Fair Labor Standards By Wesley B. Tailor

Most likely, you do not pay your greenhouse employees apremium for overtime. Based on your company’s status as an”agricultural” business, you probably believe that you are notrequired to pay them at a premium rate for working over 40 hours per week.While it is true that most greenhouse employees generally are not entitled toovertime, this is not always the case. If, for instance, one of your employeedrivers picks up plants from an outside vendor and those plants undergo nofurther cultivation before they are sold, you may be required to compensatethat employee for overtime. Additionally, if your business is primarily engagedin selling plants and flowers grown by outside parties, you may be required tocompensate your employees for overtime. Even if only a small portion of anemployee’s overtime work consists of performing non-exempted duties, you willneed to compensate this employee for all of the hours worked over 40 at a rateof one and a half times his or her regular rate. Thus, it is important for you,as a greenhouse employer, to be aware of how federal overtime laws apply toyour individual business.

The Fair Labor Standards Act (FLSA) was enacted in 1938 tohelp combat unemployment, improve working conditions and protect the standardof living for low-paid workers. One of the FLSA’s provisions obligatesemployers who require or permit their employees to work more than 40 hours perworkweek to pay a premium for additional hours. However, because of fears that theserequirements would drive industries that could not afford higher labor costsout of business, Congress provided for certain exemptions to FLSA coverage.

One industry that was exempted is the agricultural industry.This means that operators of greenhouses may be exempt from the obligation topay their employees overtime. However, whether you actually are exempt frompaying overtime to particular employees depends on a variety of factors. Thefollowing is a brief discussion of the FLSA’s overtime provisions, theagricultural exemption and what the agricultural exemption means for employersof greenhouse workers.

Provisions Overview

The FLSA requires employers to pay overtime compensation ata rate of one and a half times the employee’s regular hourly rate to anyemployee who works an excess of 40 hours per workweek. This requirement appliesregardless of whether the employee is required to work overtime or does sovoluntarily. Of note is that even if an employer wants to avoid payingovertime, a prohibition on working overtime or a rule that overtime work willnot be paid unless authorized in advance will not necessarily relieve theemployer of all overtime obligations. For instance, if the employer knows orshould know that an employee is continuing to work overtime, even thoughunauthorized, the FLSA still requires overtime to be paid.

The FLSA does not require employers to pay overtime fordaily hours worked in excess of a certain number or for hours worked onweekends or holidays. Instead, all of the overtime provisions revolve aroundthe 40-hour workweek. The workweek does not have to begin on a particular dayor time, but it must be fixed and consist of seven consecutive 24-hour periods.For example, one business’s workweek may be set from 8 a.m. on Wednesday to thefollowing Wednesday at 8 a.m., while another business may set the workweek fromFriday at 6 p.m. to the next Friday at 6 p.m. Additionally, employers cannotoffset one week’s overtime hours against non-overtime hours worked anotherweek. Because each workweek stands alone, it is advisable for employers toensure that employees are fully aware of when the workweek begins and ends andthe effect that the workweek has on overtime calculations, preferably by meansof a written policy.

Failure to comply with the FLSA can be quite costly for abusiness. The FLSA allows an employee or the Secretary of Labor to bring acivil action against employers who have failed to pay overtime in accordancewith the FLSA’s provisions. Employers found to have violated the FLSA may beenjoined from further violations and are also liable for back pay, liquidateddamages equal to the amount of back pay, and attorneys’ fees and costs.Additionally, the FLSA provides for civil penalties of up to $1,000 perviolation. In extreme cases, where the employer has willfully, knowingly andintentionally violated the FLSA, the employer can be assessed criminalpenalties of up to $10,000 and/or imprisonment for up to six months.

Agricultural Exemption

As previously mentioned, Congress exempted certainindustries from FLSA coverage for fear that its requirements would put manyindustries out of business. With respect to agricultural businesses, not onlywas Congress concerned that many agricultural employers would not be able to sustaina workforce if they were required to pay overtime premiums, but it alsobelieved that the higher labor costs would result in higher produce prices.Consequently, the agricultural industry is one of the industries exempt fromthe FLSA’s overtime requirements.

Under the FLSA, there are two categories of practices thatconstitute agriculture: 1) primary activities, which consist of general farmingpractices such as cultivating and tilling soil and growing and harvestingcrops; and 2) secondary activities, which are practices other than farming thatare performed by a farmer or on a farm and are incidental to primaryactivities. Thus, to the extent that greenhouse workers are engaged in eitherprimary or secondary agricultural activities, they are not entitled toovertime.

Greenhouse Workers and the Exemption

The FLSA expressly provides that farming includeshorticulture, so a majority of the work performed in a greenhouse isagricultural and exempt from overtime. Clearly within the exemption, for example,are sowing seeds and growing plants, trees, shrubs, vines and flowers; handlingthese plants from the propagating frames to the field; and cultivating,watering, fertilizing, pruning and bracing the plants as they grow. However,because the activities performed in a greenhouse are determinative of whetherthe agricultural exemption applies to a particular employee, it is important toevaluate each specific activity and its purpose to know whether an employer isrequired to pay overtime to its greenhouse employees. The following are otheraspects of greenhouse operations to consider when determining whether agreenhouse is required to compensate its employees for overtime:

Selling stock.Businesses involved primarily in retail or wholesale distributions of stockgrown by third parties are not within the exemption and thus must pay theiremployees overtime. However, a greenhouse may maintain a shop for selling itsown stock as an incidental part of its business and still fall within theexemption. For instance, work connected with the sale of flower pots and gardentools is secondary agricultural work and within the exemption where thegreenhouse is primarily engaged in selling its own stock.

