Family Sized Farmers are Exempt form New Minimum Wage Laws

But the technical definition of ag employment is key to determining whether you must pay minimum wage or overtime.

State and federal minimum wage increases have been making headlines recently. But minimum wages should not affect most Illinois farmers, said Donald Uchtmann, a University of Illinois Extension agricultural law specialist.

"Both the Illinois and federal minimum wage laws contain an exemption for agricultural employment," said Uchtmann. "Because of these exemptions, only some Illinois farmers are required by law to pay minimum wage for agricultural employment. In contrast, none are required by law to pay 'time and a half' overtime for agricultural employment."

However, not all employment on the farm is "agricultural employment,” warned Uchtmann. “Many farmers intending to pay less than minimum wage or intending not to pay overtime should consult an attorney before relying on the agricultural exemption."

Uchtmann's comments came as he reviewed the July 1 increase in Illinois's minimum wage to $7.50 per hour. The minimum wage under federal law also increased in July but remains lower than the state’s minimum wage.

"Both Illinois and federal laws exempt from their minimum wage mandates wages paid to many agricultural employees by family-sized farmers," he said.

When it comes to overtime, however, the agricultural employment exemption is much broader than the exemption from the hourly minimum wage. "Consider a farmer with more than 500 worker days of agricultural employment during one quarter of the preceding calendar year," he said. "The law requires this farmer to pay Illinois's $7.50 per hour minimum wage--too many workers to be exempt--but this farmer is exempt from the 'time and a half' for overtime mandate."

Not all employment "by farmers" or "on the farm" is agricultural employment. The technical definition of agricultural employment is important in determining whether a farmer must pay minimum wage or overtime.

Under Illinois law, "agriculture" means farming in all of its branches, including the cultivation and tillage of the soil, dairying, the production, cultivation, growing and harvesting of any agricultural or horticultural commodity, excluding Christmas trees, the raising of livestock, bees, fur-bearing animals or poultry.

The definition also includes any practice (including forestry or lumbering operations) performed by a farmer or on a farm as an "incident to or in conjunction with" such farming operations, including preparation for market, delivery to storage or to market or to carriers for transportation to market.

"'Agriculture' does not include the processing of ag commodities or any activities subsequent to processing," said Uchtmann. "The phrase 'incident to or in conjunction with' does not include construction by a private contractor of farm buildings on a farm.

"Farmers with more than five or six employees, farmers with farm and non-farm enterprises, farmers involved in the retail sale of their agricultural products, and farmers who employ persons in tasks beyond obvious 'agricultural activities' should seek legal advice about how the laws apply to them."

To read the complete report, "Minimum Wage Increasing in Illinois but Ag Exemption is Unchanged," go to the Law and Taxation section (www.farmdoc.uiuc.edu/legal/index.asp) of U of I Extension's farmdoc Web site.

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