Last month, I participated in a very helpful webinar by Farm Commons discussing the legal aspects of running a community-supported agriculture (CSA) program. It began by discussing how member/shareholder agreements can lay the groundwork for a positive relationship between CSA owners and members. According to Farm Commons, detailed agreements are the key to establishing expectations and responsibilities for both sides. Some examples of recommended elements to include in are the dates of the CSA program, the growing practices used on the farm, the products grown on the farm, and what “shared risk” means and how to handle this risk. Farmers should also review their member/shareholder agreement to make sure it is clear to a CSA newbie, and that the details of your CSA program are incorporated into the purchasing process.
The next topic was worker shares and interns, who work for less than minimum wage or for housing or food instead of wages. Having a worker share or intern program can be an affordable way for farmers to get work done while involving others in food production. However, if minimum wage and workers’ compensation are required for regular employees, they may also be required for worker shares and interns–particularly if the state where the farm is located doesn’t have an ag exception to minimum wage requirements. (Note that this doesn’t apply to interns participating through a school program, since school internships fall under a different set of laws).
The safest route for farmers to take regarding worker shares and interns is to pay the minimum wage and provide workers’ comp if they aren’t sure they meet an exception. Farm Commons did note, however, that food and housing can often count towards wages. Workers’ comp exceptions may vary from state to state, so they should be researched carefully. Putting a work and wage agreement in writing was recommended.
Another important take-away from the webinar concerned insurance and volunteer liability. The goal for farmers is to have happy volunteers who contribute to the farm and don’t get injured. Accidents happen, however, and injuries to volunteers may not be covered, depending on the insurance policy. Farm Commons emphasized two things: First, if volunteers are compensated, then the insurance company may count them as employees rather than volunteers; secondly, farm liability is limited in scope and doesn’t cover everything that the farm business may do. Some solutions include making sure your policy covers your needs and using a volunteer agreement to prevent accidents and dissuade lawsuits. Insurance should cover a farmers’ volunteer activities and, according to Farm Commons, farmers should always use a volunteer agreement.
Legal structures and how to organize a farm business were other key topics. Different structures for businesses include sole proprietorships/partnerships, limited liability companies (LLCs), limited liability partnerships (LLPs), and corporations. The goal for a farm business is to be easy-to-run and able to protect personal assets from business liabilities. Sole proprietorships and partnerships leave personal assets available, whereas LLCs, LLPs, and corporations don’t. Therefore, it may be wiser for farm businesses to avoid a sole proprietorship or partnership, and instead seek to become an LLC, LLP, or corporation. In order to do this, farmers must prepare the required documents and also divide their assets between personal and business accounts.
Watch for other upcoming Farm Commons webinars–I found the information presented to be thorough and incredibly well-researched. If you would like to view an outline of the webinar topics, you can read it in PDF form here. You can also listen to the complete webinar by visiting this link. You will need the most current version of Java to open the recording.