ALBANY — Language in the New York state budget will close a loophole that has blocked dozens of farms from accessing a state tax credit meant to cover the extra overtime costs caused by the mandated reduction in the farm worker overtime threshold.
Starting two years ago, New York labor officials started a gradual reduction in the farm worker overtime threshold. Under previous state regulations, agricultural workers were paid overtime after they’d worked 60 hours in a week, and they were the only sector of the workforce held to that standard. After a ruling from the state Labor Department’s Farm Laborers Wage Board in 2023, that threshold is coming down gradually – first to 56 hours per week in 2024, with four-hour reductions every other year. By 2032, the overtime threshold will be 40 hours per week, the statewide standard for all other industries.
Farmers worried about the extra costs they’d have to carry, and argued that the move would make New York’s farms less competitive – they said farm workers wouldn’t want to work for fewer hours to avoid overtime costs, and farmers couldn’t afford to pay enough staff to run their operations without overtime. State legislators laid out a tax credit program where farms can get a refund on their taxes for the value of what they pay in overtime each year.
But a loophole in that program left out farms that used payroll management companies rather than handling human resources work in-house – because the workers were being paid not directly by the farm, but by a payroll company that the farm was paying a bill to, they weren’t considered eligible for the tax credit. That model is common in upstate New York, especially among dairy farms.
But language in this year’s state budget, in the bill that lays out revenue and addresses a number of tax credit programs, will fix that loophole by detailing that agriculture workers employed by a farm or by a “qualified professional employer organization” can be counted for the credit. The tax credit will still be paid to the farm the employee works at, rather than the employer organization.
The program also allows for farmers to seek this tax credit in advance, by certifying their overtime costs for the first half of the year.
And it shifts most of the responsibility for the program, from data management and farm certifications to the drafting of guidance and uniform program application documents, to the state Department of Agriculture and Markets.
In a statement, the Northeast Dairy Producers Association lauded the fix, thanking Governor Hochul and the ranking members on the state legislature’s agriculture and labor committees.
“By ensuring the Farm Overtime Tax Credit can be accessed by all of New York’s farms, our state has made clear it’s commitment to supporting New York’s family dairy farms,” they said. “We appreciate the efforts of Governor Hochul and Rankers, all working collaboratively to find a solution to ensure all farms have access to this program.”
The association also thanked the state Department of Agriculture and Markets for taking on responsibility for the program’s continued operation.
“We applaud their dedication to supporting New York farms,” the group said. “This is one of several recent investments in the future of New York’s dairy industry, and we look forward to continuing to work with all our partners to maintain New York’s status as a top-producing dairy state, now and in the future.”
Neither chamber of the legislature has taken up the bill that includes this language. Lawmakers continued to vote on various budget bills through Thursday — while plenty of lawmakers have expressed frustration with this year’s budget process, which has extended more than a month past its statutory deadline and pushed a number of controversial policy issues, each budget bill has passed with a healthy majority in both chambers. Most controversial policy issues had been made public by Thursday, and lawmakers in the state Senate started to vote on the appropriations bills, which establish taxation and monetary distribution, on Thursday afternoon.