Experts interpret overtime bill’s effect on farms


Issue Date: September 21, 2016
By Steve Adler

Now that Gov. Brown has signed the agricultural overtime bill, Assembly Bill 1066, employment specialists are working to interpret its provisions and help farmers and ranchers to prepare for them.

The new law will entitle agricultural employees to premium pay after eight hours of work in a day or 40 hours in a week, but implementation will be phased in, starting in 2019. Other changes not involving overtime pay will go into effect next Jan. 1.

Changes contained in the bill include:

  • The current 10-hour workday for agriculture, which has been in place since 1976, will be phased down for employers with more than 25 employees in four half-hour steps annually. The phase-down starts on Jan. 1, 2019, when farmers or ranchers will have to pay employees 1½ times their regular rate of pay after 9½ hours worked in a workday. In 2020, premium pay begins after nine hours and in 2021, after 8½ hours. The last step will lower the daily overtime threshold to eight hours, effective Jan. 1, 2022.
  • Progressively lower caps on weekly straight-time hours will also be imposed on larger employers, effective on the first day of each of the same years. The imposition of those caps will start on Jan. 1, 2019, with a requirement to pay time-and-a-half after 55 hours worked in a workweek. In 2020, the cap reduces to 50 hours and in 2021 to 45 hours. On Jan. 1, 2022, the law imposes a 40-hour weekly cap plus a requirement to pay double time for hours worked over 12 in a workday.
  • Each of those phase-in steps will be delayed for three years for employers of 25 or fewer employees. For those employers, imposition of the phase-in steps will start on Jan. 1, 2022, and end on Jan. 1, 2025, along with a requirement to pay double time for hours worked over 12 in a workday.
  • AB 1066 will also subject agriculture, effective Jan. 1, 2017, to the "one day's rest in seven" provisions of the Labor Code, although days of rest can be accumulated throughout the month due to business necessity.

Bryan Little, CFBF director of employment policy, said AB 1066 represents another development that triggers higher labor costs, and will likely accelerate a trend toward agricultural mechanization.

"We are going to see more cultivation that lends itself to mechanization, like tearing out old vineyards and replanting them in a way that is compatible with grape harvesting machines. Also, there will be more dried-on-the-vine raisins and less of the traditional paper trays," he said.

Little said he spoke with a winegrape grower last week who has a large portion of his operation already set up for mechanical harvest, and who intends to convert the remaining acreage in the near future. The grower told Little he also plans to purchase more mechanical harvesters.

The new overtime law could prove especially problematic for dairy farms, which operate long hours, year-round, and don't have the seasonal variations some other crops and commodities have. Little said dairy farms will likely move toward further automation of milking parlors.

"There is one dairy producer that I talked with a few weeks ago who said he employs about 30 people right now, and that he can further automate, which will allow him to cut his employee numbers by about half," Little said.

Based on rising labor costs linked to the state's increasing minimum wage and the new overtime requirements, those machines will be paid for in five or six years, he said.

Little said he predicts two things will happen in the near future: First, new machines will be developed to perform tasks that currently require hand labor; second, farmers will elect to grow crops that require less labor.

"We will also see more consolidation. Larger growers are better able to manage the cost of compliance than smaller growers, because they can spread the cost over more things. So it is going to cause some real changes in the next five or 10 years in order to cope with this," he said.

The Farm Employers Labor Service (FELS®), a company affiliated with CFBF, will provide analysis and compliance assistance for its subscribers, both through the FELS Newsletter and online at www.FELS.net. For more information, call 800-753-9073, fax 916-561-5696 or email fels@fels.net.

(Steve Adler is associate editor of Ag Alert. He may be contacted at sadler@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.