Fresno, California – Agribusiness, perhaps more than any other industry right now has labor challenges. Attracting employees may result in employers offering to house for free their prospects or offer to house them for less than market value. Datatech serves many clients in America that hire employees to pick and work in fields, and we serve many farm labor contractors that work to supply labor to growers in their regions. It’s good to know the payroll impacts in these scenarios as employers seek to attract new workers.
Ag employers providing housing have some payroll considerations under laws and regulations at the federal and state level as it pertains to pay, whether it’s overtime pay, workers’ compensation premiums, or taxes.
The Farm Labor Employers Service, of which, Datatech is a member, is a good source of information on these types of topics.
FELS recently published an article (Sign up for the FELS free e-newsletter) on how providing housing will need to be reported and compensated for. FELS says, “Non-monetary remuneration must be accounted for in the calculating of an employees regular rate of pay. There are exceptions to this when costs for housing are being excluded from wages due to a collective bargaining agreement.” California’s Division of Labor Standards uses the same standards for reporting fringe benefits as the federal U.S. Department of Labor and are considered at the ‘reasonable cost’ to the employer. Consult the FELS article for a more detailed description of this.
Benefits that an employer provides to an employee are taxable and must be included in the employee’s pay, that goes for housing, health insurance, moving expenses and the like. So that means the employee should see the benefit on their W-2 at the end of the year. The exceptions to this, as far as housing goes according to FELS is if, “Housing is furnished on the employer’s business property, housing is furnished for the employer’s business convenience and the housing is provided as a condition of employment.”
So as an Agribusiness seeking to fill your labor requirements, beware of the payroll impacts of providing housing for employees. In this farm labor crunch, employers have to do what they have to do to manage their fields and crops. FELS is a good source for farm employer labor questions.
Datatech serves agribusinesses across America with powerful farm payroll, accounts payable and receivable and cost-accounting software.