There are distinctive legal obligations associated with employees and independent contractors. For this reason, it is vital that farm workers are not misclassified as one or the other.

On an episode of the “Agronomy and Farm Management” podcast, Jeff Lewis, program coordinator for The Ohio State University Income Tax Schools, shared his knowledge about the opposing worker classifications and how to ensure accurate identification for business and farm success.

“In agriculture especially, we tend to believe that everybody we bring onto the farm might be an independent contractor, but we have to look at the reality of the economic relationship between worker and employer,” Lewis said.

Employee or not?

Federal and state labor laws make it illegal for an employee to be compensated without employment protections and requirements such as the Americans with Disabilities Act or Social Security and unemployment tax withholding. For this reason, Lewis said, if an employee is misclassified as an independent contractor, there can be civil and criminal penalties associated with employment relationship, wage, and tax violations.

One easy way to determine whether a worker is an employee or not is to consider whether you are in control of when and how they perform the job. If they are under obligated time restraints and binding instructions, it’s safe to say they are an employee. If they can complete their job on their own time and largely in their own way, and if they are not relying on you for a paycheck, odds are the worker is an independent contractor.

This is referred to as the “right to control test.” It can be accompanied by an “economic reality test,” which takes into account the totality of circumstances of an employment relationship to determine whether a worker is economically dependent on an employer.

Employee status

The Fair Labor Standards Act (FLSA) created a requirement for a minimum wage and overtime pay. However, agricultural operations are currently exempt from adhering to this law. If a worker is an employee, you may have to further determine if they are a primary or secondary agricultural employee, or a non-agricultural employee.

A primary agricultural employee is defined as someone who partakes in direct farm work: harvesting, planting, raising livestock, and other such activities. A secondary agricultural employee is defined as someone who works closely alongside agricultural practices, such as fixing equipment, providing pest control, or fixing barn lights. These kinds of employees remain exempt from the FLSA, and an employer is not federally required to pay minimum wage or overtime.

A non-agricultural employee might be one in agritourism. They may sell produce or gifts, plan events, or provide educational programs. These workers do fall under the FLSA and are required by law to be compensated accordingly, Lewis said.

If there is an instance in which an employee is both an agricultural and non-agricultural worker, Lewis said it’s important to split up their duties by week. Otherwise, every paycheck must reflect the FLSA payment regulations.

Now, it’s your turn

What it comes down to is determining, firstly, if a worker is an employee or a contractor; second, if they qualify as an agricultural worker. Then, it’s up to you and your operation to make sure you are following state and federal regulations for taxes, wages, and insurance.

“As attorneys, we want to prevent the worst case scenario from happening,” Lewis said. “Producers cannot afford to misclassify a worker.”

Lewis suggested visiting farmoffice.osu.edu for more information.