California's legislative effort to change how overtime wages paid to agricultural workers are regulated drew in one small segment of the agricultural industry now fighting for its very existence under the sweeping changes.

Sheep producers suffering to stay afloat amidst imported lamb now face having to pay their sheep herders overtime for hours they do not work because of how the employees live and work on the operations, according to Ryan Indart, sheep producer and past president of the California Woolgrowers Association.

When legislators passed AB 1066 in 2017 it created a set of unintended consequences that must now be addressed if the sheep industry is to remain alive in California. Left unchecked, Indart says he and others like him will go out of the sheep producing business because he will be unable to pass along the 50 percent increase in his labor costs.

If that were not enough, Indart said his industry was hit with "a double whammy" this year after COVID-19 restrictions shut down restaurants and significantly curtailed sales of lamb to consumers.

"While we had this wage overtime issue to contend with, we're now dealing with prices that decreased by 50 percent and the lack of consumption," Indart said. "It's just a real death punch for us and will be the final nail in our coffin unless things change."

Indart calls the action to sweep sheep herders into the ag overtime bill an "unintended consequence" of legislative action that ostensibly sought to bring parity to how agricultural employees are paid overtime. Sponsored by the United Farm Workers Union, the legislation transitions overtime payments to an eight-hour workday over 40 hours per week. It started by mandating employers with 26 or more workers to pay overtime based on a 9.5-hour day or 55 hours per week at the beginning of 2019. This year that transitioned to 9 hours per day and 50 hours per week.

For employers with 25 employees or less, that phase-in schedule begins in 2022 at the same 9.5 hours per day and 55 hours per week. It moves to eight hours per day and 40 hours per week by 2025.

Through the California Woolgrowers Association, producers want an administrative ruling that could align California's overtime rules for sheepherders with federal law, according to George Soares, a lobbyist who represents the CWGA.

"We think there's an administrative solution to this," Soares said.

According to Soares, the Obama Administration in 2015 determined that range herders could work 48 hours per week before overtime is accrued, even though these employees are available on a continuous basis. In a letter to Gov. Gavin Newsom, the CWGA wrote that "multiple courts have upheld this interpretation as both reasonable and well-supported by evidence."

Sheep industry leaders are seeking the administrative fix after being assured that the bill's author, Lorena Gonzalez, D-San Diego, does not want legislative changes to her bill and will not allow follow-up legislation through the committee that she chairs. As a result, the sheep industry is now asking for administrative relief, which Soares argues is available through the Industrial Welfare Commission.

"We believe the Industrial Welfare Commission has the authority to do this based on federal case law and we're asking them to use a federal rule and federal court decisions to justify this modification," Soares said. "This is an issue that needs to be resolved."

Targeted Grazing

Sheep and lambs produce two consumable products: wool and meat. Producers like Indart not only are paid for both but can rent or sell rams (male sheep) for breeding. They can also lease the animals out for grazing where landowners want an environmentally friendlier means to control vegetation. Cities and solar farm owners like the alternative to herbicide treatments, Indart says.

Indart leases his sheep herds for targeted grazing on public and private property. It is part of a business model that relies solely on grazing and avoids the feeding of costly supplements that can leave lambs too fat for market.

He is also looking into direct-to-consumer sales to stay in business, though not as easy as it sounds. Selling lamb meat is not merely about marketing – that is relatively easy compared to other aspects of the business – but about how to efficiently move those animals to slaughter, process the meat, store it, then move it to consumers.

"I sold one load of lambs back at the end of February for a good price, before things really started to take hold and the markets shut down," Indart said. "Right now, I have 2,000 to 2,500 lambs I literally can't sell."

He continued: "So, you have to find creative ways to get these animals harvested and sold the best you can."

One such way is to sell fewer animals, but more often, at his local market. Through this he has met new customers that have small processing plants that could bode well as markets open and people begin consuming more lamb products.

Buy Local

Others in agriculture agree that if there could be one positive from the COVID-19 shutdowns, it could be in the desire for consumers to shop locally. Where this may have merely been a cool catch phrase for some in the recent past, Indart believes consumers coming out of the COVID-19 restrictions may continue to actively seek local supplies of food sourced from farmers they know or have a relationship with.

"This helps guys like me because I've got a local product," he said. "The problem is I need to get that product processed, packaged, stored and delivered. There are all kinds of logistical questions that come to play."

This direct-to-consumer approach has long been a dream of Indart's, a third-generation sheep farmer trying to find a profitable and efficient way to sell quality lamb products straight to consumers.

"My dad bought it fair and square from my grandfather at fair market value," he said. "There were no family handouts. I bought it from my father the same way. I am proud to produce sheep and lambs and am honored to not only care for my family through this industry but am humbled to be able to produce food and fiber for this country."