Overtime and California Farm Workers
March 17, 2020
AB 1066, the Phase-In Overtime for Agricultural Workers Act enacted in 2016, requires large farm employers to pay overtime wages to workers after eight hours a day or 40 hours a week by 2022. Since 1976, farm employers have been required to pay overtime after 10 hours a day or 60 hours a week.
Supporters of AB 1066 argued that farm workers should be treated like other workers, while opponents countered that many farm workers are employed seasonally and want to maximize their hours of work when work is available. Opponents predicted that employers would reduce employee hours of work rather than pay overtime wages.
Farm employers with 26 or more employees must pay overtime wages to workers after nine hours a day or 50 hours a week in 2020, and must pay overtime on an 8/40 basis after January 1, 2022.
There are limited data on hours worked in California agriculture. USDA’s Agricultural Labor Survey and the NAWS suggest that most California farm workers are employed between 43 and 45 hours a week. Three types of workers, livestock (dairy) workers, irrigators, and equipment operators, often work more than 40 hours a week, with some regularly exceeding 60 hours.
A Western Growers Association survey of 150 growers in late 2016, after AB 1066 and SB 3 raising the minimum wage to $15 were approved, found that three fourths planned to increase mechanization and a third said they would reduce production of labor-intensive crops. Growers told the WGA that their employees worked an average 9.6 hours a day and 56 hours a week at $12.40 an hour, suggesting 5.5 day work weeks. Instead of paying overtime wages, most growers said they would reduce hours, so that their workers would be employed 16 fewer hours a week and earn $500 a week instead of $700 a week.
The NAWS interviews with CA crop workers in 2015-16 found that two-thirds were employed more than 40 hours a week, including five percent who were employed more than 60 hours a week. Among those employed more than 40 hours a week, the most common work week was 46 to 50 hours, closely followed by workers employed 55 to 60 hours a week.
Another survey of 100+ mostly male workers who were employed full time pruning table grapes in Kern county and operating equipment in Madera in winter 2020 found that over 80 percent knew that their employers had to pay overtime wages after nine hours a day and 50 hours a week, and over half reported that their hours of work in 2020 had changed because of 9/50 overtime.
For the almost 100 workers who reported working fewer hours in 2020 than in previous years, 40 percent reported spending more time with their families and 40 percent reported spending less money, with less spending on clothing and food the two leading items for cutbacks. Fewer than 15 percent of these workers reported obtaining a second job, and half of the second-job workers were employed five to nine hours a week.
Workers were divided on whether their employers would maintain long work weeks and pay overtime wages: 40 percent said no, 35 percent yes, and 25 percent did not know. When asked about their preferred work weeks, 40 percent wanted overtime pay after eight hours a day and 40 a week, while a quarter preferred more hours of work even with no overtime pay. A third preferred 8/40 work weeks, that is, no extra hours.
Workers were asked who benefitted most from 8/40 overtime, and 40 percent said equipment operators, followed by 20 percent who said packing house workers and a sixth each who said harvest workers and irrigators. Pruners were considered least likely to benefit from 8/40 overtime, perhaps because pruning is done in the winter months and can be stretched out if necessary. Over 80 percent of responding workers had total household incomes of $30,000 or more, suggesting 2,000 hours worked at $15 an hour by one or more workers in the household.
AB 2956 would create a tax credit for farm employers equal to the overtime premium pay that they provide to farm workers. A worker employed 55 hours a week at a base wage of $14 would earn $770 in base wages and $35 in overtime pay in 2020, and under AB 2956 farm employers could claim a tax credit of $35.
What would the cost of a tax credit system for overtime premium pay be after 8/40 overtime is phased in for large employers in 2022? The Census of Agriculture reported $11 billion in labor expenses in 2017 for directly hired and contract labor. If these labor expenses are divided by average hourly earnings, California crop and livestock workers worked about 860 million hours worked in 2017 or 430,000 year-round equivalent jobs.
If five percent of the California hours worked were overtime hours, there would be 43 million overtime hours and, at an average overtime premium of $7 an hour, overtime pay would be $300 million.
Alternatively, in the nonfarm manufacturing sector that is subject to 8/40 overtime, workers average three hours of overtime a week. If overtime hours in California agriculture averaged three a week for half of the year or 26 weeks, workers would work an average 78 hours of overtime a year. If the base wage is $14 and the overtime premium is $7, this means an additional $546 per worker per year and a total $235 million in overtime pay.
Tax credits for overtime pay could encourage farmers to offer more hours of work and to pay overtime wages, which would increase farm worker earnings and spending in farm worker communities. Tax credits for overtime premium pay could minimize the need for some workers whose hours are reduced to find a second job that involves both more work and more commuting.
Overtime for farm workers on the same basis as nonfarm workers may spread from the current five states including CA that require some type of overtime pay for farm workers to all farm workers if the Fairness for Farm Workers Act introduced by Senator Kamala Harris (D-CA) and Representative Raul Grijalva (D-AZ) is approved by Congress.
CA’s minimum wage for employers of 26 or more will be $15 in 2022, when 8/40 overtime is required
|Date||Minimum Wage for Employers with 26 Employees or More||Minimum Wage for Employers with 25 Employees or Less|
|Jan. 1, 2017||$10.50/hour||$10.00/hour|
|Jan. 1, 2018||$11.00/hour||$10.50/hour|
|Jan. 1, 2019||$12.00/hour||$11.00/hour|
|Jan. 1, 2020||$13.00/hour||$12.00/hour|
|Jan. 1, 2021||$14.00/hour||$13.00/hour|
|Jan. 1, 2022||$15.00/hour||$14.00/hour|
|Jan. 1, 2023||$15.00/hour|
|Daily OT (1.5x)||Weekly OT (1.5x)||Double Time (2x)|
|2019*||> 9.5 hrs/day||> 55 hrs/wk||(see 7th day laws)|
|2020*||> 9 hrs/day||> 50 hrs/wk||(see 7th day laws)|
|2021*||> 8.5 hrs/day||> 45 hrs/wk||(see 7th day laws)|
|2022*||> 8 hrs/day||> 40 hrs/wk||> 12 hrs/day|
|* Employers with under 26 employees add three (3) years to the listed dates|
Two-thirds of CA crop workers interviewed by the NAWS in 2015-16 worked more than 40 hours a week