On January 1st, the Oregon agricultural overtime threshold dropped from 55 hours per week to 48 hours per week, as required by 2022 HB4002. Agricultural employees are now entitled to 1.5x pay for hours worked that exceed 48 hours in a week. On January 1st, 2027, the overtime threshold will fall to 40 hours per week. Oregon follows California and Washington in implementing similar ag overtime policy, and those states are now fully phased in to a 40-hour per week threshold. There has been plenty written on this topic in the popular press but there hasn’t been much analysis of the impact of ag overtime on farm profitability or worker pay.
In this blog post, I share analysis that my OSU colleague Jeff Reimer and I recently completed on the impacts of agricultural overtime in Oregon using farm-level payroll data from Oregon dairy, cherry and nursery producers1. We find that agricultural overtime will negatively affect farm profitability and, perhaps surprisingly, will decrease the weekly earnings of some farm workers. This analysis is valuable in large part because it is based on individual records of (anonymous) employee hours and wages that are not usually available to researchers.
How will labor costs change for farms?
Farm businesses face seasonal fluctuations in their labor needs, and these fluctuations differ by commodity group. Using the provided payroll records from 2022 to 2024, we calculate the total number of hours for which each operation would have paid overtime under each of the three overtime thresholds (i.e. 55, 48, and 40 hours) had they been in place. Figure 1 shows the number of overtime hours by week for one of the cherry producers (Panel A), one of the dairy producers (Panel B), and one of the nursery producers (panel C). The seasonal fluctuation in labor demand that is apparent in the figure will be largely similar across operations in the same sector. The figure shows that cherry producers have a large spike in their labor needs during the harvest in June and July, but will have relatively few overtime hours the rest of the year. The dairy and nursery businesses, on the other hand, both have peak seasons (summer for dairy, early spring for nursery) but have employees working more than 40 hours per week in all seasons. Employees at dairy farms in particular tend to have a high average number of hours per week. As a result of these sector-specific patterns, the impact of new agricultural overtime laws will land differently on each farm type.
Figure 1. Overtime Hours by Week Under Different Overtime Thresholds (Jan. 2022 – Nov. 2024)
To estimate the financial cost of ag overtime to farms and the impact to the wages of individual workers, we use each employee’s actual wage rates and hours worked by week from 2022 to 2024. We calculate the gross wages that they would have earned during the period under a no-overtime scenario, as well as each of the three overtime thresholds outlined in Oregon House Bill 4002. Wages under the three overtime thresholds are calculated for all employees in all weeks and then converted to percentage increases relative to the no-overtime baseline wage. For example, an employee working 50 hours in a particular week and earning a base wage of $18 per hour would see a 0% increase in wages at the 55-hour threshold, a 2% increase in wages at the 48-hour threshold, and a 10% increase in wages at the 40-hour threshold.
The estimated percentage increases in labor costs are averaged across farms in each commodity group and are presented in table 1. Of the three agricultural sectors, the dairy employees work the highest number of hours per week over the course of the year and have the highest anticipated overtime costs at each threshold level, with total wages increasing approximately 7% and 12% under the 48 hour and 40-hour thresholds, respectively.
The cherry producers see a smaller increase in labor costs than the dairy farms, but a slightly larger increase than nursery crop producers. On average, the nursery crop producers included in this analysis would see an estimated increase in labor costs of slightly more than 4% under the 40-hour overtime threshold. It is important to note that all farming operations are unique, and differences in crop mix, farm size, and production factors such as weather may result in fluctuations in overtime hours from year to year and from one farm to the next.
Table 1. Estimated percentage increase in labor costs at each overtime threshold, by sector
| Sector | No. of Farms | 55 hours | 48 hours | 40 hours |
| Nursery | 3 | 0.1 | 0.7 | 4.2 |
| Dairy | 5 | 3.6 | 6.8 | 11.9 |
| Cherry | 2 | 1.95 | 3.3 | 6.3 |
The estimated percentage increases in labor expense that we estimate for each overtime threshold should not be confused with the percentage impact to net farm income. Since crop and livestock enterprises vary in terms of labor intensity and net profit margins, an equal percentage increase in labor costs will impact some farms more substantially than others. For example, based on a 2022 Oregon State University crop budget for sweet cherry production, a 10% increase in costs associated with pruning and harvest labor would amount to an additional cost of $380 per acre, representing a 30% reduction in net income to cherry production (Thompson and Seavert, 2022). That is, a small percentage increase in labor costs can have a large impact on the profitability (and financial sustainability) of farm businesses.
