New Overtime Rules Update
Last week, we did a post on the new overtime rules. Some of the wording may have been a little vague, so we are updating via this post. First, an agricultural worker is not required to be paid “overtime”; however, the worker is required to be paid for any hours worked by the employee. If they work 47 hours in the week, they get paid for 47 hours.
Many farmers have various employees that they have elected to treat as “exempt” from any payment over 40 hours of work in a week. These employees must meet one of three major categories:
- Executive – Primary duties are supervisory and they supervise 2 or more employees.
- Administrative – Non-manual work related to management policies.
- Professional – Education-based and requires advanced knowledge.
If the employee meets either of these qualifications, they must also be paid a minimum weekly wage. This wage until December 1, 2016 is $455 per week. Beginning December 1, 2016, the weekly wage increases to $921 per week or $47,892 per year. If the employee is exempt and has a weekly wage higher than this amount, then you are not required to pay any extra for hours over 40 in a week. However, if the employee’s weekly wage is less than $921 per week, then you would be normally required to pay overtime at 1 1/2 time; however, if the employee is employed by the farmer and performs agricultural work including certain administrative or management services, you only need to pay their regular hourly rate for any hours over 40.
Therefore, to clarify last weeks post a bit more, if you employ any workers on your farm beginning December 1, 2016 and you pay them less than $921 per week, you will be required to pay them for each hour worked at their normal hourly rate even if they were exempt under the old law. This will require you to keep track of all hours worked, including those managers and administrative workers that you do not track hours now.
The penalty for not following these rules can be harsh, so it is very important to review this with a good farm labor law attorney if you think the rules might apply to you.
Paul Neiffer, CPA
CliftonLarsonAllen, LLP
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
Hi Paul,
Thanks for the farming overtime post. I work for a non-profit farm and am unclear on wether or not OT should be paid at the straight rate or 1 1/2 times. Our farm does not meet the 500 man day test, so I thought that exempted us from applying the special farm rules. – (OT at straight rate and 1 1/2 over 60 hours worked).