Last week, the Minnesota Court of Appeals affirmed an order by the Minnesota Department of Labor and Industry (DLI) that Daley Farm must pay overtime premium wages to its agricultural employees. The Court ruled that the exemption in the Minnesota Fair Labor Standards Act (MFLSA) for agricultural workers, Minnesota Statutes § 177.23, subd. 7(2) (2010), does not apply to workers who are paid on an hourly basis.

Under the MFLSA, employers must pay minimum wages and overtime compensation to all employees unless the employees are specifically exempt under the law. Workers working more than 48 hours in a workweek must be paid at a premium pay rate of 1-1/2 times their regular rate. The effect is that workers paid on an hourly basis have a right to premium overtime compensation. To be in compliance with the decision, and the law, farm employers should pay the premium overtime compensation to those employees that work over 48 hours in a workweek and are paid on an hourly basis.  

The issue in the case was a matter of statutory interpretation, specifically on the word “salary.” Minnesota Statutes § 177.23, subd. 7(2) provides that an employer does not have to provide premium overtime compensation for certain agricultural workers. The statute excludes from the definition of employee “any individual employed in agriculture on a farming unit or operation who is paid a salary greater than the individual would be paid if the individual worked 48 hours at the state minimum wage plus 17 hours at 1-1/2 times the state minimum wage per week.” Daley Farm argued that its employees meet the statutory exemption because their weekly wages exceed the threshold set by the statute. The DLI argued that agricultural workers must be paid on a salaried – rather than hourly – basis in order to fit within the exemption. 

The Court relied on the rule promulgated by the DLI that states “a salary is not an hourly rate. An employee is paid a salary if the employee, through agreement with an employer, is guaranteed a predetermined wage for each workweek.” Minn. R. 5200.0211. The Court rejected Daley Farm’s argument that the federal FLSA, which exempts agricultural workers without regard to their salaried or hourly status, preempts a narrower MFLSA agricultural exemption and instead held that employers should comply with the law that sets the higher standard. The takeaway is that the MFLSA and the DLI rule requires employers to pay their hourly ag workers premium overtime compensation.