On September 30, 2022, the state labor commissioner announced that the overtime threshold for agricultural workers will be lowered from the current threshold, which is 60 hours. Beginning on January 1, 2024, the threshold will be lowered by four hours every two years, until it reaches 40 hours in the year 2032. Non-exempt farm workers must be paid one and one-half times their regular pay for each hour in the workweek in excess of the applicable overtime threshold. The schedule is outlined below for reference:
|Effective Date||Overtime Threshold|
|January 1, 2024||56 hours|
|January 1, 2026||52 hours|
|January 1, 2028||48 hours|
|January 1, 2030||44 hours|
|January 1, 2032||40 hours|
The Governor and Legislature also enacted three new tax credits to assist farm employers in transitioning to a lower overtime standard:
- The Investment Tax Credit was increased from 4 percent to 20 percent for farm businesses, providing an encouragement for potential automation of farm production.
- The Farm Workforce Retention Tax Credit was increased to $1,200 per employee to provide near-term relief to farmers.
- A new refundable overtime tax credit was established for overtime hours paid by farm employers at the level established by the Board and confirmed by the Commissioner up to 60 hours.
As a reminder, a farm employer means any individual, partnership, association, corporation, cooperative, business trust, legal representative or organized group of persons acting as an employer of an individual engaged or permitted to work on a farm.
Next Steps for Employers
Employers should note that the Department of Labor is currently in the midst of the rule making process which includes a 60-day public comment period. The public comment period is open until December 11. Comments should be emailed to firstname.lastname@example.org.
Farm employers should begin reviewing their overtime pay practices and prepare to make changes if necessary to comply with the new rule. To ease some of the financial impact of the rule, employers may follow the gradual approach required under the law by decreasing the threshold every two years until 40 hours is reached in 2032. Employers may also internally decide to accelerate the timeline for the decrease or decrease the threshold to 40 hours as soon as feasible. These more generous approaches may result in a positive employee experience and minimize the administrative burden of monitoring the gradual decreases for the next decade.
HR Works will continue to monitor this topic and provide updates as they become available.