Wednesday, November 22, 2017

Federal Labor Law and Agriculture

Overview

For certain types of agricultural employment, federal labor laws are relevant.  Exemptions exist that cover the vast majority of smaller operations, but there can come a point at which either the number of employees hired or the type of agricultural production involved will trigger the federal rules. 

A recent case from Indiana illustrates the application of federal law, and why the classification of the type of employment matters.  What is often involved is the line between “agricultural” employment, “secondary agriculture” or a job in an ag setting that is more properly designated as “commercial” employment. 

The Indiana Case

Facts.  In Kidd v. Wallace Pork Sys., No. 3:16-CV-210-MGG, 2017 U.S. Dist. LEXIS 163174 (N.D. Ind. Oct. 2, 2017).The defendant operated a hog farm and a feed mill. The plaintiffs were employed at the feed mill between 2013 and 2016, during which time they often worked more than forty hours per week and were never paid overtime. From the time of the feed mill’s inception until summer 2016 the defendant used its own employees to produce animal feed at the feed mill while simultaneously contracting with Bi-County Pork, Inc. to purchase feed produced by Bi-County’s own staff at its independent neighboring facilities using inputs provided solely by the defendant. Bi-County only produced feed for the defendant and the defendant purchased all the feed Bi-County produced. All of the defendant’s feed is either fed to animals that the defendant owns or raises or is sold to third-parties.

Before the plaintiffs began working for the defendant at the feed mill, at least one other feed mill employee (other than the plaintiffs) complained about not receiving overtime pay. The complaint prompted an investigation by the United States Department of Labor (DOL) into the applicability of the Fair Labor Standard Act’s (FLSA) overtime exemption for secondary agricultural labor at the feed mill. The DOL concluded that the feed mill’s operations warranted a secondary agricultural designation exempting feed mill employees from overtime pay because the primary use of the feed produced there was feeding the defendant’s hogs. The DOL also concluded that the defendant used 55 percent of the feed it produced itself and sold the remaining 45 percent. The DOL also pointed out that although the feed mill qualified as secondary agriculture at that time and date, the success with outside suppliers and clients might change that designation in the future.

The court’s analysis.  The plaintiffs both sued alleging that the defendant’s failure to pay them overtime constituted violations of state (IN) minimum wage and wage payment statutes as well as the FLSA. The cases were subsequently removed to federal court based upon original jurisdiction arising from their claims under the federal FLSA. Through discovery actions, the defendant reported that about 75 percent of their total feed output was sold to third parties with 75-80 percent of that total feed output being produced by Bi-County. Under 29 U.S.C. § 213(b)(12), the overtime provisions of the FLSA do not apply “to any employee employed in agriculture.” The FLSA distinctly identifies two branches of agriculture: primary agriculture and secondary agriculture. The parties agreed that the work that the plaintiffs performed at the feed mill only qualified for the agricultural exemption from overtime pay if it constituted secondary agriculture. The federal court concluded that in order to defer to the DOL’s report it must first assess whether the totality of the circumstances especially with respect to the portion of the defendant’s income streams, during the time of the plaintiffs’ employment, changes significantly enough from the time covered by the DOL’s investigation to warrant reclassifying work at the feed mill from secondary agriculture to manufacturing. The court held that because the defendant failed to produce data specifying the total feed production and sales from the feed mill and Bi-County separately during the relevant period of the plaintiffs’ employment, a genuine issue of fact existed as to what proportion of the feed mill’s feed output was sold to third parties. As a result, the court concluded that neither party was entitled to summary judgement as a matter of law. 

Conclusion

Employment matters in agriculture sometimes trigger the application of federal law (as well as certain state law requirements).  The Indiana case is an example of how contemporary agricultural production activities might trigger their application. 

To the readers of this blog, enjoy Thanksgiving with your families.  As Abraham Lincoln stated in his Proclamation of Thanksgiving on October 3, 1863, take time to reflect and give thanks for the provision of the “blessings of fruitful fields and healthful skies.”   The next post will be on November 28. 

https://lawprofessors.typepad.com/agriculturallaw/2017/11/federal-labor-law-and-agriculture.html

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