Oregon Farmworkers See Smaller Paychecks as Overtime Law Prompts Farms to Cut Hours

The take-home pay packet of many Oregon farmworkers is less annually than before the agricultural overtime law was passed in 2022 because farms reduce working hours to avoid overtime payments.

According to data researched by Oregon State University agricultural economists Tim Delbridge and Jeff Reimer, while increased hourly wages have existed since 2022, they nevertheless led to decreases in annual incomes.

Data Collected from Oregon Dairy, Nursery, and Cherry Farms

The economists collected payroll data from five dairies, three nurseries, and two cherry farms in Oregon dating from 2022 when House Bill 4002 called for farm workers to be paid time-and-a-half for overtime on a five-year timeline.

They analyzed data from five Oregon dairy farm employees who all averaged more than 55 hours a week in 2022. By 2023, however, their average weekly hours had decreased by about six hours, with the workers experiencing an average of $75 less in their weekly pay packets.

Not all data analyzed showed overtime reductions, but some of the research participating farmers said they lowered end-of-year bonuses or felt less pressure to raise the wages of workers earning overtime.

Labor costs for dairies at 55 hours of overtime increased by 3.6%. The economists estimate as overtime moves to the 48-hour threshold, labor costs for dairies will nearly double to 7%.

At 40 hours, the increase in labor costs will be about 12% since the pre-overtime law passed in 2022.

Nurseries are less impacted, with a predicted 4% labor cost increase by the 2027 40-hour threshold. The economists project that cherry growers will have a 3.3% increase this year and a 6.3% increase in 2027.

Overtime Law Could Result in Farm Consolidation

Delbridge said farm consolidation could be an unintended consequence of the overtime law and is more likely to occur at the 40-hour threshold and not the 55 or 48-hour threshold.

He said it is easier for large farms to manage the financial risks associated with the overtime laws and the new agricultural labor housing rules that will go into effect in 2027.

Delbridge explained that large farm operations can avoid paying overtime by employing more workers. Large farming operations already have housing facilities for those extra workers or the capital to invest in a housing project.

The provision of housing, however, would pose a significant expensed for small farms.

Oregon was the third state in the U.S. to pass an agricultural overtime law, following California and Washington.