Legal Deep Dive: The FLSA Agricultural Overtime Exemption

If you are an H-2A employer, you are probably familiar with the concept of the “overtime exemption” for agriculture. For the uninitiated, the 1938 Fair Labor Standards Act (FLSA) exempts agriculture from the general requirement that overtime pay at time-and-a-half is required when more than 40 hours are worked in a week. Both primary agriculture - farming in all its branches and the harvesting of any agricultural or horticultural commodities; and secondary agricultural tasks performed by a farmer or on a farm - such as packing or delivering farm product to market - qualify as exempt under the FLSA. 

While most H-2A employers understand the general rule that “agriculture is exempt,” few understand the numerous exceptions to the rule that can lead to costly mistakes. This confusion is understandable given the complicated wording of the relevant statutes. To make matters even more complicated, H-2A employers can easily find numerous conflicting decisions by the Board of Alien Labor Certifications (“BALCA”) inconsistently interpreting the definition of agricultural labor.

At Seso, we want you to have all of the information you need to run your farm or FLC in full compliance. This article will explain the basics of the FLSA overtime exemption for agriculture by walking through a brief overview of the relevant legal definitions and practical real-life examples and explanations.

(Note: This guidance is for general information; for legal advice on specific situations, consult a qualified attorney in your state.)

Agriculture is exempt at the federal level, but states may be different

1. Washington - RCW § 49.46.130  (Active - over 40 hours)

2. Hawaii - Haw. Rev. Stat. § 387-3 (Active - over 48 hours)

3. Oregon - HB 4002 (Current threshold over 48 hours, fully implemented by 2027)

4. New York - Labor Law § 163-a (Current threshold over 52 hours, fully implemented by 2032)

5. Colorado - COMPS Order #38 (Current threshold of 48 or 60 hours, dependent on size of employer)

6. Minnesota - §§ 177.23 and 177.25 (Narrower exemption than federal standard - over 48 hours)

There is no replacement for consultation with a local labor and employment attorney in your state to ensure compliance, and we encourage you to seek local counsel on issues involving overtime pay.

Defining agricultural labor

We’ve established that agriculture is exempt from overtime at the Federal level under the FLSA. However, the FLSA’s definition of agriculture is slightly narrower than the IRS definition of agricultural labor. One key takeaway from all the legalese: a job may qualify as “agricultural labor” under the IRS definition—making you eligible for the H-2A program—yet still fail to meet the narrower FLSA definition of primary or secondary agriculture necessary to exempt the work from overtime. In other words, eligibility for the H-2A program does not automatically mean the work being performed is exempt from overtime.

For this article, we will review important parts of the FLSA related to exempt primary and secondary agriculture, as well as the relevant portion of the IRS definition of agricultural labor to show the overlap and differences between the two definitions. Please note that the full provisions of the FLSA are quite extensive, as is the full IRS definition of agricultural labor. The snippets below are meant to illustrate a few key areas rather than comprehensively address all possible exemptions or applications. For those that prefer to skip the technical definitions, feel free to jump to the Examples and Explanations section to see the language in practice.

The  FLSA definition of agriculture at sec. 3(f) of the FLSA, at 29 U.S.C. 203(f) provides an exemption for both primary and secondary agriculture, defined as:

Additionally, at 29 U.S.C. § 213(b)(16), the FLSA clarifies that an employee is exempt from overtime if engaged: 

On the other hand, sec. 3121(g) of the Internal Revenue Code of 1986 at 26 U.S.C. 3121(g) defines agricultural labor as:

With these definitions in mind, we’ll outline a few practical rules and real-world examples to help illustrate how the FLSA overtime exemption applies in practice.

Basic rules of the FLSA overtime exemption

Here are some basic principles to help you understand the FLSA overtime exemption: 

1. Labor must qualify as primary agriculture or secondary agriculture under the FLSA to be exempt.
   a. Primary - Cultivating, planting, growing, irrigating, harvesting crops, caring for livestock, poultry, dairy, or beekeeping operations
   b. Secondary - On the farm tasks like packing, grading, washing, sorting, loading of product grown on the farm OR off-farm tasks done in the employ or for the benefit of the farmer

2. FLC’s are not a farmer - they do not own, lease, or control the land. But they do provide exempt agricultural labor while on the farm and while transporting harvest workers off the farm for the benefit of the farmer.
   a. FLC’s may NOT be exempt from overtime while transporting workers to the grocery store or for personal errands off the farm, as the transportation is separate from the primary agricultural activities and are not on behalf of a farmer

