tyson's Poultry, Inc., 355 F. 2d 255, 259-60 (8th Cir. 1966).
Bland Farms argued its workers were eligible for the agriculture exemption from overtime because its production manager provided oversight of the independent onion growers and occasionally Bland Farm employees would provide labor to the contract growers (the cost of which was recouped by Bland Farms). The judge disagreed, however, and found the actions were not enough to make the independent growing of the onions part of Bland Farm’s agricultural operation. According to an article in the Washington Post, Bland Farms plans to appeal the judge’s ruling.
An interesting side note of this case is Bland Farms wondered about this issue back in the 1980s and wrote and asked the U.S. Department of Labor (DOL) for guidance. In 1985 the DOL sent Bland Farms a letter informing them that the processing of the contract grown onions would fit within the agricultural exemption if Bland Farms purchased entire fields of onions (DOL now provides this interpretation is wrong). Bland Farms claimed it relied on that letter when it did not pay its workers overtime and did not act in bad faith. Why does it matter? Violations of the FLSA not only entitle successful litigants to back wages but, if they can prove the employer acted in bad faith, to liquidated damages in an amount equal to the back wages, in other words, double damages.
The Court accepted that Bland Farms relied on the letter and did not act in bad faith up until the filing of the lawsuit. According to the judge, when the lawsuit was filed Bland Farms should have reviewed its actions and realized the opinion of the DOL had changed. Bland Farms, therefore, has to repay all of the overtime wages due from 2012-2016 and the overtime plus an amount equal in liquidated damages for the part of 2014 after the lawsuit was filed and all of 2015 and 2016. The takeaway from this seemingly unfair twist is that an interpretative guidance cannot be relied upon forever and if a lawsuit is filed an employer should consult legal counsel about employment practices.
As this case illustrates, it is easy to run afoul of the agricultural exemptions to the FLSA and state labor laws. Any producer with questions about how these types of law apply to his or her operation should seek legal advice before paying a farm worker less than the minimum wage or failing to pay overtime.