MMA Blog

Overtime Laws are Impacting Dairy Operators

For decades, most states have followed the federal law that exempts agricultural workers from overtime pay, but increasingly states, including California, New York and most recently Washington, have introduced overtime laws that limit the workweek for ag workers to 40 hours. The new Washington law was praised by President Biden who supports Congress to extend the right for farmworkers in all 50 states to earn overtime pay. Whether a federal law is eventually passed or additional states pass overtime wage laws for ag workers, dairy farmers in Idaho should be aware of the trend and consider reviewing current employment practices and insurance coverages.

Washington’s Senate Bill 5172 that passed in May lays out a phased approach requiring overtime pay for employee time worked over 55 hours a week in 2022, 48 hours a week in 2023, and 40 hours a week by 2024. The legislation also prevents courts from requiring farmers to pay retroactive overtime. In November 2020, the Washington Supreme Court ruled in Jose Martinez-Cuevas v. DeRuyter Bros. Dairy, Inc. requiring dairy employers to provide overtime pay to workers who had previously been considered exempt as agricultural workers. The ruling prompted a wave of litigation by former employees suing dairy owners for three years of back pay overtime. SB 5172 has now prevented that litigation to the relief of dairy farmers across Washington.

 

Reviewing employment practices

Prior to the Washington overtime ruling, several dairy farmers in the state paid their employees a salary, but now employment practices at dairies are shifting to comply with the new law. Washington dairies must track and document hours worked, and many are implementing systems for employees to clock in and out and document breaks. This employment practice, along with documenting all employment decisions with two decision makers and following other best practices, is a smart move for dairies across the country to consider as a risk management tool.

At the online Idaho Farm and Ranch Center a number of resources and management tools are available for managing employees and complying with federal and state laws.

 

Reviewing coverages

In addition to reviewing your employment practices, now is a good time to also do a thorough review of your insurance coverages considering the heightened litigation targeted at U.S. dairy operations and employers in all industries. In 2019 alone, the Equal Employment Opportunity Commission reported 72,675 workplace discrimination charges with over $68 million in payouts.

Along with workers’ comp insurance for employees and farm liability policies, dairy owners should also consider employment practices liability insurance. While your standard liability coverage may just cover your defense, it may not be sufficient to cover all defense costs, damages and wages if an employee files a suit against you. EPLI covers claims of discrimination, harassment, offensive work environment and retaliation, and carriers often offer helpful risk management resources and a hotline for legal services.

As a dairy farmer, you can’t do the work without your full team, so following best practices for employment and making sure your coverages are sufficient for current risks is vital to maintaining a successful and viable operation.

 

Doug Van Batavia is a risk manager and insurance broker at Marsh McLennan Agency. As a former dairy owner, Doug provides firsthand entrepreneurial and agriculture experience to customers throughout the Northwest. This content is for informational purposes only.  Consult your actual insurance policy for details regarding terms, conditions, coverage, and exclusions. Contact Doug at dvanbatavia@paynewest.com or 509.946.2629.

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