All farm business owners/operators are subject to various laws and regulations regarding agricultural employees. Some regulations may affect only a small number of agricultural employers and employees, while other regulations affect all agricultural labor. This fact sheet does not cover all the laws and regulations, but only those affecting most agricultural employers. This information is intended only as a summary and does not have the weight of law.
Workers' compensation coverage is required of all farm owners and operators with one or more employees. Employees covered include farm workers under the age of 18, part-time, full-time and seasonal employees. Family members who are employees of the business also are covered. In an exchange of labor between two farmers, the value of labor exchanged should be considered wages for workers' compensation coverage.
Workers' compensation coverage does not extend to an independent contractor and his/her employees. To avoid potential problems, the farmer should request a copy of the contractor's current Certificate of Premium payment to determine that coverage is in effect. If the contractor has no coverage and a contractor's employee is hurt on the farm, the farmer will be held responsible for any costs associated with the worker's injury.
Workers' compensation pays for all employee medical care related to occupational injuries or diseases. Workers' compensation also provides compensation to the worker and/or dependents in the case of job-related disabilities or death.
Agricultural wages are subject to social security coverage if one of the following conditions is met:
With covered wages, the employer withholds 7.65 percent (the rate for 1994) of the employee's wages and matches the employee's contribution with an equivalent amount.
Farm employees who are subject to social security withholding include the employer's spouse, parents, and children 18 years of age and older in addition to other employees. All employees of partnerships and corporations are subject to social security withholding. The only employees exempt from social security coverage are children under the age of 18 who are employed by their parents in a sole proprietorship.
Agricultural employees subject to social security withholding are also subject to federal income tax withholding. Employers will need an employer identification number (EIN); Circular A, Agricultural Employer's Tax Guide, containing the needed withholding tables; W-4s from each employee; and tax deposit coupons (Form 8109) to deposit payroll taxes.
Agricultural payroll taxes (social security taxes and withheld income taxes) need to be deposited at least once a year if total payroll taxes are $500 or less. If total taxes for the year are greater than $500 but less than $50,000, taxes are to be deposited monthly. If total taxes are greater than $50,000, payroll taxes are deposited semimonthly.
Agricultural employers are required to file Form 943, Agricultural Employer's Tax Return, annually. The employer also must provide each employee with a W-2 wage and tax statement by January 31 of the following year.
Currently, Ohio income tax withholding is not required. If an employee requests Ohio taxes to be withheld, the employer is required to do so. Ohio school district income tax withholding is subject to the same rules as state income taxes.
This act makes it illegal to hire an unauthorized alien. All employers are covered regardless of the number of employees. Employers must verify the status of all employees hired after November 6, 1986, using Immigrational and Naturalization Service Form I-9. Each Form I-9 is to be kept by the employer for three years after the date of hire or for one year after an employee has been terminated, whichever is last.
There are fines associated with failure to comply with the verification and record-keeping requirements. Civil and criminal penalties can also be levied if employers knowingly employ and/or employed illegal aliens.
The minimum wage for covered workers is $4.25 per hour. The rate is the same for covered farm employees as it is for nonfarm employees.
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. A "man-day" is any day during which an agricultural employee performs agricultural labor for at least one hour. Five hundred man- days is approximately equivalent to seven employees working full-time in a calendar quarter (7 employees x 5.5 days per week x 13 weeks = 500.5 man-days). Agricultural employers who employ 500 man-days of labor per calendar quarter or less are not subject to the minimum wage.
If the employer is a sole proprietorship, the employer's immediate family members are exempt from the minimum wage and are not included in the 500 man-day test. If the employer is a partnership or corporation, there are no exemptions for family member employees.
Farm employers are subject to unemployment insurance if during the current or previous calendar quarter: a) they employed ten or more workers in each of 20 or more weeks; or, b) they paid $20,000 or more cash wages in any calendar quarter of the current or preceding calendar year. A person employed for any portion of any day of a week is counted as one of the ten workers in a week necessary for employer coverage.
