For many, the idea of dealing with legal issues seems stressful. Rachel Armstrong, executive director of Farm Commons, says educating yourself about farm law reduces risk and can actually bring peace of mind instead.

“You will get better sleep once you have a better understanding of ag law,” she says.

Armstrong presented information about legal resilience for farms as part of the “Growing Stronger: Collaborative Conference on Organic & Sustainable Farming” held earlier this year. She addressed disability insurance, legal liability if employees get sick or injured on the job, unemployment and overtime.

Disability, health insurance and self-employment

Knowing what will happen if you should become disabled, short- or long-term, can reduce risk and worry.

“Many farmers and self-employed people don’t realize that your health insurance might not cover you if the sickness or injury result from self-employment,” Armstrong says. “There can be that exclusion both from spouse’s coverage through an (off-farm) employer or a policy bought on the open market.”

She encourages everyone to read the fine print in their health insurance policy to find out if their expenses will be covered if the medical treatment is related to self-employment. If it is not covered, it is important to find health insurance and or a disability policy that will. Most insurance agents and brokers should be able to walk you through the process.

“When searching for short- and long-term disability, you need to ask a lot of specific questions,” Armstrong says. What is the waiting/exclusion period? What is the benefit (usually 60% of income)? What paperwork is required to prove wages/income and to prove disability?

A special consideration for farmers is to know how you will prove wages/income. If they use the net income on Schedule F and you show a loss, you likely will not receive payment. “Make sure the agent or broker gives you [a] policy that will work for you,” Armstrong says.

Each farm operator needs to decide how much money they need to survive and if the 60% of wages usually given by disability insurance will be sufficient. Armstrong says to consider your risk of exposure to sickness and injury, and if there is anyone else who can do your job.

Workers comp may be better option

For many folks, the cost of a disability policy is not going to be worth the benefits. “It’s often just not robust enough. For some, workers comp is a better option,” she says.

People who are self-employed can get workers compensation insurance; it’s not just for employees. “You can also elect coverage for yourself in most states as the owner of your business,” says Armstrong.

Workers comp will not cover injuries that are not related to work but prevent you from doing your job. When the injury or illness is related to your self-employment, it generally covers lost wages, medical expenses, mileage to doctor visits and provides payment for a disability. Armstrong says this also will not work for everyone, and each farm operator needs to determine if the benefit outweighs the costs of coverage.

Keeping employees safe is good risk management. This is not a new idea, but Armstrong says there are some new solutions.

Laws vary from state to state if workers compensation insurance is required for farm employees. Even if it’s not required, she says it might be a good idea to do it anyway, as employees who have workers comp cannot sue the farm for injuries or illness suffered as a result of the job. It can also help with their bills and lost income.

She says to reach out to insurance agents in your area to get a price quote for workers compensation insurance, same as you would for disability insurance, and know that laws do vary from state to state.

Without workers compensation coverage, farm operators are potentially legally liable if employees get injured or sick, especially if it’s due to the employer’s negligence. She used the example of dealing with COVID-19 and said to use common sense steps for prevention, such as screening employees for illness and making personal protective equipment available and encouraging its use. She recommends consulting the Centers for Disease Control and Prevention (CDC) checklist for agricultural risk assessment and control planning. If basic steps such as providing masks and having hand sanitizer are not done and employees can trace the illness back to working at your operation, you might be legally liable.

Armstrong says although employers are legally allowed in most locations to require employees to be vaccinated (with some exceptions such as religion), a middle ground approach might be better. “Consider a time-off incentive if they get the vaccine, and offer educational materials about safety,” she says. “If you put some time and effort into encouraging vaccination, it minimizes your risk” for both employees missing work and your liability.

Unemployment insurance

She also addressed unemployment insurance. Under federal rules, farms don’t need to pay into unemployment insurance unless you have more than $20,000 employee wages in any calendar quarter of the current or previous year, or if you have 10 or more employees. “Some states have stricter requirements, so be sure to check for your area,” she says.

It also important to know the laws concerning overtime for both salary and hourly employees. “Salary can negate requirements for paying overtime but is a regulated area,” Armstrong says. “The (salaried) position needs to meet certain salary threshold, and it needs to be a management-style position.” (A management position must include making decisions and/or managing other employees, for example.)

The minimum salary threshold is set by the U.S. Department of Labor’s Fair Labor Standards Act and is currently $913 per week or $47,476 per year. If you are unsure if job duties are managerial and qualify as a salary position, consult your state’s department of labor.

If you have employees driving your vehicles (other than tractors), you need to check with your auto insurance that they are covered.

Armstrong says taking care of all of this may seem daunting, but figure out what are the highest risks on your operation and start there.

Rachel Armstrong is the founder and executive director of Farm Commons, a 501(c)(3) charitable organization dedicated to understanding farm business law as it is now, and how to effectively use the tools it offers, shaping the evolution of farm business law to achieve their shared goals, and work effectively with attorneys and other professionals to create long-term legal resilience.