Recent Blog Posts

By: Peggy Kirk Hall, Tuesday, November 25th, 2014

OSU’s Agricultural & Resource Law Program is pleased to announce its inaugural webinar, Big Data and UAVs:  Legal Issues for Agriculture, scheduled for Friday, December 12 at 1 pm.  This is the first webinar in the program’s new “Ohio Food, Agriculture and Environmental Law Webinar Series,” offering monthly legal webinars on issues of importance to Ohio agriculture. 

The webinar will feature John Dillard, an Associate Attorney with the law firm of Olsson Frank Weeda Terman Matz, PC in Washington, DC and a leading expert on legal issues with technology and agriculture.  With a background in agriculture and experience advising clients in the food and agricultural industries, Dillard will present a practical analysis of the legal issues raised by agriculture’s increasing use of large data sources and UAVs.   Dillard authors a blog, Ag in the Courtroom, on AgWeb.com and Legal Ease, a column in Farm Journal magazine.  He has appeared on national television and radio agricultural programs to discuss legal issues that affect agriculture.

Future webinars in the Ohio Food, Agriculture and Environmental Law Webinar Series will feature other national and state experts discussing legal issues of importance to Ohio agriculture.  Topics in the series thus far will include:

The 2014 Farm Bill: Guiding a Client through the New Law with Bill Bridgforth of Ramsay, Bridgforth, Robinson & Raley LLP, Pine Bluff, Arkansas on Friday, January 9, 2015 at 1 pm. 

Managing Pollutant Discharge Risk on Farms with Chris Walker and Jack Van Kley of Van Kley & Walker LLP, Dayton/Columbus, Ohio and Tom Mehnke of Mehnke Consulting LLC, Greenville, Ohio on Thursday, February 12, 2015 at 1 pm (tentative).

Introduction to Food Law:  What You Need to Know to Build a Food Law Practice with Jason Foscolo of Foscolo & Handel PLLC, Sag Harbor, New York on Thursday, March 12, 2015 at 1 pm.

Nursing Home Costs & Medicaid:  The One-Two Punch to the Family Farm with Craig Vandervoort of Sitterly & Vandervoort Ltd, Lancaster, Ohio on Friday, April 10, 2015 at 1 pm.

Rights and Remedies for Protecting Your Water Supply in Ohio with Joe Reidy of Frost Brown Todd LLC, Columbus, Ohio and Peggy Kirk Hall of OSU’s Agricultural & Resource Law Program on Thursday, May 14, 2015 (tentative).

For information on how to access the complimentary webinars and archived recordings, visit the “webinars” tab on http://aglaw.osu.edu.  

Posted In: Legal Education
Tags: big data, UAVs, drones, webinars
Comments: 0
By: Caty Daniels, Tuesday, November 18th, 2014

By: Larry Gearhardt, OSU Extension Asst. Professor, Taxation

For the past several years, Ohio’s farmers have had the enviable task of planning for higher incomes because of historically high crop prices. Year-end tax planning became increasingly important with the passage of the 2012 Fiscal Cliff legislation (passed on January 1, 2013, but made retroactive to 2012). This legislation contained several provisions that penalized high income earners, such as a new 39.6% income tax rate, a 20% tax on capital gains for taxpayers in the 39.6% range, and a new 3.8% net investment income tax and a 0.9% Medicare tax.

Most farmers normally do not have income that exceeds the thresholds that trigger these higher taxes. However, the higher crop prices over the past several years have pushed more farmers into the category where year-end tax planning was critical. Perhaps 2014 will be different because of the plummeting crop prices, but on the flip side, farmers have lost two very important tax planning tools, at least for today. Furthermore, as is often the case, when one sector of agriculture loses, another sector gains. Livestock and poultry farmers are still receiving high prices for their products.

The most important step in year-end tax planning is to establish a date to determine income and expenses for the year. I suggest that around December 1 of this year, the farmer should determine, as close as possible, what his/her income and expenses are for the year. This leaves ample time for the farmer to take action to reduce income taxes, if possible. As soon as the ball drops on New Years Eve, the farmer has lost his opportunity to take action to reduce his taxes in 2014.

