Based on the number of workers’ compensation cases that we have recently defended involving claims by farm workers, it is clear that many farm and agribusiness owners still seem to believe that they do not need to obtain workers’ compensation insurance. This may be due to some pretty broad exemptions that used to exist in the law for agricultural operations. That all began to change about 12 years ago when the Nebraska Supreme Court found that a custom feeding operation was not exempt from coverage under the Workers’ Compensation Act^[1].  The Legislature then made a significant amendment to the Act in 2003 that changed the obligations of agricultural employers relating to workers’ compensation^[2].   While some limited agricultural exemptions under the Workers’ Compensation Act still exist, you should understand that if you are a farm or agribusiness owner and you hire employees, you should not assume that you are automatically exempt.

The Nebraska Workers’ Compensation Act still allows for an exemption of the requirement to procure and maintain workers’ compensation insurance for employers who are engaged in an agricultural operation that employs less than ten unrelated employees or if there are more than ten unrelated, full-time employees, the ten or more employees are employed during a calendar year for less than thirteen weeks. 

An “agricultural operation” is defined under Nebraska law as either the cultivation of land for the production of agricultural crops, fruit or other horticultural products or the ownership, keeping, or feeding of animals for the production of livestock or livestock productions.  However, this exemption is not effective unless the employer provides appropriate notice to the unrelated employee.  This notice should be given to an unrelated employee at the time of hiring or at any time more than thirty calendar days prior to the time of injury.  There is specific language that must to be included in the notice.  Additionally, it must be signed by the unrelated employee and retained by the employer.

If this notice is not provided to, and signed by, the employee and he or she is injured on the job, he or she may be bring a workers’ compensation claim.  If the employee prevails and you do not have workers’ compensation insurance, you could be required to pay out of pocket the injured employee’s medical expenses, temporary and permanent disability benefits, and vocational rehabilitation services (services designed to assist the employee in returning to work).  The injured employee can receive workers’ compensation benefits without proving that negligence was the cause of the injury and you will not be able to defend on the basis that the worker’s own negligence was the cause of the accident.  Further, even if the injured employee elects to sue you in a negligence case, you may also lose certain defenses due to lack of workers’ compensation and the required notice.  Personal exposure for these types of claims can amount to hundreds of thousands of dollars if you are dealing with serious injury or death.  As you can see, this is complicated and it can have a serious impact upon your farming operation in the event of an injury.

Most farm liability packages do not automatically include workers’ compensation coverage, so don’t just assume that you are covered just because you’ve renewed the same farm insurance package over the years.  Have a serious discussion with your insurance agent about this issue, and we recommend that you also contact our office to discuss whether your farming operation is exempt and whether it makes sense to simply obtain workers’ compensation insurance, even if otherwise exempt.  Even if you are exempt and do not need to obtain workers’ compensation insurance, we can provide assistance with preparation of the notice to your employees.

Be safe out there during this harvest season!

Nicole Mailahn and Dan Lindstrom