Packing, storing and warehousing. Greenhouse employees who work in packing orstorage sheds performing such duties as sorting, grading and trimming the stockgrown by their employer and packing it for shipment are engaged in work thatfalls within the agricultural exemption. Therefore, these employees need notreceive overtime pay.

Ancillary employees, such as maintenance and clericalworkers. A greenhouse may employ people toperform tasks other than the actual growing of plants but that are necessary toenable the greenhouse to engage in its agricultural activities, such asclerical help and maintenance. So long as the work is incidental to theagricultural production and is performed at the greenhouse, it is consideredsecondary agriculture and within the exemption. Thus, clerical and maintenanceworkers are not entitled to be paid overtime.

Working with stock not grown by the greenhouse. As previously stated, businesses dealing in stockobtained from independent sources are not engaged in agricultural work. Thereare gray areas, however, that can present problems for some greenhouses. Forexample, greenhouses occasionally obtain plants growing in the wild andsubsequently sell them. So long as the plants are further cultivated in thegreenhouse before sale, the work associated with the plants is consideredincidental to the greenhouse’s farming operations and is still within theexemption.

However, there are other instances when a greenhouse obtainsplants grown by independent contractors that pose more of a risk of falling outsidethe exemption. If a greenhouse buys stock, such as seeds and plugs, from thirdparties and continues to cultivate and otherwise perform agricultural work withrespect to those plants, the work is considered to be within the exemption. Onthe other hand, when a greenhouse buys full-grown plants from an independentcontractor and resells them without performing additional agricultural work onthe plants, it is seen as a wholesaler, rather than a grower, and theseactivities are not exempt from the FLSA.

For example, suppose there is a business located in Georgia– let’s call it GA Greenhouse — that employs a delivery person, Mike Johnson,who delivers plants to Florida. While in Florida, Johnson picks up plants tobring back to GA Greenhouse. Johnson works a total of 60 hours that week(including his trip to Florida), while only one of those hours was spentpacking the Florida plants in his truck. If additional agricultural work, suchas those activities identified above, is performed on the Florida plants, thenGA Greenhouse would not need to pay Johnson for overtime. More importantly, ifthose plants are not further cultivated and are sold in the same condition aswhen they arrived from Florida, then GA Greenhouse would be obligated to payJohnson overtime under the FLSA. In this scenario, GA Greenhouse would have topay Johnson at a rate of one and a half times his regular rate, not only forthe one hour he spent packing the plants into his truck but for all 20 hours ofovertime worked that week.

There is an exception where buying stock from a third partyand selling it without further agricultural work is seen as incidental to thegreenhouse’s agricultural activities and is therefore still exempted work.However, this exception essentially applies only where the stock is bought fromindependent sources for emergency purposes, such as when a greenhouse’s cropfails and there is a production shortfall. In this case, if Johnson picked upthose plants in Florida merely because the GA Greenhouse crop had failed, andthe additional plants were necessary to satisfy GA Greenhouse’s customerrequests and cover production shortfall, then Johnson would not be entitled toovertime pay.

Employees engaged in both exempt and non-exempt work. It isnot uncommon for a greenhouse employee to cultivate and perform agriculturalwork on plants grown on-site and also work in a retail area selling items suchas flower pots and plants received from a third party during the same workweek,thus engaging in both exempt and non-exempt work. The FLSA does not allowemployers to prorate overtime pay for an employee who performs both exempt andnon-exempt work in the same workweek. As a general rule, such an employee willnot be exempt, and the FLSA will require the employer to pay overtime based onall of his or her hours, whether exempt or non-exempt. Thus, in order to avoidpaying overtime, employers of greenhouse workers should make an effort toensure that workers who primarily perform exempt work are in fact limited toonly exempt work. Otherwise, you may find yourself paying overtime to anemployee where only a small portion of the employee’s over 40-hour workweek wasnon-exempt.

What the FLSA Requires of You

Unfamiliarity with the FLSA’s overtime requirements canbecome quite costly for a business. On one hand, if a greenhouse operationturns out not to be non-exempt and fails to comply with the FLSA’s overtimerequirements, that business could become the target of a civil lawsuit or evencriminal sanctions. On the other hand, if a greenhouse operation simply assumesthat it is required to pay its employees overtime, but in actuality, is notcovered by the FLSA, then that business is unnecessarily paying out hard-earnedrevenue. Thus, it is advisable for employers of greenhouse workers to take thetime to determine what the FLSA requires of them and whether they, inparticular, are covered. In most cases, employers of greenhouse workers willdiscover that they are not obligated to pay overtime. However, as illustratedabove, there are always exceptions that should be considered, and it isimportant for employers to be aware of their obligations under the FLSA or riskthe consequences.

Author’s Note: The author would like to thank Lindsay S.Marks and Ashley C. Adams for their invaluable assistance in preparing thisarticle.

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Wesley B. Tailor

Wesley B. Tailor is attorney for Troutman Sanders LLP, Atlanta, Ga. He can be reached by phone at (404) 885-3487 or E-mail at [email protected]

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