There were 55 tax benefits, credits, and exclusions that expired at the end of 2013 and have not been re-authorized. The two most critical tax benefits for farmers that either expired, or were reduced, were bonus depreciation and the section 179 expense deduction. Until the end of 2013, section 179 of the Internal Revenue Code allowed a farmer to deduct up to $500,000 of the cost of capital improvements as an expense in the year of purchase. This amount has been reduced to $25,000 in 2014. In addition to the $500,000 expense deduction, a farmer could take a 50% bonus depreciation in the year of purchase of a capital asset. There is no bonus depreciation for 2014.

There is keen interest in whether or not the section 179 expense deduction will be increased and the bonus depreciation returned. The word out of Washington is that nothing will happen until after the November election. Whether or not any changes happen between the election and the end of the year is anyone’s guess. However, historically, Congress has made the section 179 expense deduction and the bonus depreciation retroactive to the prior year if no action is taken. If a farmer bets on section 179 being increased and bonus depreciation returning, he should take action prior to the end of the year. If he waits until 2015 to purchase that new tractor, it is too late to adjust 2014 taxes.

Besides betting on the section 179 expense deduction and bonus depreciation, another useful tax planning tool is income averaging. Farmers enjoy the ability to look back at the prior three years and average their income over that period of time in the event that the farmer experiences a high income year. This may have limited benefit in light of the high crop prices over the last several years.

The most basic year-end tax planning is timing income and expenses, if possible, so that the income and expenses occur in the year that is most beneficial to the farmer. If 2014 is a high income year, the farmer should delay the receipt of revenue until 2015 and pay for 2015 expenses this year. This becomes especially important under the current circumstances where it appears as if 2015 income will be lower than previous years.

Even though the crop prices are plummeting, those farmers in the livestock and poultry sectors are still enjoying high profit margins. Until we know the future of the section 179 expense deduction and bonus depreciation, the options of livestock and poultry farmers are somewhat limited. The timing of income and expenses becomes more critical with more emphasis placed on deferring income and accelerating expenses. Even though it is not as inviting as in prior years, making capital expenditures and depreciating the cost by MACRS depreciation is still a useful tool.

Posted In: Tax
Tags: Tax Planning, 2014 Tax Planning Considerations
Comments: 0
By: Caty Daniels, Friday, November 14th, 2014

Ohio State University Extension’s Agricultural and Resource Law Program is excited to announce a new partnership with a group of universities creating a new Agricultural and Food Law Consortium.  The Consortium is a national, multi-institutional collaboration designed to enhance and expand the development and delivery of authoritative, timely, and objective agricultural and food law research and information.

The Consortium will host its first webinar on Wednesday, November 19, from 2:30-3:30 (EST). The webinar, titled Mandatory GMO Labeling Laws: Overview and Status of Current Legal Issues, will focus on GMO labeling laws, proposals, and initiatives. Details about the webinar, including sign-on instructions, are available on the National Agricultural Law Center website at http://nationalaglawcenter.org/consortium/gmolabelingwebinar/. The program presenter will be Consortium member, Ross Pifer, Director of the Agricultural Law Resource and Reference Center at Penn State Law. The program is designed for a broad audience that includes non-attorneys.

The Consortium is being led by the National Agricultural Law Center, which is a unit of the University of Arkansas System Division of Agriculture in Fayetteville, Arkansas. The OSUE Agricultural and Resource Law Program’s role in the consortium will be to conduct legal research, write articles, and produce outreach material. The consortium will allow us to collaborate on national and regional issues using our strengths to create bigger impact and will allow us to bring our expertise and Ohio’s issues to a national audience. Other universities making up the consortium include the National Sea Grant Law Center at the University of Mississippi School of Law and the Agricultural Law Resource and Reference Center at Penn State Dickinson School of Law.

Right now, an online survey is being conducted asking for input on agriculture and legal issues individuals are dealing with. This survey will help define the Consortium’s long-term research and information agenda. Everyone is asked to participate in the short, anonymous survey. The survey can be found at: http://nationalaglawcenter.org/consortium/.

By: Peggy Kirk Hall, Tuesday, September 30th, 2014

Although long considered a natural fertilizer that can benefit our soils, manure has a history of increased regulation in recent years based on potential impacts to water quality.   The following explains how state and federal law regulates the production, storage and application of animal manure in Ohio.  