A sole proprietor's parents, spouse, and children under age 18 are excluded from coverage. All employees of a partnership and a corporation, regardless of family relationships, are covered by unemployment insurance if the employees' weeks' test or quarterly payroll tests are met. In a general partnership, the partners are considered to be self- employed and not employees. Minors are not excluded from coverage unless they are the minor children of a sole proprietor.
There are both state and federal regulations relating to the employment of minors. Where both state and federal regulations apply, the more stringent standard is used. Employment of children by their parents or by persons standing in the place of parents on a farm owned or operated by such parents or persons is exempt from the regulations.
Employers are prohibited from having youth under 16 years old in jobs declared hazardous by the U.S. Secretary of Labor. The state of Ohio has adopted the same list of hazardous occupations. These include:
Facts and circumstances will determine whether an individual is an employee or an independent contractor. As an employee, the costs of workers' compensation, social security and unemployment insurance (if applicable) as well as state and federal income tax withholding are employer responsibilities. As an independent contractor, these costs and withholdings are the contractor's responsibility. The principal test is the extent of the employer's control over the individual doing the work. If the employer has control over the job to be accomplished and the details and means for accomplishing the job, then an employer/employee relationship exists. Determining factors include: a) whether supervision is to the work or merely to the completion of the job; b) whether an individual can set his/her own work schedule; c) who provides the tools and materials for the job; d) whether the individual holds himself/herself out to the public as available to work for others; e) skill or expertise needed for the job; f) whether the individual is participating in benefits offered by the employer; g) method of payment; and, h) the termination rights of the parties. This list is not all-inclusive, but is intended to be a summary of the major factors. The Internal Revenue Service uses 20 different items in making a determination. Typical farm jobs classified as being performed by an independent contractor include custom machine hire including hauling; veterinarian services; accounting and legal services; building construction and repair; and farm drainage installation. Payments to unincorporated independent contractors totaling more than $600 are reported annually on IRS Form 1099.
The Occupational Safety and Health Act (OSHA) is concerned with worker safety. The following are not covered by OSHA regulations: 1) self-employed persons; 2) farms at which only immediate members of the farm employer's family are employed; and, 3) workplaces already protected by other federal agencies under other federal laws.
Employers covered by OSHA need to comply with agricultural standards established for slow moving vehicle (SMV) emblems; anhydrous ammonia; rollover protective structures (ROPS) for farm tractors and the required employee training and machinery guarding and shielding; and the required employee training. Farmers/employers not covered by OSHA regulations may want to review applicable OSHA standards to increase their workplace safety for themselves and family members.
Federal Civil Rights legislation and the Ohio Revised Code prohibit employment discrimination on the basis of race, color, religion, sex, national origin, handicap, ancestry or age. All employers need to be aware of their responsibilities and review their application, interviewing and hiring procedures to avoid violating a potential employee's civil rights. Management of employees in the workplace also needs to be reviewed for discriminatory practices.
The Americans with Disabilities Act prohibits discrimination against people with disabilities in the areas of employment, transportation, public accommodation and activities of state and local governments. The Act currently covers employers with 25 or more employees and will affect employers with 15 more employees after July 1994.
All employers, even though not covered, should review their application and hiring procedures, along with the terms, conditions and privileges of employment for possible discriminatory practices. Employers also must provide reasonable accommodations to make existing facilities readily accessible and usable by employees with disabilities.
There are a number of laws and regulations affecting agricultural employers. These brief summaries relate to some of the more common laws and regulations. The Ohio Farm Labor Handbook, the resource for this fact sheet, discusses these issues in more depth and detail and identifies the responsible agencies. The Handbook is available at your local county Extension office.
Ohio Farm Labor Handbook. 1992. Bernard L. Erven and Russell T. Coltman. Ohio State University Extension.
Bernard Erven, State Specialist, Dairy Farm Management Mike Hogan, Extension Agent, Agriculture/Natural Resources
All educational programs conducted by Ohio State University Extension are available to clientele on a nondiscriminatory basis without regard to race, color, creed, religion, sexual orientation, national origin, gender, age, disability or Vietnam-era veteran status.
Keith L. Smith, Associate Vice President for Ag. Adm. and Director, OSU Extension.
TDD No. 800-589-8292 (Ohio only) or 614-292-1868