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Handling OT: How Oregon nursery, Washington seed potato farm respond to overtime laws

Handling OT: How Oregon nursery, Washington seed potato farm respond to overtime laws

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Capital Press

By Berit Thorson and Don Jenkins

August 24, 2023

CANBY, Ore. — Amanda Staehely worries about making Oregon’s new overtime law work at her nursery.

She plans to hire more help, but also cut the hours of the nine workers she has now. “I hate doing that,” she said. “We have employees that have been here for a really long time and I would consider friends of ours.

“But at the end of the day,” Staehely said, “it won’t pencil out for us to be paying time-and-a-half.”

In Whatcom County, Wash., seed potato farmer Greg Ebe is already making similar changes. Washington began phasing in overtime in 2022. At first, farmworkers were paid time-and-a-half after 55 hours in a week. “That was workable,” Ebe said.

The threshold dropped to 48 hours this year. “We’re more up against it now,” he said.

The northwest Washington farm planted fewer acres, abandoned less-profitable varieties, cut hours for some workers, paid overtime to others and hired more people to avoid paying more overtime.

On Thursday afternoons, an office worker checks how many hours each employee has worked that week.

“We’re paying the overtime in some cases, but in some cases we’re holding people to 48 hours,” Ebe said. “We’ve lost a couple of people over holding their hours back.”

Staehely owns Columbia Nursery with her husband, Wayne, and has run it since 2019. She expects to face the same choices as Ebe as Oregon phases in its overtime law.

Big adjustment

The nursery and the seed potato farm are just two of the thousands of Northwest agricultural employers that will have to adjust to paying overtime as new state laws phase in.

In Oregon, the threshold is 55 hours this year and next. Then it will be 48 hours the following two years until it settles at 40 hours in 2027.

Washington’s threshold will be at 40 hours next year, edging out California as the first state to adopt the standard for all farmworkers.

California farms with 25 or fewer employees will pay the 50% premium for more than 40 hours of work beginning in 2025. On larger California farms, the 40-hour threshold went into effect in 2022.

Oregon State University economics professor Tim Delbridge said it’s noble to keep labor from being exploited, but worries about the consequences of overtime for employers and employees.

Delbridge said he expects some workers will earn more, but others will make less.

“The (employees) that really want the 60 hours of work are going to end up seeing smaller paychecks because they’re now working 40 hours at the same wage,” Delbridge said.

“It’s challenging for employers,” he said. “It reduces their flexibility. I think on the whole, there ends up being a reduction in average hours worked and probably an increase in average pay because some people are going to get the overtime pay.

“I think this is unambiguously worse for employers, but there will be some employees that are better off,” Delbridge said.

Farms will figure it out because they have to, he said. “The world is still turning in California.”

Oregon farms can deduct labor costs from their state income taxes, up to 90% for this year for small farms. The tax deductions will decline over time.

Some will mechanize ...

Workers are the farm’s biggest expense and biggest asset, Ebe said. “We highly value our people. That sounds like a cliche and very corporate, but we operate as a team and we value their skills.”

In the long run, however, Ebe envisions a farm with fewer workers.

The farm’s new $900,000 harvesters reap four rows at 3 mph, compared to the old harvesters, which dug up two rows of potatoes at 2 mph.

A $600,000 automated sorter distinguishes potatoes from dirt clods and does it faster than human eyeballs.

rrigation crews are getting overtime now, but there will be fewer such jobs as remote-controlled drip irrigation lines replace the reels.

“I think (overtime) will accelerate our conversion to mechanization,” Ebe said. “We want faster with fewer people. That’s the goal.”

... But others can’t

However, Staehely said mechanization won’t work at her nursery.

Nurseries have many kinds of plants, which require different planting, pruning and harvesting methods. Automated equipment may not be capable of the many techniques.

Furthermore, she simply can’t afford to mechanize. “That would be years and years of expenditures, and it’s something that doesn’t fit our nursery specifically because we’re too small,” she said. “So I get priced out of even the solution.”

Amendments sought

Oregon Association of Nurseries CEO Jeff Stone said he wants legislators to amend the overtime law to raise the threshold during peak seasons, arguing agriculture is unlike other industries.

“You’re talking about live plants. Cherry growers are going gangbusters for six weeks, so they need everybody for 12 hours a day,” Stone said.

Growers could hire more workers to hold down overtime, but people aren’t lining up for agricultural jobs, he said. “You can’t just add employees because there is a critical shortage of agricultural workers.”

Washington state Republicans this past session proposed setting the overtime threshold at 50 hours for 12 weeks and leaving it at 40 hours the rest of the year. Each farm could choose the 12 weeks.

The bill never moved in the Democratic-controlled House or Senate, though it received a courtesy hearing in the Senate. Some workers testified they liked the law, but others said they expected to make less money.

Corinna Spencer-Scheurich, executive director of the Northwest Workers’ Justice Project, said a seasonal exemption from paying overtime would weaken the law too much.

Farms likely will struggle as the law takes effect, but they will adjust, she said.

“If a business model relies on workers not having the same wage and hour and health and safety protections as other industries, that doesn’t seem like a viable business model,” Spencer-Scheurich said.

“At the end of the day, Oregon has done the right thing in terms of equity,” she said. “They’ve done the right thing in terms of health and safety. They’ve done the right thing to encourage people to have time off to engage in their family and civic duties.”

Supreme Court ruling

If Washington farmworkers work fewer hours, it will be the outcome sought by the state’s Supreme Court, which ruled 5-4 in 2020 that dairy workers were entitled to time-and-a-half after 40 hours. The ruling led to legislation granting overtime to all farmworkers.

The controlling opinion, written by Justice Barbara Madsen, stated that working at a dairy was “extremely dangerous” and that “overtime results in (a) 61 percent higher injury rate.”

“One would argue,” Madsen said during oral arguments, that the overtime law was meant to discourage employers from requiring long hours, “not to give workers more money in their pockets.”

The overtime law also applies to seasonal foreign farmworkers. They face reduced work hours during their limited stays in the U.S., said Enrique Gastelum, CEO of WAFLA, a farm labor recruiter in Oregon and Washington.

He said it’s frustrating when he hears people say that agriculture should be able to pay overtime like other industries. Unlike other industries, farmers can’t pass along higher labor costs, he said. “Why can’t they understand the true nature of our industry?”

Harvest ‘sprint’

Ebe’s seed potato farm, Ebe Farms LLC, has about 30 year-round employees. The workforce doubles when seed potatoes are harvested.

Unlike for some other farms, seasonal workers are available. By the time seed potatoes are harvested, the region’s berries have been picked and people are looking for work.

During the harvest, the farm will hire more truck drivers and workers to sort potatoes, maybe six to eight, to hold down hours for about 20 other workers, Ebe said.

Whatcom County has a relatively short growing season. Planting, growing and harvesting are a “sprint,” Ebe said. If lawmakers acknowledge the seasonal nature of farm work, it would be helpful, he said.

Busy winter

Nurseries are busiest in the winter, getting ready to fill spring orders. It’s also when business accounts are low. When checks start arriving in June, Staehely pays bonuses for the winter work.

“They should be paid for their time,” she said. “Heck, yeah, that is absolutely an important thing, but we do it in different ways.”

Staehely said she and her family are already working to cut down costs. Sometimes she and her husband put the kids to bed and take inventory so they don’t have to pay someone to do the time-consuming, low-skill task.

“I feel like the state’s pushing people to move to corporate farms,” Staehely said. “Things are getting so much harder and so much more expensive to run any sort of business and we’ve been hit a lot recently.”

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