Livestock Environmental Permitting Program

The Ohio Department of Agriculture’s Division of Livestock Environmental Permitting (ODA) administers a permit program for Ohio’s largest confined livestock operations, or Concentrated Animal Feeding Facilities (CAFFs).  Ohio Revised Code Chapter 903 and Ohio Administrative Code 901:10 contain the program’s legal provisions.

An owner must obtain a “permit to install” and a “permit to operate” from ODA before operating a CAFF.  The permit requirement applies to a CAFF that houses any of the following, at a minimum:

  • 700 mature dairy cows
  • 2,500 hogs over 55 pounds
  • 10,000 baby pigs under 55 pounds
  • 82,000 laying hens
  • 125,000 pullets or broilers
  • 1,000 head of beef animals of any size
  • 500 horses
  • 10,000 sheep or lambs
  • 55,000 turkeys

Related to manure, obtaining the “permit to install” requires a CAFF owner to submit information on:

  • Maps indicating CAFF boundaries, manure storage facility dimensions, location and siting distances and locations of subsurface drains within 100 feet of manure storage.
  • Geological study results with information on soil; groundwater sampling and analysis; hydrology; geology and topography of land used for manure storage.
  • Listing of the type, amount and nutrient content of manure from the facility.

For the permit to operate, the CAFF must submit a Manure Management Plan that outlines the Best Management Practices the CAFF will implement to minimize water impacts from the storage and use of manure.  The Manure Management Plan must include:

  • A nutrient budget.
  • Manure and soil characterizations.
  • Manure distribution and utilization methods
  • Methods for minimizing odor.
  • Inspection, maintenance and monitoring practices.
  • Land application methods.

Land Application of Manure for Permitted CAFFs

Land application of manure by a permitted CAFF or by a Certified Livestock Manager working with the CAFF must be in accordance with ODA regulations, which include requirements for:

  • Soil and manure tests.
  • Crop yields and rotations to determine nutrient needs.
  • Setbacks from streams, neighbors and wells
  • Limitations on amounts of nitrogen, phosphorus and liquid applied.
  • Weather predictions.
  • Examination of soil condition for cracks, earthworm burrows and plant root pathways to tile or tile blowouts in the field.
  • Monitoring of tile outlets during and after application.
  • Restrictions against runoff or ponding of manure.
  • Recordkeeping requirements.
  • Inspection requirements.

If a local farmer uses manure from a permitted CAFF for application on another farm, the CAFF must provide the farmer with the ODA’s application requirements and a current manure test.  The farmer must certify when and how much manure was taken from the CAFF.  The farmer’s land application of manure then falls under the Agricultural Pollution Abatement Program, described below.

National Pollutant Discharge Elimination System (NPDES) Permits

The federal Clean Water Act requires livestock operations defined as “Confined Animal Feeding Operations” (CAFOs) to obtain a federal NPDES permit if they discharge or propose to discharge a pollutant to surface waters, even if the operation has obtained a permit from ODA. The Ohio EPA administers the NPDES permit process, which requires operators to control spills and runoff from their facilities and from the land application of manure.   To obtain a permit, a CAFO must develop and implement a Manure Management Plan that addresses:

  • Practices to ensure adequate manure storage capacity and proper maintenance and operation of storage facilities.
  • Practices to divert clean storm water away from production areas.
  • Practices to ensure that animals and manure in the production area do not come into direct contact with waters of the State.
  • A land application plan that includes:
  • A nutrient budget.
  • Manure and soil characterizations.
  • Application methods and timing.
  • Agronomic application rates.

CAFO owners must also meet ongoing monitoring, recordkeeping and reporting requirements and are subject to enforcement actions for violations.

Certified Livestock Manager Certification

Ohio law requires Ohio’s largest CAFFs and every manure broker or manure applicator who handles more than 4,500 dry tons or 25 million liquid gallons of manure per year to obtain the Certified Livestock Manager (CLM) certification from ODA.  The applicant must complete core classes on nutrient management standards, manure storage and handling and Ohio manure regulations and must also complete three elective classes on water quality, soil testing, stockpiling, emergency action plans, spill reporting, value of manure nutrients, recordkeeping, biosecurity, liability or applying manure to growing crops. CLMs must complete ten hours of continuing education every three years to maintain their certification.

