Farm Management Newsletter

Quarterly Publication of Ohio State University Extension

Summer 2002

By David Miller, District Specialist, Farm Management

Farm Labor Rules During the busy spring and summer, many farmers hire additional labor. This article provides an overview of the major employment rules for agricultural labor. It does not cover all the details. Federal Minimum Wage The minimum wage is currently $5.15 per hour. Agricultural employers who employ more than 500 man-days of labor in any calendar quarter of the preceding calendar year must pay at least the minimum wage. Agricultural employers using less than the 500 man-days of labor are exempt from the minimum wage provisions.

A "man-day" is any day during which an employee does agricultural labor for at least one hour. Five hundred man-days is about equivalent to seven employees working fulltime in a calendar quarter.

The employer's immediate family who are employees are not included in the 500 man-day test unless the employer is a farm corporation.

Workers' Compensation

Ohio law requires EVERY employer, including agricultural employers, to carry workers' compensation. A trade or business must cover all employees regardless of how much they earn.

Frequently, family member employees, including spouses, children and related adults, should be covered under workers' compensation. Why? Because many family health insurance policies do not cover work-related injuries, deaths, and diseases.

If you hire an independent contractor to provide services for the farm business and the contractor has employees, a copy of the contractor's Certificate of Premium Payment should be requested. If the contractor does not carry workers' compensation, the farmer could become liable for costs arising from an injury to one of the contractor's employees.

Social Security

Wages paid to agricultural employees are subject to social security (FICA) with several exceptions. If wages for all employees total less than $2,500, employees earning more than $150 are subject to FICA. If total wages are $2,500 or more, all wages paid are subject to FICA. The employee pays 7.65% of their wages and the employer pays an equal amount. Wages paid to a spouse or children, 18 years old or older, are also subject to FICA.

Federal Income Tax
Withholding

Agricultural wages that are subject to social security taxes are also subject to Federal income tax withholding. To meet the withholding requirement, each employee should complete a W-4 form and the employer should keep the W-4's on file. Withholding of Ohio income taxes is optional for agricultural wages.

Unemployment Insurance

Farm employers subject to unemployment insurance are those who 1) employed 10 or more workers in each of 20 or more weeks during the current or preceding calendar year or 2) paid $20,000 or more cash wages in any calendar quarter of the current or preceding calendar year. The Ohio coverage rules are the same as the Federal.

Immigration Reform and
Control Act

The Immigration Reform and Control Act affects all American employers. The law makes it illegal to hire unauthorized aliens. ALL employers must establish employment eligibility and the identity of new employees by completing Form I-9. Employers need to keep completed I-9's for three years or one year after an employee leaves. Form I-9 is available from the Immigration and Naturalization Service, Department of Justice.

Employees Under Age 16

Federal and state child labor laws affect the employment of minors (under the age of 16) in agriculture.

Articles appearing in Farm Management Update may be reproduced in whole or in part, without special permission. Newspapers, periodicals, and other publications are encouraged to reprint articles (including illustrations) which would be of interest to their readers. Please acknowledge the authors as the source of your information. Address editorial comments to Robert Moore, Extension Associate, AED Economics, 2120 Fyffe Rd., Columbus, OH 43210.

Generally, employees under the age of 16 may not operate tractors over 20 PTO horsepower or other hazardous farm equipment. There are exemptions for those who have completed a tractor and farm machinery certification course.

Regulations also affect the number of hours a minor can work. Generally they cannot work more than 40 hours per week, more than eight (8) hours per day when school is not in session, or more than three (3) hours per day or 18 hours per week during the school year. Minors cannot be employed during school hours.

Independent Contractor or Employee

The distinction between employees and independent contractors is significant. If an individual is an employee, the costs of workers' compensation, social security, etc., are the responsibility of the employer. If an individual is an independent contractor, these costs are the responsibility of the contractor.

Whether an individual is an employee or an independent contractor is a question of fact and must be determined for each case. The principal test is the amount of employer control over the individual. If the employer has control over the job and the details and means for doing the job (who, what, where, when, and how) an employer-employee relationship exists.

"The regulations about workers' compensation and the I-9 forms affect all employers, regardless of size."

In Summary

There are many rules affecting agricultural employers. This article briefly describes some major ones. The regulations about workers' compensation and the I-9 forms affect all employers, regardless of size. The other rules mentioned affect employers depending on the size of their work force.