Fruit growers are challenged every season by weather, pests, and unpredictable input costs along with the need to compete with producers from other countries in our increasingly global marketplace. As challenging as these cultural and marketing pressures are, most growers will tell you this is what agriculture is all about. The constant and growing political pressures on U.S. agricultural employers, however, are not generally considered among the more welcome challenges growers must overcome to successfully maintain operations. The unique pressures agricultural employers face because of your role as employer often pose greater, and more difficult to manage risks to your business than agronomic, biological, and marketing pressures combined.
In 2010, agricultural employers will contend with major changes in the only legal guest-worker program (H-2A), health care reform, continued failure of Congress to positively address immigration reform and AgJOBS legislation, and increased enforcement against employers for hiring undocumented workers. We have also been hearing recently about agricultural employers receiving letters from the Internal Revenue Service, requiring them to reduce the number of exemptions employees claim for income tax withholding purposes.
The H-2A program is badly broken and appears unlikely to be fixed without passage of AgJOBS legislation. If comprehensive immigration reform containing AgJOBS, or a stand-alone AgJOBS bill has not passed by the time you read this article, it is unlikely we will see relief in time for 2011 because Congress will soon all but shut down in preparation for the November elections. Without legislative reform, the only legal guest-worker program available to agricultural employers remains a pawn to politics and regulatory agencies. Although this has been true for years we have never been subjected to the increasingly aggressive auditing of workers’ employment eligibility via I-9 audits, U.S. Immigrations and Customs Enforcement raids, and significant state and local pressures, which have virtually shut down some agricultural employers and frightened away potential employees. It seems unfair, and destructive of American agriculture, to continue increasing enforcement without offering viable legal alternatives, but until Congress passes meaningful reform, agricultural employers will continue to be caught in the middle of this difficult and dangerous political situation.
Agricultural employers are still sorting out the impact of health care legislation. Although we know the major timelines and provisions, it will be months before we see proposed regulations and understand their full costs and impacts. We believe that some, but not all, agricultural employees may be exempted under the seasonal provisions, but there may still be costs to the employer. Because it appears to require everyone to purchase health insurance, or pay a penalty, there is concern about how care will be provided and paid for in the case of those agricultural workers whose documentation is called into question. At the very least, all employers will face added recordkeeping and reporting requirements. The National Council of Agricultural Employers will summarize the requirements and also track and participate in the regulatory processes as they evolve.
Internal Revenue Service
Agricultural employers in the Northeast have been receiving letters from the IRS telling them that employees have filed questionable numbers of exemptions on their W-4 forms. Employers who receive such letters are required to reduce withholding to a single exemption for the named employees and notify the employee within ten days. It is up to the employee to restate the exemptions. Although the employer may not require proof, the employer should carefully explain to employees that they sign the form under penalty of perjury and make careful notes of the process. These letters cause extra expense and effort for agricultural employers and employees and constitute yet another regulatory or enforcement burden taking time away from agricultural operations.
We expect to see I-9 employment eligibility audits continue. In 2009, ICE announced over 600 audits in the spring and 1,000 more in November. Many of those audited were agricultural employers, including fruit growers, dairies, and others. Audits have disrupted work forces, diverted time and effort to compliance, and in the worst cases, ended with fines and other penalties. I-9 audits will continue to disrupt agricultural employers until Congress takes positive action to legalize our existing work force.
Amid the bad news, one 2010 federal action has offered an advantage to some agricultural employers. In March, President Obama signed the Hire Act to encourage employment. Any employer who hires a worker who has been unemployed for 60 days or more can avoid paying the employer’s share of the FICA tax withholding. This is significant, representing over 6 percent of wages. This is available for part-time
and seasonal workers as well. NCAE and others have shared information on this employer benefit with their members.
Managing government issues is unlike managing your own operation in that the only path to success lies in working together, usually through your state and national associations. Because of our low population versus other industries, agriculture is too often overlooked in the legislative and regulatory process. Even though American farmers continue to produce the safest, most abundant, and most economical food in the world, our legislatures and regulators too often overlook our needs unless we work together in Washington, D.C., and state capitals.
Instead of being discouraged or angered by the issues discussed here, resolve to support and participate in your state and national industry and agricultural employer associations to proactively support your needs. Your associations can help avoid bad legislation and regulation, change existing policies, and educate you on compliance and risks to allow you to spend your valuable time and effort continuing to be the most productive food producers in the world.