Sheep ranchers in California say a new state overtime pay rule could force them out of business.

California sheep and goat producers say a looming state overtime rule for herders could put them out of business.

Effective Jan. 1, 2022, employers will be required to pay herders at least 50% higher wages, which employers call "economically unsustainable" and "devastating."

"We've recently had some big (sheep) operations drop out of the industry because of the fear of the overtime. They don't see a way out of this," said Ed Anchordoguy, president of the California Wool Growers Association and a Sonoma County sheep rancher. "A lot of people are selling off breeding stock. It could affect the market significantly."

The rule would bump monthly compensation per herder from $2,489.02 to $3,730.37 for businesses with 25 or fewer employees and from $2,666.81 to $4,381.20 for those with 26 or more employees.

According to the California Wool Growers Association, the state, which ranks No. 1 in wool production, has 3,500 sheep and goat operations with 550,000 head and employs 375 herders.

If the overtime rule leads large operations to close, industry leaders say it could have ripple effects, potentially toppling crucial infrastructure. Fewer large operations, ranchers say, may lead to fewer shearers, processors, feed suppliers, veterinarians and new medications.

The upcoming rule has a five-year history.

In 2016, former California Gov. Jerry Brown signed into law Assembly Bill 1066, which incrementally increases wages for agricultural workers. The problem, sheep and goat ranchers say, is how the law computes work hours.

Mid- to large-scale sheep and goat producers employ herders. Most herders are temporary H-2A foreign guestworkers. Some are from Basque country, a region straddling the Pyrenees along the border separating Spain and France.

Some of the operations are for commercial production of meat, milk and fiber. Others are targeted grazing operations. These animals must be protected and moved to fresh pasture regularly, meaning herders are nomadic.

Producers have long been required to provide herders with food, housing and cell phones.

Because range herders move in concert with their flocks, the state of California has concluded they work 168 hours per week — 24 hours per day, seven days per week. When AB 1066 is applied, herders will be tracked as working long overtime hours, which employers must pay for.

Producers are calling on Gov. Gavin Newsom to make an administrative adjustment. Instead of the 168-hour workweek, employers are asking Newsom to adopt an existing federal standard, defining their workweek at 48 hours.

The federal standard, adopted under the Obama administration's Department of Labor, determined herders work 48 hours per week by taking into account the value of free food, lodging and the nature of the work. This federal standard, producers say, is superior to the new state standard.

"We will not make it through if this wage increase goes into effect," said Andree Soares, president of Star Creek Land Stewards, one of the state's largest sheep and goat targeted grazing operations. "January 1st is coming at us like a freight train."

Soares said demand for her services is at an all-time high, with agencies contracting early for targeted grazing before wildfire season. People see the value of her work, Soares said, but don't recognize that if the rule is applied, she may not be able to continue.

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