United States: Pray For A Good Harvest, But Keep At Your Plow – And Know Enough Employment Law To Stay Out Of The Ditch

Last Updated: March 27 2019
Article by Grant B. Osborne

Employers in agribusiness face the same risks as those in any other business, but perhaps more than most if faced with frequent employee-turnover and employees with little loyalty to those for whom they work.

Former employees, for obvious reasons, are much less reluctant than incumbent employees to take legal action against an employer who, actually or allegedly, has done them wrong, and the laws (and interpretations of laws) that govern the employer-employee relationship are in constant flux. People with little, if anything, to lose by asserting claims and such shifting ground make it hard for employers to recognize work-related risks before they've come home to roost.

Set forth below are three examples of recent developments in employment law of which all employers should be aware if they wish to avoid stepping into a pile of ... trouble.

"Exempt employees? Non-exempt employees? What does it all MEAN?"

Employees of nearly all employers, as far as "wage and hour" law is concerned, are "exempt" or "non-exempt." That's no small distinction. "Exempt" employees are not entitled to (i.e., are exempted from an employer's obligation to pay) premium pay for (usually) hours worked over 40 in a seven-day workweek (commonly known as "overtime" pay); but "non-exempt" employees usually are entitled to such pay.

Virtually all employees engaged in agribusiness are covered by the federal Fair Labor Standards Act of 1938 ("FLSA"), but employees employed in "agriculture," as defined in the FLSA, are exempt from the overtime pay provisions. "Agriculture," however, does not include work performed on a farm that is not incidental to or in conjunction with farming operations. And some "agricultural" employers get into trouble by failing to pay overtime pay to employees whose jobs are related to but don't satisfy the FLSA's definition of "agriculture." Also, many such employers who use the services of a farm labor "contractor" find themselves in "joint employment" with the contractor regarding its employees, as a result of which both the contractor and the farmer can be held responsible for violations of the FLSA. Confused yet?

Navigating the "exempt" vs. "non-exempt" distinction can obviously have an enormous impact on payroll costs, in terms of payable wages and payroll-based taxes. Getting that distinction wrong can result in huge liabilities, for both the nominal employer and those persons who control the employer's payroll practices.

The U.S. Department of Labor ("DOL"), it appears, is about to change some of the most important rules. On March 7, 2019, the DOL announced a "Notice of Proposed Rulemaking ... that would make more than a million more American workers eligible for overtime" pay. "Under currently enforced law, [most] employees with a salary below $455 per week ($23,660 annually) must be paid overtime if they work more than 40 hours per week." That salary level was set in 2004. Under the new proposal, the minimum salary required to invoke the most important so-called "white collar" exemptions (which depend not only on one's salary but also on critical job duties) would be $679 per week (which equals $35,308 per year). That's an increase in the minimum required salary of more than 49%. The proposal would also increase the total annual compensation requirement for “highly compensated employees” from the currently-enforced level of $100,000 to $147,414 per year. The proposed regulation will appear in the "Federal Register," and the public will have 60 days from the date of publication to comment on the proposed regulation.

These proposed changes are not the law yet, but they might be soon. So keep an ear to the ground.

"If my workers aren't 'employees,' then what do I care?"

Workers can be "employees" or "independent contractors." If they are truly independent contractors, then the cautions set forth above can be ignored. But that distinction isn’t always clear, and the consequences of getting it wrong can be severe. 

So what's an "independent contractor?" It's typically a worker who contracts with individuals or entities to provide defined services in exchange for compensation, and who does not work regularly for a single company. Acres of trees have been felled to make the paper required to state all the rules delineating the distinction (or trying to) between employees and contractors, but independent contractors typically:

  • Charge fees for services;
  • Are engaged only for the term required to perform an identified service or task;
  • Retain control over the method and manner of the work they do;
  • Retain economic independence from those for whom they work;
  • Are responsible for paying their income, social security, and Medicare taxes; and
  • Are not covered by most federal and state laws that are designed to protect employees, such as laws requiring payment of overtime pay and laws pertaining to unlawful discrimination in "employment."

These are just some of the factors. There are others. Unfortunately for employers (or those who might be), no shorthand formula can be reliably applied to distinguish contractors from employees in every case. Courts and governmental agencies responsible for deciding who is and isn’t an employee wrestle with the issue to this day: The National Labor Relations Board (which enforces the federal labor law known as the National Labor Relations Act), just two months ago, in SuperShuttle DFW, Inc., addressed it in enormous detail (when deciding that franchisees who operate shared-ride vans for SuperShuttle are independent contractors). The issue is sometimes clear as mud, but the rules usually add up to this: An entity contracting with an independent contractor generally has the right to control only the final result of the project, and not how the independent contractor accomplishes the result.

The economic incentive to construe the definition of "independent contractor" as liberally as possible is obvious: the "principal" who engages a mere "contractor" (as opposed to an "employer" who hires an "employee") can, for example, avoid having to comply with "wage and hour" laws, pay for payroll taxes, and pay for and maintain workers' compensation insurance coverage, and deny responsibility for compliance with the array of federal and state laws prohibiting various kinds of discrimination/retaliation in employment (and with the FMLA where it might otherwise apply).

