Processing payroll for agricultural employees adds a unique layer of complexity to farm management. While the process shares similarities with other industries, several important exceptions can apply. These exceptions, often tied to factors such as wages, employee types, and payment methods, may exempt you or your employees from certain payroll taxes.

In order to make the best decision regarding your payroll processing, it’s important to understand who agriculture employees are. They can include family members who assist on the farm, seasonal or part-time workers, including youth employees, H-2A workers, who are temporary foreign farm laborers, and contractors who are hired to complete specialized tasks. The classification of your workers will impact how you handle taxes, wages, and compliance.

Farmers with hired help are subject to several reporting requirements similar to any other business. These include wage reporting to the IRS using forms such as Form 943 for agricultural employees, employee classification to determine if individuals are contractors or employees for tax purposes and compliance with federal and state wage laws, including minimum wage, when applicable. Additionally, employers can not pay agricultural workers late. The Department of Labor provides protections for these workers since they are generally paid lower wages.

Federal minimum wage applies to farmworkers unless the farm meets an exemption (such as a small farm labor exception based on the enterprise’s size). Overtime pay, however, is generally not required for agricultural employees due to exemptions under the Fair Labor Standards Act (FLSA). There may be some state payroll variation as well, but don’t worry! Our dedicated tax department stays up to date on tax laws and we work with businesses across the United States!