How will overtime legislation impact the pay of individual workers?
Increasing earnings for workers is a key goal of agricultural overtime legislation. Although workers that receive overtime pay of 1.5 times their base wage rate are likely to see an increase in their average hourly wage, it does not necessarily follow that the total earnings will be higher for individual workers under the new rules. With agricultural overtime laws in place, farm managers have a strong incentive to organize work schedules in a way that minimizes overtime costs, and this may include reducing the hours per week that an employee works. In fact, data on farm worker employment from the Bureau of Labor Statistics (BLS) show that the average number of hours worked per week per employee has fallen in California relative to the nationwide averages, just as their ag overtime policy phased in (USDA-NASS, 2024; Figure 2).
Figure 2. Average Hours Worked Per Week by Farm Workers
Among the Oregon farms that have provided both 2022 and 2023 payroll data for use in our analysis, some have shifted work schedules to reduce overtime pay. Table 2 shows the impact of the 55-hour overtime threshold on employees of one of the Oregon dairy farms that provided data. This table shows five employees that: 1) averaged more than 55 hours of work per week in 2022, 2) were paid hourly in each year, and 3) were employed by the farm for the full two-year period. Each of these employees worked fewer hours in 2023 and earned less in total wages in 2023 than in 2022, despite the higher average hourly wage earned as a result of overtime pay. This result is consistent with the conclusions of Hill (2023) and Hill and Tanabe (2023), which used the National Agricultural Workers Survey to show that average weekly earnings fell for many employees following implementation of agricultural overtime in California.
Table 2. Average Weekly Wages and Hours Worked for Five Individual Employees in 2022 and 2023
| Employee | 2022 Avg. Weekly Wages (no overtime) | 2023 Avg. Weekly Wages (OT at 55-hours) | Avg. Weekly Hours (2022) | Avg. Weekly Hours (2023) |
| Employee A | $1,192 | $1,110 | 71.2 | 62.5 |
| Employee B | $1,088 | $1,082 | 55.4 | 53.2 |
| Employee C | $1,153 | $1,144 | 59.1 | 55.7 |
| Employee D | $1,096 | $954 | 60.9 | 51.5 |
| Employee E | $1,024 | $889 | 55.8 | 47.7 |
Not all farm managers that contributed data for this analysis reduced the number of overtime hours that their staff worked in 2023 and 2024, though the pressure to minimize costs has led them to take other steps. Some operations have reduced year-end bonuses, or report feeling less pressure to increase the base-wage rates of employees that now earn overtime pay. Some operations have few workers that exceed 55-hour work weeks and have not yet made adjustments, but anticipate the need to make substantial changes to comply with the 48-hour threshold that started on January 1, 2025.
Farms will face strong pressure to minimize labor costs for their own financial survival, while also feeling pressure to provide enough work to retain their skilled, and often long-term employees. Producers of dairy and nursery crops face significant competition from low-cost states without agricultural overtime laws and will be unable to pass on cost increases to consumers. The cherry industry is concentrated in states that also have ag overtime laws, which presents a more level playing field, but the industry as a whole is already struggling with profitability challenges. On the employee side, we should expect some farm workers to seek second jobs, which may be with other farms, or outside of agriculture. In any case, this is likely to be a period of disruption in Oregon agriculture.
- We thank the farm owners that generously shared data with us for this analysis. Funding for this work was provided by Columbia Gorge Fruit Growers, the Oregon Association of Nurseries, the Oregon Dairy Farmers Association, the Oregon Farm Bureau, and the Agricultural Experiment Station of Oregon State University. ↩︎
References:
Hill, A. and T. Tanabe. 2023. Potential Impacts of Overtime Laws for US Crop Workers. Choices, 38(2).
Hill, A. 2023. California’s Overtime Law for Agricultural Workers: What Happened to Worker Hours and Pay? ARE Update. Vol. 27, No. 1.
Thompson, A, and C. Seavert. 2022. Enterprise Budget: Cherries, Sweet, Fresh Market. Oregon State University. AEB 0069.
USDA-NASS. 2024. Farm Labor. Available at: https://usda.library.cornell.edu/concern/ publications/x920fw89s?locale=en