Ohio Agricultural Pollution Abatement Program

Ohio’s Agricultural Pollution Abatement Program (APAP) applies to agricultural operations that are not subject to the above state and federal permit programs for CAFFs and CAFOs.   As stated in Ohio Revised Code 1511 and Ohio Administrative Code 1501:15-5, APAP provides state standards for management and conservation practices that aim to abate water pollution resulting from animal manure.   The Ohio Department of Natural Resources Division of Soil and Water Resources (ODNR) administers APAP in cooperation with local Soil and Water Conservation Districts (SWCD).

Ohio’s APAP regulations establish Best Management Practices (BMPs) for livestock operators.  The standards encourage operators to:

  • Operate and maintain animal manure collection, storage or treatment facilities to prevent seepage, overflow or discharge of animal manure into waters of the state.
  • Prevent the discharge of manure-contaminated runoff from animal feedlots and animal manure management facilities.
  • Prevent pollution caused by flooding; construct animal feeding operations so that animal manure will not be inundated by a 25 year frequency flood.
  • Minimize pollution from land application of manure by adopting manure application practices that consider the characteristics of the animal manure, available land, topography, cropping system, method of application, weather, time of the year, condition of the soil, other nutrients applied and nutrient status of the soil.

Technical expertise and cost-share assistance is available through APAP to help operators install and implement BMPs and develop Operation and Management Plans.   The law provides a complaint-driven process for suspected pollution incidents that can result in an investigation by ODNR or SWCD.   Farms that cause pollution and fail to adopt the recommended BMPs to address pollution abatement must develop and implement modifications to their facilities as approved by ODNR or SWCD, or face enforcement actions.

Watershed in Distress Regulations

The Ohio APAP regulations also contain rules that apply to certain producers of manure within areas designated as “watersheds in distress,” located in Ohio Administrative Code 1501:15-5-19 to 20.   The chief of ODNR’s Division of Soil and Water Resources, with approval of the Ohio Soil and Water Conservation Commission, may designate a watershed to be in distress when aquatic life and health is impaired by nutrients or sediment from agricultural land uses and where there is a threat to public health, drinking water supplies, recreation, or public safety and welfare.  Within the boundaries of a designated watershed in distress, these additional regulations apply to animal facility owners and operators and manure applicators:

  • No land application of manure may occur between December 15 and March 1 without prior approval from the agency; before and after these dates, applications of manure on frozen ground or ground covered in more than one inch of snow may occur only if injected into the ground or incorporated within 24 hours of surface application.
  • No land application of manure if the local weather forecast shows more than a 50% chance that precipitation would exceed one-half inch of rain in the 24 hours after the proposed application.
  • Restrictions on the application of snowpack manure.
  • An operation must ensure a minimum of 120 days of manure storage as of December 1 of each year and keep records of manure storage volumes.
  • Anyone who produces, applies or receives more than 350 tons or 150,000 gallons of manure per year must have an approved Nutrient Management Plan that addresses the methods, amount, form, placement, cropping system and timing of all nutrient applications, unless the farm is already operating under a permit from ODA’s DLEP or an NPDES permit from OEPA.

For more information on the regulation of animal manure in Ohio, refer to these resources:

ODA Livestock Environmental Permitting and Certified Livestock Manager Programs - www.agri.ohio.gov/divs/DLEP/dlep.aspx

Ohio EPA Confined Animal Feeding Operations - www.epa.ohio.gov/dsw/cafo/index

Ohio DNR Agricultural Pollution Abatement  - www2.ohiodnr.com/soilwater/water-conservation/agricultural-pollution-abatement

Ohio Revised Code - http://codes.ohio.gov/orc

Ohio Administrative Code - http://codes.ohio.gov/oac

By: Caty Daniels, Monday, September 08th, 2014

With fall quickly approaching, now is a good time to consider whether you should lease your land for hunting. Leasing your land for hunting can be beneficial by giving you an extra source of income as well as managing wildlife populations and decreasing crop damage. However, there are some considerations to make before granting that lease to someone.

