If there’s one thing that U.S. companies and corporations love, it’s little loopholes in the law that increase their bottom lines.
And an oldie but a goodie is doing whatever it takes to keep workers off the company payroll and classifying them as independent contractors. Company employees receive guaranteed wages and benefits like reimbursement of expenses, overtime, vacation, paid time off, pensions, and health insurance for doing the organization’s bidding. Independent contractors … well forget it. They get none of that.
The Biden Administration’s proposed independent contractor rule is an effort to make it tougher for corporations to keep workers off payrolls. At its core, the new rule establishes an “economic realities test” for determining if a worker is an employee or independent contractor. This is based on whether the worker is in any way economically dependent on the employer for work or is in business for themselves.
The economic realities test requires “totality-of-the-circumstances” analysis based primarily on:
- Nature and degree of control by the employer over the worker;
- Extent to which the work performed is integral to the employer’s businesses;
- Investments by the worker and the employer;
- The opportunity for profit or loss depending on managerial skill;
- Degree of permanence of the work relationship;
- Skill and initiative.
As you might imagine, this is huge. If implemented it’s probably not a stretch to say the standard would impact hundreds of thousands of workers from industries A-to-Z. Including agriculture.
Start with the obvious. Hello Big Poultry and your tournament pay system that already is under the federal microscope.
Up to now, Big Poultry has had a sweet deal when it comes to worker relationships. The majority of chicken and turkey farmers in the U.S. are classified as independent contractors. Poultry processing companies contract with chicken producers to raise birds. In these contracts, poultry companies provide the birds and feed and control breeding and medicine decisions. Poultry farmers bear the costs of infrastructure including barns and other housing arrangements.
But the independent contractor rule could, if it overcomes the sure-to-follow legal wrangling, require Big Poultry to reclassify chicken producers as employees.
Recently there have been a few lawsuits seeking that chicken producers be classified as employees. In Roger Parker v. Perdue Farms Inc, et al, U.S. District Court Judge Tilman E. Self, III denied Purdue’s motion to dismiss the case claiming Parker has been misclassified as an independent contractor. That case appears headed for a hearing.
Purdue makes a strong argument that contract chicken producers generally fall under the “agriculture exemption” of the Fair Labors Standards Act. But Self found Parker might have a case because FLSA exemptions are fact specific and Purdue’s arguments are “premature at the motion to dismiss stage.”
And Michael Diaz, Jean-Nichole Diaz and Diaz Family Farms v. Amick Farms, LLC also is seeking to reclassify independent workers as employees by taking on inequities in the tournament pay system:
“The Amick Grower Contract attempts to assert that growers are independent contractors, not employees. The contract states that the grower ‘is not a representative, agent, or employee of Amick Farms, LLC and acts entirely as an independent contractor.’ In reality, however, the growers are not given the independence they are promised. Defendant exerts control over every aspect of their growing business. The reason why Defendant would like to classify growers as independent contractors and not employees is plain: money. Employees, unlike independent contractors, are entitled to prompt payment of certain financial benefits such as the minimum wage and ERISA benefits… Defendant wants to have its cake and eat it, too: have growers that function as controlled employees but pay them as if they are independent contractors.”
If you are a chicken producer who isn’t making the federal minimum wage all this sounds promising. One thing is for certain: Big Poultry no way, no how will EVER of its own volition allow contracted chicken farmers to become company employees. If somehow the independent contractor rule gets over the finish line, expect Tyson, Purdue, Cargill, Pilgrim’s Pride and the rest of the Big Poultry flock to terminate all chicken producer contracts, and either twist or blow up the tournament system to hatch something that will keep workers off the company payroll.
For Big Poultry, the bottom line is the bottom line.
About Dave Dickey
Dickey spent nearly 30 years at University of Illinois at Urbana-Champaign’s NPR member station WILL-AM 580 where he won a dozen Associated Press awards for his reporting. For 13 years, he directed Illinois Public Media’s agriculture programming. His weekly column for Investigate Midwest covers agriculture and related issues including politics, government, environment and labor. His opinions are his own and do not reflect Investigate Midwest. Email him at dave.dickey@investigatemidwest.org
