June 1, 2009

Christmas Tree Growers’ Lights Go Dark


Summer 2009

On Friday, May 29, 2009, the U.S. Department of Labor (DOL) pulled the plug on Christmas tree growers when it issued a final rule that suspended the H-2A rules published in December 18, 2008 (New Rules), and that became effective on January 17, 2009. Christmas tree growers had welcomed the December 18, 2008 H-2A rules because they leveled the economic playing field in the production of Christmas trees by adopting the U.S. Fourth Circuit Court of Appeals' definition of Christmas tree production as an agricultural activity for Fair Labor Standard Act (FLSA) purposes. This means that the exception to the minimum wage and overtime compensation rules under the FLSA for Christmas tree production gained under the New Rules will be lost to all such growers unless they live in Maryland, Virginia, West Virginia, or North or South Carolina, the states covered by the Fourth Circuit. Unfortunately, the suspension will become effective on June 29, 2009, and will last at least nine months. But if you are a grower, don't expect the DOL to turn the lights back on anytime soon.

The DOL's action is not entirely unexpected. On March 17, 2009, the DOL issued a Notice of Proposed Suspension of the New Rules for nine months. At that time the DOL said that suspending the New Rules and reissuing the rules in effect on January 16, 2009 (Prior Rules), would allow the DOL and the Obama Administration the opportunity to evaluate whether the New Rules were in the best interest of the United States. Offering a glimmer of hope, the DOL allowed a 10-day comment period on the Notice of Proposed Suspension.

More than 800 comments were received during the comment period, including from organizations representing Christmas tree growers and related agricultural organizations. Most commentors criticized the timing of the suspension, indicating that it would be disruptive to growers who had already planned and calculated their costs on the basis of the New Rules. The DOL dismissed this criticism by stating that the DOL would apply the rules in effect at the time the H-2A application was filed, and that most, if not all, such applications would be filed before the suspension of the New Rules became effective anyway. While this may be true, the real problem is the return to the Prior Rules and the exclusion of Christmas tree production from the definition of agriculture for FLSA purposes.

Those organizations and individuals commenting on the revisions to the FLSA portion of the New Rules noted that the changes were unrelated to the H-2A program and should therefore not be suspended. The DOL acknowledged this point but went on to state that the DOL "believes that suspending these FLSA regulatory changes will provide an opportunity for additional review with an explicit focus on the ramifications of the rule on the implementation of the FLSA." Christmas tree growers should interpret this to mean that DOL Secretary Hilda Solis and the Obama Administration would prefer to allow the economic advantage in the production of Christmas trees to exist in one part of the country rather than allow the entire industry to be excluded from minimum wage and overtime compensation as the New Rules provide in the revisions to the FLSA.

Thus, if you are a Christmas tree grower anywhere other than in Maryland, Virginia, West Virginia, or North or South Carolina, you need to make sure that your wage and hour practices reflect the payment of minimum wage and overtime compensation on and after June 29, 2009. A failure to pay compensation properly will subject employers to stiff penalties, including the payment of attorney fees. Farm labor organizations will be watching these employer practices closely, and you can be sure they will go after employer violators. Consult legal counsel if you have any questions or concerns in your payroll practices.

For more information on this topic, please contact marketing@jordanramis.com or call (888) 598-7070.


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