Summary of a Recent
Judicial Development in
Labor

FLSA Overtime Exemption for Agricultural Employees

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In Tullous v. Tex. Aquaculture Processing Co. LLC, 579 F. Supp. 2d 811 (S.D. Tex. 2008), the United States District Court for the Southern District of Texas denied two defendants' motions for summary judgment because there were disputed issues of fact regarding whether one defendant was exempt as an agricultural employer from the overtime provision of the Fair Labor Standards Act, and whether the other was a "joint employer" under the Act.

Background

Texas Aquaculture, an agricultural cooperative, retained ProSource, a staff leasing agency, to lease employees to work at its fish processing plant. Id. at 814. ProSource performed administrative functions such as payroll, workers' compensation insurance, and maintaining employment records, but claimed to have little involvement with the day-to-day operations of the plant. Id. In its staff leasing agreement, ProSource assumed the "obligation" to "coordinate" with Texas Aquaculture in "the hiring, firing, disciplining, and reassignment" of the employees, and reserved "the right of direction and control over the adoption of employment and safety policies." Id. Employees were required to abide by ProSource's employment policies and procedures, and employees fired by Texas Aquaculture remained employed by ProSource and were reassigned. Id. The agreement referred to Texas Aquaculture and ProSource as "co-employers." Id. One of the employees brought this action for violation of the Fair Labor Standards Act (FLSA) because hourly employees were not paid time and a half for overtime. Id. at 815. ProSource and Aquaculture disagreed on which entity was responsible for FLSA compliance, and both defendants moved for summary judgment on different grounds. Id.

Arguments

Texas Aquaculture argued that, because the fish processing plant was run by farmers for agricultural purposes, it was exempt from the FLSA's overtime requirements. Id.

ProSource argued that it was not an "employer" for the purposes of the FLSA. Id.

Analysis and Holdings

Agricultural exemption
An exemption from the FLSA's overtime provision for "any employee employed in agriculture" is provided by 29 U.S.C. § 213(b)(12). Id. at 817. Exempt agricultural practices fall into two categories: primary agriculture, which includes specific farming operations, and secondary agriculture, which is broader and includes any activities, including non-farming activities, being conducted by farmers or on a farm. Id. at 818. The court noted that employees of a farmers' cooperative association are not generally engaged in any practices "by a farmer" unless the association itself is engaged "in actual farming operations to an extent and under circumstances sufficient to qualify as a 'farmer.'" Id. The court found that Texas Aquaculture appeared to be more like a separate entity, independent from the catfish farmers who owned it, and thus would not come within the secondary meaning of agriculture because its work was not performed "by a farmer or on a farm," and stated that at the very least, genuine issues of material fact precluded summary judgment on the issue. Id. at 819.

"Employer" status
The court explained that under the FLSA, an "employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee, which has been broadly interpreted and may include multiple joint employers depending on the nature of the relationship between the employers. Id. at 820. To determine joint employer status, courts examine the "economic realities" of that relationship and look at whether the alleged employer: "(1) had the power to hire and fire employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records." Id. After considering the relevant factors, the court found that genuine issues of material fact precluded a summary judgment determination that ProSource was not a joint employer with Texas Aquaculture, because some aspects, such as who was responsible for determining whether employees received overtime, were disputed. Id.

The case was decided on September 30, 2008.