Your first concern should be whether or not you would be liable for hunting accidents on your property. You likely wouldn’t be, thanks to Ohio’s Recreational User Statute. In certain situations, Ohio’s Recreational User Statute provides immunity from legal liability for someone harmed on your property during recreational activities. The types of recreational activities included in the Recreational User Statute include: hunting, fishing, trapping, camping, hiking, swimming, operating a snowmobile, all-purpose vehicle, or four-wheel drive motor vehicle, or engaging in “other recreational pursuits.”    

Under the Recreational User Statute, those who lease nonresidential property for hunting do not have any duty to keep the premises safe, do not give any promises of safety by granting permission, and do not assume responsibility or liability for injuries caused by any act of the hunters.

Next, you should consider the lease itself. To create an enforceable lease, the lease must:

  1. Be in writing
  2. Identify the land being leased by legal description, address, and acreage
  3. Properly name the lessor (the owner of the land) and the lessee (the person leasing the land to hunt)
  4. Be signed by both parties
  5. Be acknowledged and certified by a notary public or local official if the lease is over three years

It is also important to consider what should be included in the lease. Some terms and conditions you should consider including are:

  • A description of the property
    • Clearly defining what property is/is not included in the lease will set clear boundaries for the lessee
  • A description of what activities are/are not allowed
    • Fishing, camping, tree stand or duck blind construction, etc.?
  • Allowance or restriction of sub-leasing
    • Do you want to give permission to the lessee to sub-lease or is the lease strictly between you and the lessee?
  • Who is allowed to hunt or access the property
    • Just the lessee? Or may the lessee bring guests? Is there a limit to the number of people allowed to hunt at any given time? Do you want the lessee to ask permission to bring guests?
  • Amount of payment and payment dates
    • How much will you charge for the lease and when do you want paid?
  • Termination clause
    • When will the lease end? On a specific date and/or if a violation of the lease agreement occurs?
  • Deer Killed
    • Limiting the number of deer that may be killed? Requiring a certain number of female deer killed?
  • Landowners reserving some rights to hunt on their land
    • When leasing your land for hunting, you give up your right to hunt the land yourself unless you reserve some rights to hunt for yourself
  • What season is the lease in effect?
    • Only deer, deer and turkey, etc.
  • Vehicle access to the property
    • Where can vehicles drive and park on your property? What vehicles are permitted – will you allow ATV’s?
  • Requiring hunters to maintain liability insurance

These are important considerations to think about including in a hunting lease, but this is not an exhaustive list. You should really consider what your goal is for leasing your land for hunting. Make sure the terms and conditions you include in your lease will help accomplish those goals. While hunting lease templates can be found online, you should consult with an attorney to create a hunting lease that will satisfy the goals and needs of your particular situation.  

To read Ohio’s Recreational User Statute, visit: http://codes.ohio.gov/orc/1533.181

Posted In: Animals, Property
Tags: Ohio hunting leases, hunting leases
Comments: 0
By: Peggy Kirk Hall, Tuesday, August 19th, 2014

In response to the recent drinking water ban in Toledo, three senators from Ohio's Lake Erie counties have introduced SB 356 to expand and accelerate fertilizer certification legislation passed earlier this year.  Senators Brown, Cafaro and Turner's proposal would add "manure" to the definition of "fertilizer" for purposes of the fertilizer certification program enacted this May in SB 150.   Whether or not manure applications should fall under the fertilzer certification requirement was a point of much debate in committee hearings for SB 150, with the legislature ultimately deciding to exclude manure applications from the new certification program.

SB 356 would also significantly change the deadline for fertilizer applicators to become certified--from September 30, 2017 to December 31, 2014.  This change of deadline, which appears impracticable if not impossible, would require the Ohio Department of Agriculture (ODA) to establish the regulations for the fertilizer certification program and offer certification training so that any persons desiring to apply fertilizers after December 31, 2014 could become certified through the new program.  Currently, SB 150 gives ODA and fertiler applicators three years to establish the new fertilizer certification program and complete certification training.

