TN 13 (07-09)

RS 01401.120 Agricultural Wages

A. General policy for SSA Ruling 95-3P

SSA Ruling 95-3P, Transactions Involving Noncash Transfers for Agricultural Labor, changed the way certain transactions involving noncash transfers for agricultural labor are treated by SSA for wage purposes. Prior to the ruling, SSA excluded noncash transfers from wages. Effective August 7, 1995, certain noncash transfers are wages under Section 209(a) of the Act. The noncash remuneration now treated as wages and referred to as in-kind payments, includes lodging, food, clothing, agricultural or horticultural commodities such as livestock, grain, milk products, and other noncash items.

Some employers provide cash or credit for food, clothing, etc., and later deduct the amount from the farmworker's share of the net proceeds of the commodity. In this situation, the farmworker's cash wages for the year are his or her share of the net proceeds before reduction for the amount owed.

References:

1. Beginning 1988

Cash payments are wages if:

  • the employer paid $2,500 or more for agricultural labor in a year; or

  • the employer paid less than $2,500 in a year, but the employee was paid $150 or more.

EXCEPTION: The $2,500 a year test does not apply to certain seasonal agricultural workers. For instructions on Seasonal Agricultural Labor, see RS 01402.025.

2. 1957 through 1987

Cash payments of $150 or more in a calendar year are wages.

Cash payments of less than $150 are wages if the employee worked for the employer for 20 or more days during the year and the cash payment was computed on a time basis.

3. 1955 through 1956

Cash payments of $100 or more in a calendar year by the employer are wages.

4. 1951 through 1954

Cash payments of $50 or more in any calendar quarter of regular employment are wages. Prior to 1951, agricultural labor was excluded from coverage.

B. Policy for principal farm employee

The wage status of cash payments made to a principal employee who hires an additional employee depends on whether the principal employee has the authority to hire on behalf of the employer.

1. Principal employee has authority to hire

The principal employee's wages are the difference of what the employer pays the principal employee and what the principal employee pays the additional employee.

2. Principal employee does not have authority to hire

The worker is considered an employee of the principal employee and employer payments are the principal employee's wages.

NOTE: In both instances, cash wages paid by the principal employee to the worker are wages for the worker under the cash-pay rules in RS 01401.120A.1.- RS 01401.120A.4. (In this section)

C. Policy for determination of in-kind payments

The agreement or understanding (verbal or written) between the farm operator and the employee is a deciding factor in determining whether the payment represents payment-in-kind or cash wages. When payment-in-kind is involved, you need to determine if it is readily convertible to cash and, therefore, considered cash wages.

When a noncash transfer occurs, it is wages when all the following conditions are present:

1. Employer and employee relationship

A bona fide employer/employee relationship must exist.

If no employment relationship exists, there are no wages. To determine whether an employer/employee relationship exists, see RS 02101.020.

2. In-kind payment equivalent to cash

The in-kind payment must be equivalent to cash. Although Section 209(a) (7) (A) of the Act excludes from the definition of wages remuneration paid in any medium other than cash for agricultural labor, if a bona fide transfer of the noncash medium from the employer to the employee has not occurred and the transaction is, in economic reality, equivalent to a payment in cash, the wage exclusion does not apply.

3. Employers’ dominion and control over noncash item

The employer must exercise dominion and control over the noncash item.

In determining whether the transaction involving a noncash medium is, in economic reality, a payment in cash, SSA will consider the extent to which the employer exercises dominion and control over the noncash item. The following are things to consider:

  • Has the employer transferred a readily identifiable portion of an item?

  • Does documentation of the transfer exist?

  • What is the length of time between the receipt of the item by the employee and the sale of the