Summary of a Recent
Judicial Development in
Labor

Employee Falls Within FLSA
Agricultural Exemption

Eugenio A. Lomba
National AgLaw Center Graduate Assistant

In an action brought by an employee seeking overtime compensation under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201-219, the United States Court of Appeals for the Eleventh Circuit has ruled that the agricultural exemption contained in the FLSA applied to all employees, including the plaintiff, of a corporation that leased land and employees to another corporation that was engaged in the cultivation and sale of plants and trees. Ares v. Manuel Díaz Farms, Inc., 318 F.3d 1054, 1055-58 (11th Cir. 2003). It also ruled that the employee seeking overtime compensation was an "agricultural employee" for purposes of the FLSA agricultural exemption and was therefore not entitled to overtime compensation. Id. at 1055-58.

Adan Ares, plaintiff, was an employee of Diaz Landscaping and Nursery, Inc. ("Diaz Landscaping"), a corporation operating out of the State of Florida. See id. at 1055. Manuel Diaz owned Diaz Landscaping and Diaz Farms, Inc. ("Diaz Farms"), "a Florida corporation engaged in the business of cultivating, harvesting, and selling plants and trees." Id. Diaz Landscaping owned land that was used for agricultural purposes, "all of which [was] leased to Diaz Farms for use in its plant cultivation operations." Id. Diaz and his family lived within the limits of the farm operation and used the house as an office for his business management operations. See id..

Ares claimed that Diaz's business enterprises, Diaz Landscaping and Diaz Farms, "employed 90 employees who worked fifty to sixty hours each week and were not paid overtime wages." Id. He also claimed that "Diaz Landscaping was an independent corporation engaged in leasing land and employees, rather than in agricultural work, and therefore its employees did not fall within the agricultural employee exception to the overtime wage provisions of 29 U.S.C. § 207(a)." Id.

Diaz argued that Diaz Landscaping owned the land, but that all the land was "leased to Diaz Farms for use in its plant cultivation operations," and that Diaz Landscaping "was the employer of record of all employees working at Diaz Farms from 1997 through 1999." Id. Diaz asserted that "Diaz Landscaping was not actively involved in agriculture and had no function or activity other than to lease land and employees to Diaz Farms." Id.

The district court determined that each of Diaz's business enterprises were "so intertwined as to constitute a single agricultural enterprise which is exempt from the requirement to pay overtime wages, and that Ares was employed in agriculture within the meaning of 29 U.S.C. § 213(b)(12)." Id. Ares appealed the district court's decision to the Eleventh Circuit. See id.

The Eleventh Circuit explained that under the FLSA, an employee who is "'engaged in commerce or in the production of goods for commerce,' or 'employed in an enterprise engaged in commerce or in the production of goods for commerce' must be paid for hours worked over forty hours per week at a rate not less than one and one-half times the regular rate at which he is employed.'" Id. (citing 29 U.S.C. § 207(a)(1)). It also explained that "the requirements of section 207 shall not apply to 'any employee employed in agriculture.'" Id. (quoting 29 U.S.C. § 213(b)(12)). The court added that

[A]griculture, within the meaning of the [FLSA], has two distinct branches: "(1) a primary meaning which includes farming in all its branches, such as cultivation and tillage of soil, growing and harvesting of crops, and (2) a secondary meaning which includes other farm practices, but only if they are performed by a farmer or on a farm." The secondary practices must be performed "incidently to or in conjunction with such farming operations." Farming includes horticulture.

Id. (citations omitted).

The court noted that although the Eleventh Circuit had not previously addressed this particular issue, other circuits had done so. See id. In Wirtz v. Jackson & Perkins Co., 312 F.2d 48 (2d Cir.1963), the defendant "operated farms in several states and a storage center in New York, received shipments of products from the farms and prepared them for sale." Id. (citation omitted). Several of these farms were operated as wholly-owned subsidiary corporations. See id. The Second Circuit ruled that because the defendant "'employ[ed] subsidiary corporations whose functions [were] uniquely integrated into the over-all agricultural enterprise,' . . . the agricultural exemption applied equally to the several farms and the work done at the storage center." Id. at 1056-57 (citation omitted). In Wirtz, the court stated that "'[w]e find nothing in the language or history of the Fair Labor Standards Act to suggest that Congress intended the availability of the agricultural exemption to turn upon the technicalities of corporate organization within which farming operations or practices performed incidental thereto were conducted.'" Id. at 1057 (quoting Wirtz, 312 F.3d at 50).

In Dofflemyer v. NLRB, 206 F.2d 813 (9th Cir. 1953), the Ninth Circuit determined that the operations of a grape packing shed and storage plant fell within the FLSA agricultural exemption. See id. In that case, the owners "of both the farm and the packing operation were three partners who were also family members, and the shed and plant packed only the produce from the partners' farm." Id. The Ninth Circuit stated that "these packing operations were carried on 'by farmers and on a farm. They were carried on in conjunction with and incidental to the farming operations.'" Id. (citations omitted).

In the present case, the Eleventh Circuit noted that Diaz owned both Diaz Landscaping and Diaz Farms. See id. It also noted that Diaz lived on the farm, managed the farm from a home office, met with farm clients at his house, and that he "considers the house, farm, and corporations as part of a single farm enterprise." Id. In addition, the court noted that "the sole function of Diaz Landscaping is to lease land and employees to, and thereby support the operations of, Diaz Farms." Id. Finally, the court noted that "Diaz Farms sells only its own products." Id.

It stated that just as in Wirtz, "the separate entities are 'uniquely integrated into the over-all agricultural enterprise.'" Id. (quoting Wirtz, 312 F.2d at 50) It also stated that just as in Dofflemeyer, "'[w]hat we have here is little more than an informal family enterprise. The same [individual] . . . appear[s] as the sole moving character [ ]' in all its operations." Id. (quoting Dofflemyer, 206 F.2d at 814).

The court determined that Diaz's employees, including Ares, were "in a 'real sense' employees of the sole proprietor of the organization by which they were hired." Id. It added that

[I]t is unrealistic to view Diaz Landscaping as an independent entity, separate from Diaz Farms. Rather, these entities are essentially interdependent components of a family business. We are persuaded by the reasoning of the Second Circuit in [Wirtz] . . . that the availability of the agricultural exemption should not "turn upon the technicalities of corporate organization." As Diaz Landscaping and Diaz Farms are integrated components of an agricultural enterprise, we hold that the agricultural exemption of 29 U.S.C. § 213(b)(12) applies to employees of Diaz Landscaping.

Id. (citations omitted).

The court concluded that because Ares conducted his job duties and tasks on a farm and those duties were incidental to primary agriculture, "they fell within the definition of secondary agriculture. Consequently Ares was an agricultural employee within the meaning of the Fair Labor Standards Act, and they were covered by the FLSA and were exempt from the overtime wage provisions under 29 U.S.C. § 213 (b)(12)." Id.

The case was decided on January 17, 2003; this summary was posted April, 2003