S.B. 356 is the first of several legislative proposals we expect to see in response to Toledo's water concern.  The bills will likely present different approaches to address phosphorous runoff, which many point to as the cause of the algae problem.  Representative Sheehy has announced his intent to introduce legislation soon that would limit applications of manure on frozen or snow-covered ground and would expand manure storage requirements for livestock operations. 

A statewide Ohio Lake Erie Phosphorous Task Force formed in 2009 issued its second report and recommendations for addressing phosphorous in Ohio waterways last October.

 

 

 

By: Peggy Kirk Hall, Friday, August 08th, 2014

Fourteen years after the Ohio Legislature transferred permitting authority for confined animal feeding operations (CAFOs) from the Ohio EPA to the Ohio Department of Agriculture (ODA), a Wood County couple is challenging the transfer in federal court as a violation of the federal Clean Water Act.   Larry and Vickie Askins filed the lawsuit on August 4, 2014 in the U.S. District Court Northern Division against the ODA, Ohio EPA and U.S. EPA.  The lawsuit seeks an injunction to prevent ODA from further issuing National Pollutant Discharge Elimination System (NPDES) permits to CAFOs.  The lawsuit also asks the court to order that only the Ohio EPA can administer the NPDES permit program in Ohio, that the Ohio EPA violated federal law by failing to notify the U.S. EPA of the transfer of CAFO permitting authority to ODA and that the U.S. EPA violated federal law by failing to suspend Ohio’s ability to issue NPDES permits after the transfer of authority.

The Ohio Legislature passed S.B. 141 in 2000, which transferred authority to issue NPDES permits for CAFOs from Ohio EPA to ODA.  The lawsuit alleges that this transfer violated the terms of a 1974 Memorandum of Agreement between the U.S. EPA and Ohio EPA, in which the U.S. EPA, which has original authority over NPDES permits, delegated its authority to the Ohio EPA for purposes of administering the NPDES program in Ohio.  To date, U.S. EPA has delegated full or partial NPDES authority to 45 states

According to the Askins lawsuit, Ohio also violated Clean Water Act regulations by not notifying the U.S. EPA of the transfer until 2006.  Since the notification in 2006, the U.S. EPA still has not granted ODA the authority to administer an NPDES permit program for CAFOs, claims the lawsuit.

The lawsuit arises under the Clean Water Act’s “citizen suit” provision, which allows a citizen who has been or may be adversely affected to file a claim against someone who is violating the Clean Water Act or against an EPA Administrator that fails to perform any non-discretionary act or duty under the Clean Water Act.

While the CWA citizen suit provision grants citizens the right to enforce the law, citizens must also satisfy the “legal standing” doctrine of the U.S. Constitution’s Article III, which requires a suing party to have personally suffered actual or threatened injury that can fairly be traced to the defendant’s actions and for which the court can provide a remedy.  Thus, the Askinses must be able to prove that they have suffered or will suffer particular injuries from the transfer of NPDES permit authority to ODA, from Ohio EPA’s failure to notify of the transfer and from the U.S. EPA’s failure to approve the transfer or withdraw authority, and must also show that the injunctions and orders they seek from the court will address their injuries.   A review of the Askins’ complaint, however, does not indicate the injuries the couple claim to have suffered or will suffer due to the agencies' alleged violations of the Clean Water Act.

Read the complaint in Askins v Ohio Dept. of Agriculture here.

By: Peggy Kirk Hall, Friday, August 01st, 2014

The Occupational Safety & Health Administration (OSHA) faced harsh criticism recently when the agency inspected and issued fines to small farms engaged in grain storage activities.  The farms argued that OSHA had no authority to do so because of the "small farm exemption" that limits OSHA’s authority to enforce safety regulations on small farms.  This week, OSHA released a guidance memorandum that attempts to clarify how its regional administrators should interpret the small farm exemption.  The agency's new guidance focuses on whether an activity on a small farm is “not related to farming operations and not necessary to gain economic value from products produced on the farm.”

The small farm exemption and OSHA's earlier interpretation

Since 1976, Congress has prohibited OSHA from using any of its funds to enforce safety regulations on "small farms," those farm operations that employ 10 or fewer employees and do not maintain a temporary labor camp.  In recent years, however, the agency turned its regulatory attention to grain operations on small farms.  OSHA justified its inspections and enforcement actions for grain storage activities by arguing that “post-harvest” grain storage and processing activities differ from “farming operations” and “core agricultural operations” and thus do not fit within the small farm exemption (see our earlier post).  The agency withdrew this interpretation of the small farm exemption earlier this year.