3. Introduction of almost any outside product, with the limited exception of young transplants and plugs, can trigger loss of the overtime exemption,
   a. The overtime exemption only applies to work activities performed on commodities that are produced/grown by the particular farmer or on the farm which employs the workers. In other words, the exemption is lost for that workweek the moment that products grown by third-parties are handled by a worker, even a tiny fractional amount of outside product. The most common example is the commingling of produce grown on a farm with produce grown by an independent farm during the packing process which will lead to the loss of the exemption
   b. An employer may qualify for the H-2A program if producing at least 50% of the product in a packing shed under the IRS definition, but even 1% of outside product triggers an overtime obligation for the entire packing shed operation. 

4. Even 1 hour of non-exempt work in a single weekly pay period subjects all hours over 40 to overtime for that pay period.
   a. If a worker works 55 exempt hours and 1 non-exempt hour in a single week, the worker is entitled to 16 hours of overtime pay for that work week (40 hours +16 at time-and-a-half)
   b. Overtime calculations are made on a weekly basis.

Many employers participate in the H-2A program for years without realizing their operations may trigger overtime obligations—often discovering the issue only after facing a lawsuit for unpaid wages or during a Department of Labor audit. If you suspect your current practices may not align with federal overtime rules, do not ignore the concern. Consult a qualified labor and employment attorney in your state to assess your risk, develop a compliance plan, and take corrective action. The Seso team is also available to support you with questions or next steps in planning your H-2A filings for next season.

Let’s put this into practice

The following real-world examples reflect common challenges H-2A employers have faced in recent months: 

Example 1: FLC drivers and incidental transportation off the farm

Strawberry King FLC is a farm labor contractor in Florida, a state with no overtime. The FLC harvests strawberries exclusively on multiple strawberry farms in Florida. Strawberry King has one H-2A worker with a CDL, who they pay to drive the bus transporting the field workers to and from the various strawberry farms they service. The bus driver also transports the workers to the grocery store and bank on a regular schedule every Friday after work. 

Last week, all strawberry workers worked 45 hours in the field. The bus driver worked 55 hours between driving the bus to the job site and on the weekly trip to town, as well as time spent working in the field.

Outcome: In this scenario, the employer is an FLC and not a farmer. Time spent transporting the workers to the field is likely exempt from overtime, but transporting workers to and from the grocery store and bank is not. There is no connection to the primary harvesting activity being done on any one farm in this scenario; the FLC is acting in the employ of multiple farms. Even 1 hour of non-exempt work negates the overtime exemption for that pay period, so in this scenario, the employee would likely be entitled to 15 hours of overtime at time-and-a-half. 

Example 2: Outside oroduct

Arizona Fresh Cabbage is a large grower in the Yuma Valley of Arizona, a state with no overtime. The company directly employs a large H-2A workforce who harvest cabbage in the field, work in the company’s on-farm packing shed, and deliver the packed product to an off-site cold storage facility. 

The company is considering a lucrative opportunity to begin packing finished product from other cabbage growers in the area. For next year, the company would like to pack 25% of product from neighboring farms in their packing shed but will otherwise keep their operation intact. 

Outcome: By introducing any outside product into the packing house, the employer has converted the endeavor into a “commercial packing” operation, and time spent handling, packing, and delivering outside product would no longer qualify as exempt. Arizona Fresh Cabbage would need to weigh the economic opportunity presented by the outside packing opportunity with the increased labor costs associated with paying overtime. 

Example 3: Commercial packing

Green Acre Farms is a grower in the Rio Grande Valley of Texas, a state with no overtime. Green Acre Farms has hired Top Notch FLC to harvest watermelons in several fields in South Texas. The company also owns and operates a large cold storage commercial packing facility in the middle of a commercial warehouse district that packs and ships 55% of product grown by Green Acre Farms and 45% from over 25 other large watermelon farmers. 

For next season, Green Acre Farms is considering requesting Top Notch FLC provide a few H-2A workers for the company’s commercial packing facility. The company wants to know whether or not the workers would be eligible for overtime if working in the packing shed. 

