A bill granting agricultural workers overtime passed the Oregon House and Senate and awaits Gov. Kate Brown’s (D) signature.
On March 1, the House passed House Bill (HB) 4002 along party lines (37-23), which phases in overtime starting next year after members of the Joint Committee on Farm Worker Overtime approved the measure with an amendment creating tax credits for producers.
On March 3, the bill passed in the Senate (17-10)
Rep. Andrea Salinas (D-38-Lake Oswego), one of the bill’s sponsors, told the committee that lawmakers had a responsibility to rectify a racist relic from the Jim Crow era for overtime for agricultural workers. Farmworkers were excluded from overtime in the 1938 Fair Labor Standards Act.
Many farmers who testified said they operate on razor-thin margins, and the bill would force them to cut hours for farmworkers, look toward mechanization or go out of business.
Rep. Shelly Boshart Davis (R-15-Albany), whose family owns a farm, said the tax credit phase-in would simply allow farmers time to mechanize. Boshart Davis suggested amendments providing a $50 million worker relief fund to provide direct overtime payments to farmworkers, raising the overtime threshold past 40 hours, or exempting farmworkers during peak harvest season, but her amendments were not adopted.
“We’re in a time of greater uncertainty, and I don’t think that right now is a great time to overhaul a policy related to our food supply,” said Rep. Daniel Bonham (R-59-The Dalles).
Agricultural groups testified they supported a compromise that improved pay and conditions, but lawmakers were unwilling to work with them.
“Farm families have given tours, connected legislators with their employees, opened their books to show how HB 4002 is not economically workable and commissioned a third-party economic analysis supporting those assertions with real data,” said Mary Anne Cooper, vice president of government affairs for the Oregon Farm Bureau (OFB). “We’ve engaged in good faith from day one to today, and we’ve been disregarded throughout.”
Salinas met with a group of farmers and farmworker advocates last year to reach a compromise, but that effort ended in a deadlock.
OFB said in a statement the bill’s passage would mean that Oregon farms would have to compete against states without any overtime requirements for farmworkers. OFB pointed to California, where workers are paid overtime for over 40 hours, resulting in decreased pay due to farmers being forced to cut worker hours. California is one of seven states that currently offers overtime pay to farmworkers.
Kyle Fessler, a greenhouse grower and past president of the Oregon Association of Nurseries, said Democratic lawmakers were unwilling to work with producers about how HB 4002 would affect family farms.
“Farmers have been clear throughout this process that we were not asking for a tax credit since it will be unworkable for many operations, yet Democrats continued to push forward an unworkable tax credit,” said Fessler.
Lesley Tamura, a pear grower in Hood River County, said that a tax credit offered by lawmakers to help offset the increased costs to farmers would do little to help family farms stay afloat.
Tax credits
Producers would fall under one of three tax credit programs depending on the number of employees they have. The programs do not apply to dairy producers.
• For producers with fewer than 25 employees, they would receive the following percentages of excess wages paid by the employer in a calendar year: 90 percent for 2023, 80 percent for 2024 and 2025, and 60 percent for 2026, 2027 and 2028.
• Those with more than 25 but fewer than 50 full-time workers would receive 75 percent for 2023, then drop incrementally to 50 percent during the aforementioned years.
• For farmers with greater than 50 full-time employees, the tax credit starts at 60 percent and then falls to 15 percent during the same time period.
For dairy producers, the tax credits fall into two categories:
• For dairies employing more than 25 full-time employees, the percentage is 75 percent for 2023, 60 percent for 2024 and 2025, and 50 percent for 2026, 2027 and 2028.
• Dairies with fewer than 25 workers would receive a tax credit rate of 100 percent of overtime payments with no limit.
Farmers would need to obtain wage records from labor contractors to benefit from the tax credits. However, labor contractors aren’t legally required to provide that information, so farmers may not be able to convince them to do so, said Boshart Davis.
The total amount allowed for tax credits for overtime wages may not exceed $55 million for all producers for any calendar year. If the Department of Revenue receives applications for the credit exceeding the amount, the department would proportionately reduce the amount of certified credits among all producers applying for the credit.
The overtime rules would be phased in starting at 55 hours per week in 2023 and 2024, 48 hours for 2025 and 2026, and 40 hours after 2027.
A revenue impact analysis of the bill by the Legislative Revenue Office shows a reduction in the general fund due to the tax credit ranging initially from $17 million in the 2023-25 biennium to $92.7 million in the 2027-29 biennium.
Administering the new tax credit would be the responsibility of the Department of Revenue, which anticipates creating a new unit in the Business Division to administer the tax credit certification. According to an analysis, it will cost $588,569 for the 2021-23 biennium and will increase to $2.5 million and employ 12.5 full-time equivalents for the 2023-25 biennium. — Charles Wallace, WLJ editor