But, if the "principal" gets it wrong, then there can be significant risks. To name a few:

  1. Liability for unpaid income, Social Security and Medicare taxes, plus significant penalties and interest;
  2. Liability for violation of unemployment compensation laws;
  3. Liability for violation of workers' compensation laws (both civil and criminal) and for all costs of a work-related injury/illness that might have been covered by a workers' compensation insurance policy, had one been in place;
  4. Liability for violation of various anti-discrimination laws; and
  5. Liability for violation of federal and state "wage and hour" laws pertaining to minimum wages and overtime pay (which can be imposed on the owner(s) of the business personally regardless of whether the alleged employer is a corporation or company).

One can imagine a farmer or two who might take a liberal view of the distinction between employees and contractors, in the hope of avoiding the costs and liabilities that accompany employment. But doing so isn’t without risk. Just last month, the Wage and Hour Division of the DOL issued a press release about a Florida tomato packing company – identified by name – that "has paid $87,920 in back wages to 109 employees for violating overtime and recordkeeping requirements of the" FLSA.

The Division "found [that] the employer was ineligible for an agricultural exemption" and, "as a result, [had] failed to pay employees overtime for hours they worked beyond 40 in a workweek." The employer paid up because it had "purchased tomatoes from multiple growers not owned by" the employer "and repacked them. The agricultural exemption from the overtime requirements applies only to employees involved in growing product or processing and packaging products grown only by that company. Once employees were packing goods brought in from other suppliers, the exemption did not apply".  

The employer, in this case, HAD characterized the workers as "employees" (although failed to pay them as required by law). If the employer had deemed them to be "independent contractors" and, for example, failed to withhold from wages and timely pay required payroll taxes, then the outcome would have been far worse.

"Even if they are employees, do I have to try to control what they SAY?"

Well, if you don’t want to get sued for unlawful harassment based on sex, then YES.

On February 8, 2019, the U.S. Court of Appeals for the Fourth Circuit (which has jurisdiction over employers in North Carolina) considered an appeal in Parker v. Reema Consulting Services, Inc., in which the "central question" was "whether a false rumor that a female employee [had] slept with her male boss to obtain promotion can ever give rise to her employer’s liability under Title VII" of the Civil Rights Act of 1964 "for discrimination 'because of sex.'” The court said, where the employer was accused of "participating in the circulation of the rumor and acting on it by" punishing the employee, that the employer could be held liable for doing so.

The facts alleged in the case were damning. A select few:

  1. Parker, the plaintiff, worked for the employer for about 18 months at a warehouse facility. She began as a low-level clerk and was promoted six times, ultimately becoming "Assistant Operations Manager."
  2. Near the end of her employment, she learned that certain male employees were circulating an unfounded, sexually-explicit rumor about her that “falsely and maliciously portrayed her as having [had] a sexual relationship” with a higher-ranking manager, in order to obtain her management position. The rumor originated with another employee.
  3. The highest-ranking manager at the warehouse, Larry Moppins, "participated in spreading the rumor. In a conversation with another manager, Moppins asked “hey, you sure your wife ain’t divorcing you because you’re f- -king" the plaintiff?
  4. There was a mandatory all-staff meeting. Moppins “slammed the door in" Parker's "face and locked her out.” The false rumor was discussed at the meeting.
  5. "The following day, Parker arranged a meeting with Moppins to discuss the rumor, and at that meeting, Moppins blamed Parker for 'bringing the situation to the workplace.' He stated that he had 'great things' planned for Parker … but that 'he could no longer recommend her for promotions or higher-level tasks because of the rumor.' He added that he 'would not allow her to advance any further within the company.'”
  6. "Several days later, Parker and Moppins met again to discuss the rumor. Moppins again blamed Parker and said that he should have terminated her when she began 'huffing and puffing about this BS rumor.' During the meeting, Moppins 'lost his temper and began screaming' at Parker.
  7. Several weeks later, Parker was called to a meeting with Moppins, the Human Resources Manager, and the company's in-house counsel. At that meeting, Parker was fired.

 The court took a dim view of the company's dimwitted approach:

[T]he rumor was that Parker, a female subordinate, had sex with her male superior to obtain promotion, implying that Parker used her womanhood, rather than her merit, to obtain from a man, so seduced, a promotion. She plausibly invokes a deeply rooted perception — one that unfortunately still persists — that generally women, not men, use sex to achieve success. And with this double standard, women, but not men, are susceptible to being labelled as 'sluts' or worse, prostitutes selling their bodies for gain. 

And: "The complaint not only invokes … this sex stereotype, it also explicitly alleges that males in the … workplace started and circulated the false rumor about Parker" and that she, "as the female member of the rumored sexual relationship[,] was sanctioned," but that her alleged male paramour was not. "In short, … it is plausibly" claimed that the plaintiff "suffered harassment because she was a woman." The court of appeals, therefore, reversed the dismissal of the claim by the trial court. Parker's claim of an unlawful gender-based hostile work environment, retaliation, and discriminatory termination in violation of Title VII was allowed to proceed.

The Lesson

Do NOT permit employees to engage — and DO adopt, implement and regularly emphasize the importance of policies that expressly prohibit them from engaging — in malicious gossip of a sexual nature about fellow-employees. Period. Anything short of that can land employers in expensive and embarrassing litigation. Reema Consulting Services knows that now.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Lewis Brisbois Bisgaard & Smith LLP
Rumberger, Kirk & Caldwell, P.A.
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Lewis Brisbois Bisgaard & Smith LLP
Rumberger, Kirk & Caldwell, P.A.
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions