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Albany lawmakers close loophole that left some farms out of overtime tax credit

In World
June 10, 2024

Jun. 9—ALBANY — The state legislature approved a bill last week that closes a loophole in the farm worker overtime tax credit program that helps farms cover extra payroll costs associated with the decreasing farm worker overtime threshold.

On Friday, the final day in the legislative session, the Senate and Assembly both voted to approve a bill written by Assemblymember Donna A. Lupardo, D-Endwell and Sen. Michelle Hinchey, D-Kingston, that clarifies that employees of professional labor contracting organizations that perform agricultural work are eligible for the overtime payroll credit.

Last year, lawmakers put into place a tax credit that farms and agricultural businesses can apply for, meant to cover their overtime costs for all employees who work up to 60 hours a week. That credit came as the state Department of Labor ruled that the threshold when farm workers should start getting paid extra for their work should drop from 60 hours a week to 40, in increments of 4 hours every year. The current overtime threshold is 56 hours a week, and any work done after that must be paid at a rate of at least hourly wage plus 50%.

But not every farm worker was eligible for the tax credit, because of language that did not make it into the law establishing the credit.

Some farms in New York whose owners have multiple farm operations do not directly employ their laborers — instead, the owner can set up a separate payroll or management company that handles the human resources work of those entities. Those entities, despite employing farm workers and using money generated by those farms to pay them, were ineligible for the tax credit. But the bill passed on Friday would make them eligible.

Farm advocates were roundly supportive of the bill. The Northeast Dairy Producers Association released a statement Friday lauding the legislature for passing the fix.

“We look forward to the governor signing this into law to ensure all farms are empowered to continue making business decisions that prioritize their workforce, the next generation of farmers, and their ability to continue feeding families across the state,” the association said. “This action will ensure all farms have access to the farm credit, just as the law intended from the start.”

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