This is the time of year when many agricultural employers add onto to their payrolls and hire additional workers. Additional workers are a sign that business is flourishing but along with more workers comes more legal requirements. One such legal requirement is that of workers’ compensation coverage. But when is workers’ compensation coverage required and who needs to be covered?
Workers’ compensation is an insurance program administered by the State which provides payment to employees who suffer work-related injuries or illness. Eligible employees receive compensation for lost work and medical bills, regardless of who was at fault; in exchange, employees forfeit the right to sue their employers for the injury or illness.
Which farm workers are eligible employees legally required to be covered by workers’ compensation insurance? There is a farm worker exemption to the general coverage requirements. According to the Maryland Code, Labor and Employment Article, Section 9-210 a worker, including a migrant farm worker, is an eligible or “covered” employee if the worker receives compensation from a farmer for any service other than office work, including:
(i) operating a machine connected with animal, crop, or soil management;
(ii) constructing or repairing a fixture or machine; or
(iii) handling an animal or crop with or without a machine; and
the farmer has
(i) at least 3 full-time employees; or
(ii) an annual payroll of at least $15,000 for full-time employees.
In general, an employee is not eligible if he or she is an independent contractor. The law defines an employee as ineligible if:
(1) the individual customarily is engaged in an independent business occupation of the same nature as that of the service performed;
(2) the individual is free from control and direction over the individual’s performance of the service;
(3) the individual provides the individual’s own equipment, materials, and tools; and
(4) the farmer is not required to withhold Social Security, unemployment, State, or Federal taxes from compensation paid to the individual.
Even if a farmer is not legally required to cover employees with workers’ compensation coverage, he or she can choose to opt-in to the program to reduce liability exposure.
The Maryland Court of Special Appeals in Uninsured Employers’ Fund v. Pennel, 133 Md. App. 279 (2000) examined the “farm work” exception to the workers’ compensation law. In Pennel the injured employee was a full time employee at a dairy farm for 12 years who earned slightly less than $15,000 a year in financial compensation. However, the dairy farmer’s wife had provided the employee with breakfast before his daily shift six days a week for 12 years. The Court of Special Appeals upheld the finding that the value of the meals should be included in the employee’s compensation and adding in the value of the meals put the employee’s total compensation over the $15,000 threshold. Therefore, the employee was entitled to worker’s compensation coverage. This decision illustrates the broad view that the judiciary is taking in the interpretation of the workers’ compensation law.
Any employer with questions whether or not workers should be covered should consult a private attorney for guidance or contact the Maryland Workers’ Compensation Commission (http://www.wcc.state.md.us/). Failure to cover an eligible employee can not only result in legal exposure related to the employee’s injury or illness, but can also result in serious financial penalties from the State.