By Nicole Cook
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Understanding whether you have employees, volunteers, contractors, interns or apprentices working on your farm is vital to managing your farm’s risk. Farmers that mistakenly identify workers can wind up violating state and federal requirements for things like minimum wage, workers’ compensation, payroll taxes and unemployment insurance.
Noncompliance with employment laws can carry significant financial penalties. Employment laws focus on the facts of a situation, not titles given to workers, and not knowing or understanding the laws is not an excuse for violating them. Below is an introduction to the basics of employment law for farms. For comprehensive information, speak with an employment law attorney licensed to practice in your state.
Under the law, a for-profit business cannot have volunteers. A volunteer is a person who gives his or her time to government or charitable purposes. For this reason, if a person is “volunteering” for a for-profit business, he or she does not meet the legal definition of a volunteer and the law will treat that person as an employee.
The law defines an employee as someone who is allowed to work for a business. A person allowed to work for a farm—even those who agree not to accept money for their labor—becomes an employee and their employer is subject to employment laws. Employers must follow all state and federal employee guidelines for people seeking to trade, barter or volunteer on their farm, and arranging for volunteer agricultural workers through established exchange programs does not exempt an employer from these requirements.
Interns and Apprentices
Employment laws that apply to farm work generally also apply to interns and apprentices. The U.S. Department of Labor (DOL) has specific definitions for internships and apprenticeships. Apprenticeships combine paid, on-the-job training and related technical instruction. An apprenticeship program must be created and managed in compliance with state and federal law. For example, the Maryland Department of Labor and Licensing (DLLR) administers Maryland’s apprenticeship program and requires registration of apprenticeship programs.
Interns can be compensated at less than minimum wage. To determine whether a worker is an intern or an employee, the DOL balances seven criteria examining the “economic reality” of the intern-employer relationship in order to determine which party is the primary beneficiary of the relationship. The factors include the extent to which (1) the internship provides training that is similar to training that would be given in an educational environment, (2) the intern and the employer clearly understand that there is no expectation of compensation, and (3) the intern is not displacing a regular employee. A farm employer should consult legal counsel or their state’s department of labor before deciding to pay an intern anything less than the minimum wage.
Also, many farmers may be surprised to learn that interns performing seasonal agricultural work fall under the protections of the Migrant and Seasonal Worker Agricultural Protection Act (MSPA). Whether an intern is covered by the MSPA or exempted depends on specific facts. Employers should consult legal counsel to make sure they are in compliance.
Because farms that hire independent contractors do not need to cover payroll taxes, workers’ compensation insurance, or unemployment insurance for the contractors, many for-profit and not-for-profit farms are motivated to hire independent contractors. What many don’t realize, however, is that there are strict rules defining who is and is not an independent contractor, and if the worker is legally an employee, the farm could face penalties, fines, and the responsibility for back pay and back taxes.
To determine whether a worker is an independent contractor, states and the federal government use various “factor tests.” These tests vary from jurisdiction to jurisdiction, but they generally hinge on how much control the worker has over their work, equipment, and financial situation. The more control the farmer has over when and how a worker does his or her job, the more likely the worker would legally qualify as an employee, and not as an independent contractor.
Properly classifying workers is complex. The rules are detailed, and enforcement by workers and state and federal regulators is not uncommon. Before bringing someone to work on your farm, carefully consider how employment laws might affect your operation and consult an insurance agent and attorney.
Maryland’s Agriculture Law Education Initiative has several free publications available at www.umaglaw.org to help farmers learn how employment laws affect their farms and information about how to find an employment law attorney. You can also find lots of information about employment laws by searching this blog under “labor.”