OSHA’s new guidance memorandum

In its July 29, 2014 memorandum to OSHA regional administrators, the agency now states that a small farm would not be subject to OSHA enforcement if it simply stores its own grain on the farm, sells grain from the farm or grows, stores and grinds grain on the farm to feed its own livestock.  These activities fit within the definition of a "farming operation" because the activities are "necessary to gain economic value from grain grown on the farm."

But the agency also explains that other types of activities on a small farm could be subject to OSHA authority.   According to the agency, if a small farm engages in activities that “are not related to farming operations and are not necessary to gain economic value from products produced on the farm, those activities are not exempt from OSHA enforcement.”

The agency provides a few examples of activities on small farms that would not be exempt because they are not related to farming operations or are not necessary to gain economic value from farm products. The list includes grain-based activities, but also addresses food processing examples:

  • A grain handling operation that stores and sells grain grown on other farms.
  • A food processing facility for making cider from apples grown on the farm or for processing large carrots into "baby" carrots.
  • Milling of grain into flour used to make baked goods.
  • The agency also explains that food manufacturing operations are not exempt from OSHA enforcement activities under the appropriations rider, even if they take place on a small farm.

OSHA's new guidance memorandum on the small farm exemption is available here.

By: Peggy Kirk Hall, Friday, July 18th, 2014

A recent decision by the Ohio Court of Appeals examines the issue of employer liability for a worker’s harmful acts.  The Twelfth District Court of Appeals clarified when an employer could be liable for injuries caused by a worker’s violent behavior, whether the worker is an independent contractor or an employee.

Worker’s violent behavior leads to a lawsuit

The Spurlocks hired Mr. Hogeback to perform carpentry worker when renovating their farmhouse into a bed and breakfast.  While working for the Spurlocks, Hogeback got into an altercation with an employee of a construction company that was also performing work on the Spurlock property.  Mr. Jackson, who was visiting the site to inquire about work, stepped in to prevent the fight and was injured by Hogeback.

Jackson brought suit against Hogeback and also against the Spurlocks and their business, alleging assault and battery, negligence, vicarious liability and negligent hiring, supervision and retention.   A jury ruled in Jackson’s favor for the claims against Hogeback, but the Butler County Court of Common Pleas granted Spurlocks’ request to release all claims against them and not allow the claims to be decided by the jury.

The case goes to the Court of Appeals

Jackson appealed the trial court’s decision in regards to the Spurlocks, arguing on appeal that the Spurlocks were vicariously responsible for Hogeback’s actions as their employee and also that the Spurlocks were directly liable for failing to exercise reasonable care in controlling Hogeback and for negligent hiring, supervision and retention of Hogeback.

The Twelfth District Court of Appeals reviewed the decision to determine whether the trial court had properly relieved the Spurlocks from liability.   The court quickly narrowed its focus to the claim of negligent hiring, supervision and retention, holding that the trial court was correct in regards to all other claims against the Spurlocks.

Liability for negligent hiring, supervision and retention

A claim of negligent hiring, supervision and retention can create liability for selecting or allowing a person to work when the employer knows or should have known of the hired individual's violent or dangerous propensities.  Under this theory, Jackson had to show that the Spurlocks knew or should have known of Hogeback’s violent propensities and should have foreseen the assault on Jackson.

The court of appeals dispensed with the Spurlocks’ arguments that they should not be liable under this claim because Hogeback was an independent contractor rather than an employee.  Liability for negligent hiring, supervision and retention can arise regardless of whether the assailant is an employee or an independent contractor, said the court.

According to the court of appeals, a review of the court record showed that Jackson had presented evidence that the Spurlocks may have had knowledge of Hogeback’s propensity to use physical violence.  Testimony that Mrs. Spurlock had stated "this has happened before," and "oh, no, not again" when she learned of the fight; that workers had complained to the Spurlocks about Hogeback’s “aggressive and rude behavior”; and that Mrs. Spurlock had attempted to arrange for the workers who complained about Hogeback to be on the property when Hogeback would not be there all pointed to a possibility that the Spurlocks may have known of and anticipated problems from Hogeback’s dangerous propensities.  Given this evidence, the court of appeals concluded that the common pleas judge should have allowed the jury to render a verdict on the issue.