Outcome: In this scenario, despite the packing shed packing 55% of product grown by Green Acre Farms, the location is not eligible for H-2A labor. The packing shed is located in a commercial warehouse district - it’s not on the farm or adjacent, and the workers are employed by the FLC, not the farmer. Accordingly, the workers in this scenario cannot perform secondary duties off the farm. Moreover, any domestic worker in the packing shed would clearly be entitled to overtime pay, as the mixing of outside product has negated the overtime exemption.

Example 4: Non-ag processing

Uncle Bob’s Fern Emporium is a large commercial nursery in Georgia known for their ferns, which they grow onsite and ship all over the United States. For years, the only product the company grew and sold were their ferns. However, after seeing an opportunity with local rose growers, Uncle Bob recently expanded into the lucrative gold-plated rose market, in which he takes harvested roses from other local growers, dips them in gold, and ships them for holiday gifts. 

None of the roses are grown onsite, but they are brought in freshly harvested, stored in cold storage, dipped in gold, packaged in gift boxes, and shipped internationally. While the business continues to grow its famous ferns onsite, 90% of the inventory moved last year came from the retail packaging and shipping of gold-plated roses. To keep up with the surging demand for the new gold plated rose market, the company is considering using the H-2A program for the first time to help process/plate, package, and ship the new product.

Outcome: Unfortunately, there are numerous factors that make H-2A labor an impossibility for Uncle Bob’s. First, the work does not qualify as primary or secondary agriculture under the FLSA, or as agricultural labor under the IRS definition. The roses were not grown by Uncle Bob’s, 90% of the product being packed in this scenario would be from outside third parties, and most critically, the gold plating of a rose is a clear, commercial processing activity entirely disconnected from the underlying primary agriculture act.

We’re here to help!

While the FLSA agricultural exemption offers cost protections for H-2A employers within the scope of its narrow exemption for primary and secondary agriculture, it does not cover all work performed by agricultural workers. Employers must identify when common agricultural labor falls outside of the general rule, particularly in the context of off-farm FLC transportation not connected to a farming activity or scenarios where workers are packing outside product. 

To stay on top of your overtime, we encourage you to periodically review job duties, consult legal counsel on questionable scenarios, and maintain detailed records of exempt versus non-exempt work. The right back-office tools can also greatly simplify timekeeping and payroll compliance. Seso offers an all-in-one HR, H-2A, and payroll solution built specifically with these industry nuances in mind, making it easy to stay productive while protecting your workers and your business.

Wondering where to start? Reach out to our team of experts to learn how we can support your compliance today.

Important resources:

Federal statutes and regulations: 
29 U.S.C. § 203(f) (FLSA definition of agriculture)
29 U.S.C. § 213(b)(16) (exemption for transportation of harvesting workers)
29 U.S.C. § 213(b)(12) (general agriculture exemption)
29 U.S.C. § 3121(g) (IRS Definition of agriculture)
29 C.F.R. §§ 780.105–780.108
29 C.F.R. §§ 780.128–780.147

DOL guidance:
Fact Sheet #12: Agricultural Employment Under the Fair Labor Standards Act (FLSA) – https://www.dol.gov/agencies/whd/fact-sheets/12-agricultural-employment-flsa

Round 14 FAQ’s: H-2A Definition of Agricultural Labor or Services -https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/H-2A-2010-Rule-FAQs_Round-14_Definition-of-Ag.pdf

Federal case law: 
Bowie v. Gonzalez, 117 F.2d 11 (5th Cir. 1941) - Off-farm sugarcane transport for mill not agricultural. 
Chapman v. Durkin, 214 F.2d 360 (5th Cir. 1954) – Buying/reselling fruit is not agriculture.
Maneja v. Waialua Agricultural Co., 349 U.S. 254 (1955) - Sugar refining is commercial processing, not agriculture. 
Mitchell v. Budd, 350 U.S. 473 (1956) - Commercial packing plant handling outside product is not agriculture, exemption only applies on-farm packing. 
Goldberg v. Crowley Ridge Fruit Growers Ass’n, 295 F.2d 7 (8th Cir. 1961) – Cooperative packing not-agricultural labor.
Hodgson v. Okada, 472 F.2d 965 (10th Cir. 1973) – On-farm packing of own crops held agricultural.
Donovan v. Marrero, 695 F.2d 652 (3d Cir. 1982) – Independent mushroom compost hauling not exempt agriculture.
Ramirez v. Statewide Harvesting & Hauling, LLC, 999 F.3d 1276 (11th Cir. 2021) - Off-farm transportation of workers for benefit of FLC subject to overtime pay.