Oregon’s ag overtime law is just plain better
Washington state’s agricultural community is preparing for its first year paying time-and-a-half to farmworkers. While the law isn’t new, the implementation of it is.
Earlier this week, Oregon’s governor signed their version of an ag overtime bill and, honestly, it’s just better than Washington’s law. It strikes a balance between trying to pay farmworkers more and acknowledging the financial hit farm employers will have to absorb at the same time.
Time for a little PNW Ag Overtime Showdown:
Dairy producers in Washington state were required to begin paying time-and-a-half for any hours worked beyond 40 after the Washington State Supreme Court ruled the overtime exemption for agriculture was unconstitutional in the Martinez-Cuevas v. DeRuyter Bros. Dairy court case. Under the ruling, dairy producers should have started abiding by the overtime requirement Nov. 5, 2020.
During the 2021 legislative session, Senate Bill 5172 was originally introduced as a protectionary measure to ensure the rest of the agricultural community could not be sued for back wages in further legal disputes. Instead, the bill introduced overtime pay for all agricultural employees phased in on a three-year schedule beginning this year. Farmworkers are eligible for time-and-a-half pay after 55 hours of work during a workweek; next year that threshold drops to 48 hours; and in 2024, the overtime threshold drops to 40 hours.
Overtime pay in Oregon will phase in over a five-year period beginning in 2023. During 2023 and 2024 all agricultural employers will be required to pay employees time-and-a-half after 55 hours during the workweek. Oregon, like Washington, defines a workweek as any consecutive seven-day period. For 2025 and 2026, the pay threshold drops down to 48 hours and in 2027 down to 40 hours.
Washington’s impact studies
There are no studies built into Washington state’s overtime law. Many members of the agricultural community theorize there will be negative effects to both farmworkers and employers in the form of shortened shifts, lower wages, or both. However, there is no requirement for the Departments of Employment Security or Labor & Industries to track what is happening during this transitional period in agricultural employment.
Oregon’s impact studies
Oregon’s law says, “No later than November 30, 2026, and every six years thereafter, the Employment Department, in consultation with the Bureau of Labor and Industries, the Department of Revenue, and the State Department of Agriculture, shall submit a report … on the identified economic impacts of the overtime compensation requirements.” Oregon’s lawmakers understood that changing an entire wage structure for an industry state-wide will have consequences that need to be monitored and, potentially, adjusted accordingly.
Washington’s tax credits
Agricultural employers in our state will not receive any tax credits or breaks to help lighten the load of switching from a “straight” wage system to an overtime wage system. All the cost increases will have to be addressed through changing shift structures, hiring fewer employees, paying less per hour, or minimizing the number of overtime hours allowed.
Oregon’s tax credits
During the phase-in period, all agricultural employers have tax credits available to help off-set the cost of overtime pay. Based upon the economic impact study results, those tax credits may be extended long-term.
The tax credits vary by agricultural sector and number of employees. The tax credit is a percentage of overtime wages paid out and varies during each year of the phase-in.
Whether Oregon looked at Washington’s overtime law and found ways to make it better or simply came up with something better on its own is hard to tell. In either case, it is clear that both farmworkers and their employers were in the room and listened to during the crafting and implementation of Oregon’s overtime law.
Our state would do well to take a lesson from our neighbors to the south. When everyone is at the table, there are better results for workers, farmers, and consumers.