Washington’s Supreme Court disrupted the state’s agricultural industry on November 5, 2020, when it held that the agricultural overtime exemption at RCW 49.46.130(2)(g) violated the state’s constitution as applied to dairy workers. As a result, all dairy employers immediately had to start paying their workers overtime at a rate of 1.5 times their regular hourly rate.
While not explicitly addressed, the Martinez-Cuevas v. DeRuyter Brothers Dairy decision raised significant concerns throughout the agricultural industry regarding (1) whether the decision would be applied to all agricultural employers, not just dairy employers, and (2) whether the decision would be applied retroactively.
Shortly after the Supreme Court’s decision, approximately 30 putative class action claims were filed against dairy employers seeking retroactive application of the decision and three years of unpaid overtime. The potential financial consequences of these claims to many dairy employers were staggering.
Recently, the Washington legislature addressed both unanswered questions from the Martinez-Cuevas decision in ESSB 5172, which is currently on the governor’s desk for signature.
Sunset for Agricultural Overtime Exemption
As of December 31, 2021, the original agricultural overtime exemption will expire. In its place, the legislature built in a phased scale for payments of overtime to agricultural workers. On January 1, 2022, agricultural employees will be entitled to overtime for all hours worked more than 55 per week. As of January 1, 2023, they will be entitled to overtime for all hours worked more than 48 per week. By January 1, 2024, all agricultural employees shall be entitled to receive overtime for all hours worked more than 40 per week.
California has a similar phased approach, although employer size is also considered. The Oregon legislature is considering a bill that would eliminate its agricultural overtime exemption. Further, Congress is considering similar legislation at the federal level.
Agricultural Employers Protected From Retroactive Unpaid Overtime Claims
With one very specific and narrow exception, all agricultural employers, including dairy employers, will not be subject to damages, penalties, attorneys’ fees, costs, or other relief from employees seeking unpaid overtime “due to the employee’s historical exclusion from overtime … as it existed on November 4, 2020.” This protection specifically applies to “all claims, causes of actions, and proceedings commenced on or after November 5, 2020, regardless of when the claim or cause of action arose.”
In other words, dairy employers who were either sued or threatened with putative class action lawsuits for three years of unpaid overtime wages will not be liable for any damages or attorneys’ fees for paying their employees as required by law as it existed until November 4, 2020. This exclusion does not apply to the parties in the Martinez-Cuevas v. DeRuyter Bros. Dairy case.
ESSB 5172 represents a compromise bill that brings much needed certainty to these significant unsettled issues. Unlike dairy employers, the balance of Washington agricultural employers have some time to prepare for the changes to overtime pay requirements. Here are some suggestions:
- Review hours worked and consider whether adjustments need to be made. For example, hire additional workers or invest in technology to increase worker efficiency.
- Have a realistic plan for how to manage overtime and prepare a policy consistent with that plan.
- Train managers and supervisors on overtime issues for consistent and fair implementation.
- Review piece rate or flat rate work calculations to ensure they include pay for all rest breaks, non-productive time, and any overtime that may be required.
- To the extent applicable, review the job duties and functions of any individuals in positions classified as exempt from overtime under the executive, administrative, or professional exemptions.
This does not constitute legal advice and you should consult with an attorney as to how this legislation applies to your business.