Are You a Farm Labor Contractor? The Answer May Surprise You.
If your workers are performing duties on property not owned by the entity paying them, then the entity with the payroll account is a farm labor contractor.
Prior to state or federal involvement, a market existed within the agriculture industry for those who could gather a crew of workers and bring that crew to various farmers to help with certain tasks – be it harvest, pruning or general labor. The farmer would pay the “crew boss”, and it was the responsibility of the crew boss to then pay the workers. However, this second payment, the one to the workers, didn’t always reach the folks who did the actual work. When the workers complained or brought charges, the crew boss was often gone. Into the wind. After receiving enough complaints of this practice and then being unable to track down the perpetrator, the United States Department of Labor created the Farm Labor Contractor registration program. Washington State later adopted its own set of rules, known as the Washington Farm Labor Contractor Act (the “Act”), modeled after the federal registration program.
The policy behind this registration program is to stop those who do not pay their workers and then can’t be found for prosecution. Under the federal program, if you are an “agricultural employer” and either own or lease land (thus allowing yourself to be found by authorities), you do not need to register as a farm labor contractor. Agricultural employers in Washington held the belief that the Washington registration program had the same exception until the Washington State Supreme Court, on March 3, 2016, issued a decision to the contrary. This case, Saucedo v. John Hancock Life & Health Insurance, has significantly impacted almost every agricultural employer within the state of Washington.
For example, let’s say you own two orchards...
The orchards are next to each other, yet are held in two separate entities: Farm A, LLC and Farm B, LLC. All employees are processed under Farm A, LLC. If you operate under this structure, or any similar structure, then Farm A, LLC is considered a farm labor contractor, and must apply for a license. If your workers are performing their duties on property not owned by the entity that is paying them, the entity with the payroll account is a farm labor contractor and must register with L&I.