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The controversial measure clears a critical Oregon legislative committee on a party-line vote.

COURTESY PHOTO: ANDREA JOHNSON - A bill that would end the Oregon agriculture industry's exemption from higher overtime wages is headed for floor votes in the House and Senate.
A bill that would end Oregon's agricultural overtime exemption will be voted on by the full House and Senate after passing a final legislative committee.

The Joint Committee on Farm Worker Overtime approved House Bill 4002 in a 6-4 party line vote on Thursday, Feb. 24, after updating it with a new multitiered tax credit system for farmers.

"I truly believe it was the best approach we could get," said Rep. Paul Holvey, D-Eugene, the committee's co-chair. "I think we all want the best thing for people."

The bill was "well-vetted" and lawmakers tried to accommodate the concerns of farmers while ensuring "a better and more fair" wage system for farm workers, he said.

Proponents of HB 4002 argued that farm workers shouldn't be unfairly excluded from overtime wages afforded to other employees.

Many decried the agricultural exemption as a racist relic that violated the constitutional guarantee of equal protection under the law.

However, critics countered that farmers can't afford higher labor costs and likely will limit weekly work schedules, harming their businesses as well as employees.

"Are we intending for them to get a second job if they're capped?" asked Rep. Shelly Boshart-Davis, R-Albany. "Working 30 hours for one employer and 30 hours for another employer is less healthy."

Mary Anne Cooper, vice president of the Oregon Farm Bureau, said the 40-hour overtime threshold is "completely unworkable" and will "cause the closure of many family farms."

She said the joint committee's decision shows Democrats were unwilling to seriously consider how the bill will hurt farmers and their employees. Instead, they pressed forward with tax credits the agriculture industry didn't ask for.

"We've been at the table in good faith since day one and have offered workable solutions," Cooper said. "Democrats refused to be part of that conversation."

Under the newest version of the bill, most farmers will fall under three tiers of tax credits intended to compensate them for a portion of the overtime payments:

• Farmers with fewer than 25 workers would receive a tax credit for 90% of overtime costs next year, with the rate incrementally dropping to 60% by the time it expires at the end of 2028.

• Those with fewer than 50 workers but more than 25 would qualify for tax credits that decline from 75% to 50% during that time period.

• Growers with more than 50 workers would get tax credits that begin at 60% and fall to 15% in that time period.

Due to the 24-hour nature of animal care, dairies would be subject to special rules under the amended bill:

• Dairies with fewer than 25 workers would receive a tax credit rate of 100%, of overtime payments with no limit.

• Those with more than 25 workers would qualify for tax credits that begin at 75% and drop to 50% in 2028, their final year.

The overtime thresholds would be phased in under the bill, starting at 55 hours per week in 2023 and incrementally decreasing to 40 hours per week in 2027.

The total amount available for tax credits would be $55 million per year under the newly amended bill, up from $27 million under the previous version.

The state's Employment Department would study the economic impacts of the overtime requirements and periodically report to lawmakers, who would then decide whether to revise the tax credit system.

Farmers would need to obtain wage records from labor contractors to benefit from the tax credits, which troubled some Republican members of the joint committee.

Labor contractors aren't legally required to provide that information, so farmers may not be able to convince them to do so, Boshart-Davis said.

Farmers already are competing for workers and may not be able to find labor contractors willing to do the added record-keeping, she said. "If the labor contractor doesn't provide it, the farmer doesn't have the information to apply for a tax credit."

Holvey said the free market would compel labor contractors to provide those records to farmers, while growers also could choose to hire workers directly instead of using contractors.

During the Feb. 24 hearing, the joint committee rejected another amendment favored by Republican lawmakers.

Under that proposal, the state government would contribute some overtime wages directly to workers, instead of providing tax credits to farmers.

Because the state would pay some overtime wages, farmers would be able to stay in business without limiting the weekly schedules of employees, according to the amendment's proponents.

"This provides resources directly into the hands of our workforce and also protects their jobs," Boshart-Davis said.

Under the proposal, the weekly overtime threshold for farm employers would be set at 48 hours except for a "peak labor period" of 15 weeks per year, during which the threshold would rise to 55 hours.

Farmers would pay time-and-a-half overtime wages beyond those weekly thresholds. Meanwhile, the state government would pay the added overtime amount after 40 hours per week.

In other words, take the example of a worker who's normally paid $20 an hour and who works 60 hours a week during the peak labor period.

The farmer would pay the worker $20 an hour for the first 55 hours, then 5 hours of overtime at the time-and-a-half rate of $30.

Meanwhile, the state government would pay that employee $10 per hour for the 15 hours worked after the 40-hour threshold but before the farmer's 55-hour threshold kicked in.

"I believe this is a unique solution to Oregon," Boshart-Davis said.

However, the Democratic members of the joint committee voted down the amendment after questioning its fairness to other workers and employers, as well as its labor law implications for the state government.

"A lot of laws touch this area," said Sen. Kate Lieber, D-Beaverton. "I'm trying to understand if any of these responsibilities would flow to the state."


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