With recent changes to agriculture overtime laws out east, all eyes have now turned west as Oregon farmers learned earlier today the fate of House Bill 4002. After passing the Oregon House in a 37-23 victory, the Oregon Senate voted 17-10 to end the state’s agricultural exemption from higher overtime wages.
The outcome means Oregon farmers will start paying time and a half after 55 hours to their workers beginning in 2023 and incrementally dropped to 40 hours by 2027.
Oregon dairy farmer, Derrick Josi, better known for his TDF Honest Farming social media accounts, says he wasn’t surprised that the Senate passed the bill and says it will spell disaster for agriculture.
“Sadly, I knew it would pass, as the Senate and House is both run by Democrats,” he says.
Josi milks 500 Jersey cows on the Tillamook, Oregon coast. Along with family, Josi has 12 people on his payroll and says that with the current construction of adding a new parlor and barn, his payroll is likely to increase. He also says farmers will find a way to deal with the new overtime law.
“We always do,” he remarks.
Oregon State Representative Raquel Moore-Green said House Bill 4002 isn’t likely to help farmworkers, since their employers will likely seek to reduce weekly hours, switch crops or simply exit the industry.
“They could reduce their operation size or cease farming altogether and sell out,” she says.
Tami Kerr, Executive Director with Oregon Dairy Farmers Association states, “This bill disproportionately hurts smaller dairy farms in Oregon. It was discouraging to be at the table, provide many options and be completely shut down. Everyone loses, the employees and our farmers.”
Tax Credit
A tax credit would be given to farmers to help offset the rising costs of labor stemmed from paying overtime. Farms will be divided into three tax credit tiers based on the number of their employees.
Farmers who employ fewer than 25 workers would qualify for tax credits of 90% of their added overtime payments next year, which would decrease to 60% in 2028, after which they’d expire.
Due to the 24-7 care that goes into running a dairy farm, dairy farmers in Oregon would be treated differently. Dairy farms with less than 25 workers would be eligible for a tax credit rate of 100% of overtime payments, while those with more employees would qualify for a rate that incrementally shifts from 75% in 2023 to 50% in 2028, its final year.
“Dairy is standardized work,” Josi adds. “If we have to, we can adjust and hire someone else to keep our employees under 40 hours. Other farmers don’t have that luxury.”
Impact Felt in Other States
Back east in New York, a panel voted 2-to-1 earlier this year, to reduce overtime to a 40-hour workweek by 2032. The threshold would drop four hours per week every two years beginning in 2024.
California phased in a lower overtime threshold for farmworkers over four years between 2019 and 2022 to 40 hours. In November 2020, Washington dairy farmers were required to begin paying overtime to any of their employees who work more than a 40-hour workweek. This came after the Washington Supreme Court ruled in favor of the state’s dairy workers to receive overtime pay equating to time and half after 40 hours.
Fourth-generation dairy farmer, Jason Sheehan, who runs J & K Dairy, located 45 minutes outside of the Tri-Cities in eastern Wash., has been paying some form of overtime pay to his dairy employees for years, as he watched other states like California slowly introduce overtime practices. Sheehan followed their plans with an initial 50-hour workweek; decreasing five hours annually to eventually get to the 40-hour workweek.
The Sheehan’s milk 3,000 cows and employ 38 full-time workers, of which 80% have been there for three years and of those experienced staff, more than a third have 10 to 24 years with the dairy, Sheehan reports.
“Yes, we have people that have been with us for a long time,” Sheehan says. “If the pay was an issue with our employees, they would have gone and found work elsewhere.”
Moving forward, dairy producers from coast to coast are concerned about the future of finding good help, stating it’s a struggle to find people who want to work.
Josi shares that currently he doesn’t have any problems with retaining employees, but states that “There is nobody out there to hire.”
Kerr adds that more work is needed to be done with Oregon legislature and shares, “We will have to flip a few seats this fall and come back next year to make adjustments.”
