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Will Work For Food: Paying minimum wage with farm food and housing

Having realized how difficult apprenticeships and internships are from a legal standpoint, farmers might decide to pay the equivalent of minimum wage in money, food, and housing. That can be a great solution. However, relying on volunteers instead of employees may not be a good solution.

 What’s the situation?

A farmer who understands apprenticeships, internships and the minimum wage finds herself in a bind. She doesn’t have the cash flow to pay minimum wage but she doesn’t meet the standards to host an apprentice or an intern. So she comes up with one last idea: She’ll restructure her internship as a “volunteer opportunity” in exchange for food and housing.

Where does the law come in?

That hypothetical farmer is on the right track (legally speaking) in treating food and housing as wages, but she’s on the wrong track in terms of reclassifying an intern as a volunteer. For the purposes of the federal Fair Labor Standards Act–the “FLSA,” which mandates a minimum wage–food and housing may count towards wages. But even a volunteer might be entitled to the minimum wage if the individual is treated more like an employee.

Details, please:

If a farm intern is already working for low wages in exchange for an educational experience, it might seem like a good idea to avoid labor laws by calling that individual a “volunteer.” After all, that’s more or less what a low-paid intern is! But when we are talking about legal obligations under the FLSA we have to use the law’s definitions, and the FLSA states that “employ” is “to suffer or permit to work.” That’s not quite what I was expecting for a definition! But yes, to permit someone to work at a for-profit business, even without pay, may be to employ that person. If you think about it you can see what lawmakers are trying to prevent: Without this regulation, an exploitative employer could use coercion or deceit to convince a vulnerable person to work for free in order to avoid labor laws. As the Supreme Court affirmed, individuals cannot choose to decline the protections of the FLSA. The second reason for restricting unpaid volunteering at for-profit businesses is it that unpaid workers cause a downward trend in wages for the entire industry. Sure, this law wasn’t written with the ideal, socially responsible farm in mind, but it still applies to them.

A court will look to several factors in making a classification: if a farm volunteer comes regularly and frequently for their shift, if the volunteer is under the control of the farmer while they are there, if he or she was chosen for the position or can be dismissed from the position, and how important the work is to both the business and the worker. Importantly, the court will also look at compensation. The more food or other benefits a volunteer receives, the more likely they are legally an employee. An individual’s status as an employee is usually determined only after the court looks at the facts of the individual case, so it’s hard to make generalizations. The FLSA grants a special exception for volunteers of public agencies or non-profit food banks, but that’s it.

Farmers might be thinking, “I’m caught at every turn. I might have to pay my employees, my apprentices, my interns, and maybe even my volunteers minimum wage?” That might be the way it is. We don’t know exactly because the precise facts haven’t been litigated. But all is not lost. Farms might be cash-poor, but they are usually food-rich. Farms can supplement money wages with food and housing to total minimum wage.

If a farm offers food and housing, the total fair market value of all compensation should equal minimum wage for all the time worked. To determine the fair market value, look around at what similar accommodations go for. If you have a 1-room cabin with indoor plumbing and a small kitchenette, what’s the rent on a similar cabin in a similar location and with the same amenities? If you offer a yurt and there isn’t a yurt for rent your side of the Mississippi, things are a little harder. Let your best judgment be your guide or ask your neighbors what they think.

Finding the fair market value of food can be easy or difficult. If the farm is a CSA and each worker gets a share, the fair market value is whatever the farm charges for a share. Let’s say, for example, the farm makes all their seconds-quality produce available to workers. The problem is that the value of seconds produce is harder to determine, especially if the quality is variable. Further, how much are the employees actually taking?  If the employee doesn’t actually take food it’s going to be harder to convince a judge that the employee received part of their wages in food.   

Considering how troublesome it can be to set fair market value, getting an agreement in writing is a good practice. Agree with your intern on the value of the housing you provide and the amount and quality of the food they will accept. A signed contract isn’t a slam-dunk, but the clarity and honesty that a contract establishes goes a long way towards preventing problems.

After all these posts and long descriptions of internships and apprentices, the moral of the story is this: It’s easier to pay minimum wage than to wedge your program into an exception! Also remember that I’ve been describing federal law, and that many states have regulations that are more rigorous (but never less rigorous) than federal law. And don’t forget that what makes a person an employee for minimum wage purposes may not be the same as for workers compensation and unemployment insurance: We’ll talk about some of those issues next!

What do you think:

  • That wraps up my explanation of internships, apprenticeships and the federal minimum wage. Do you have any concluding thoughts on the role these programs should play on a small to medium socially conscious farm?
  • What are the most, or least, troublesome aspects of these programs?
  • Do you agree that it’s probably easier to pay minimum wage, or do you think I’m forgetting something about cash flow on the small to medium farm? I would love to hear your thoughts.
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