The court of appeals sent the case back to the common pleas court for further proceedings to determine whether there was sufficient evidence on the issue of negligent hiring, supervision and retention.

Implications for employers

We state as a general rule that employers are not usually liable for intentional, harmful acts of an employee when those acts are outside of the employee’s work responsibilities.    The Hogeback v Jackson case is a reminder of exceptions to the general rule:

  • A successful claim of negligent hiring, supervision and retention can result in employer liability for a worker’s bad acts, which requires proof that an employer knew or should have known about the worker’s dangerous propensities and it was foreseeable that the worker’s behaviors could lead to harm. 
  • Negligent hiring, supervision and retention can apply even if an independent contractor, rather than an employee, commits the harmful acts. 

Employers can reduce this risk of liability by using practices and policies to help prevent the hiring and retention of a person who poses risks of harm to others:

  • Investigation into a potential employee or independent contractor’s background through these tools:
    • Job applications that request detailed information about previous employment, reasons for leaving a job, and employer contact information.
    • Reference checks with previous employers and other references.
    • Background checks.  See the Ohio Attorney General’s information about conducting a background check.
    • Drug tests.  Ohio law allows for private companies to conduct drug testing on a non-discriminatory basis.  The Ohio Bureau of Workers’ Compensation offers a Drug-Free Safety Program for eligible employers.
  •  Detection of and reaction to worker behaviors:
    • Monitoring for incidents of unusual, violent or dangerous behaviors.
    • Encouraging employees to report dangerous behaviors in other workers.
    • Policies for corrective actions to take, including termination, upon awareness of dangerous behaviors.
    • Prompt enforcement of all practices and policies.

Read the Court of Appeals decision in the Jackson v. Hogeback case here.

Larry Gearhardt, OSU Extension Asst. Professor, Taxation

Ohio Governor John Kasich recently signed a bill that, among other things, increases the small business income deduction from 50 percent to 75 percent of the first $250,000 in net business income.

In an effort to grow Ohio’s economy, last year the Ohio budget bill included significant tax law changes to deliver a $2.7 billion tax cut to individuals and businesses, over the course of three years. The changes included:

  • A small business tax cut that enables owners/investors to deduct from taxable income 50 percent of the first $250,000 in net business income.
  • A 10 percent personal income tax cut to be phased in over three years. In 2013, Ohio tax rates were reduced by 8.5 percent.
  • New assistance for lower-income Ohioans in the form of an Earned Income Tax Credit (EITC) equal to five percent of the amount claimed for the federal EITC.

An improving economy is generating stronger than expected state revenue, resulting in additional tax cuts. The Governor’s Mid-Biennium Review (HB 483) included the following additional tax relief:

  • ADDITIONAL SMALL BUSINESS TAX CUTS – For tax year 2014, the personal income tax deduction on small business income will be increased to 75 percent of the first $250,000 in net business income. (Under current law, the deduction does not affect the school district income tax base).
  • ACCELERATING THE INCOME TAX CUT – Next year’s scheduled one percent cut in income tax rates is moving up to be effective retroactive to January 1, 2014. This change will give taxpayers the full 10 percent income tax cut that was not scheduled to go into effect until January 2015.
  • NEW TAX RELIEF FOR LOW-AND MIDDLE-INCOME OHIOANS – Ohio is doubling the EITC from 5 to 10 percent of the federal credit. In addition, the state is increasing the personal exemption for Ohioans earning less than $40,000 a year from $1700 to $2200, and for those with incomes between $40,000 and $80,000 a year from $1700 to $1950.

Business income is defined as income from the regular conduct of a trade or business, including gains and losses. It also includes gains and losses from liquidating a business or selling goodwill. The deduction applies only to the business income apportioned to Ohio under existing law.

The business deduction percentage reverts back to 50 percent for taxable years after 2014.

Posted In: Tax
Tags: Ohio small business income tax deduction
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