I spent two days this week visiting with many of North Carolina’s farmers who work in blueberries, sweet potatoes, and beef.
The point of this blog is to show employers how they can use a payroll card to streamline the process of paying H2A workers.
Labor costs were a common area of concern at both shows. Unless a farmer has made significant investments in machinery, labor costs probably exceed any other cost center within their operation. With new intolerance for immigrants in Washington, farmers were anxious about finding enough labor for their upcoming seasons. Farmers can source work through legal channels, either by hiring local workers from the nearby community or by contracting for H-2A temporary agricultural workers. They can also employ migrant labor, usually with a kind of “don’t ask, don’t tell” approach to labor law.
Getting paid on the farm
Some farmers use chips to pay workers. Each time a picker drops off a basket of fruit, the manager exchanges it for a wooden chip. Farmworkers line up with their chips. Each chip is worth a certain amount of pay. The process might occur at an office, but sometimes disbursement is done from the bed of a pickup truck at the end of the workday.
The chip system is decidedly “old school,” but the simplicity of this approach holds a lasting appeal. It survives all language barriers. The worker picks some fruit, he gets a chip, and then he exchanges it for cash at the end of the day. The farmworker walks home with cash or a check at the end of every day.
At the blueberry show, I met a vendor with a fantastic system that integrated weighing of fruit with contamination containment and payroll processing. Each picker is given a lanyard with a barcode. When the picker has filled a basket, he brings it to the end of the row to submit it to the field manager. The manager runs the lanyard across a barcode machine. The scan captures the picker’s name and the row where the fruit came from. That information is uploaded from the field to the cloud via a cellular transmitter. Once in the cloud, it can later be pulled down. The picker’s account is credited one basket at a time. Later, those funds are integrated into payroll and tax reporting.
Farmers who have gone to electronic payments can easily integrate payroll cards into their system. If they do, they can save a lot of money. According to the American Payroll Association, it costs employers approximately $2 to write a paper paycheck. That sum is almost certainly higher for farmers. For one, if you pay workers with checks, then you have to find the time to drive them into town to cash their check.
Our Solution is the FinTwist Payroll Card
WiseWage chose to partner with FinTwist. We like that workers don’t have to pay a monthly fee to have a FinTwist card. The program is entirely free for business owners. From the perspective of a worker, they are also a win. The cards can be used internationally. There is no cost to make a signature purchase. There is no monthly fee, no minimum fee, and no overdraft. Fintwist offers multi-lingual customer service. Workers can access surcharge-free AllPoint network ATMs. They can withdraw cash in-network as many times as they would like - there is no maximum.
On the other hand: Global Cash charges a number of fees to account holders:
· $1 to check your balance at an ATM
· $1 for a decline at an ATM
· $0.45 for a decline at the point-of-sale.
If you would like to talk directly to the people at Fintwist, just follow this link to submit your contact info. Someone will call you shortly. If you would like to talk to us first, we're ready to answer your questions. You can schedule a call with us at this link.
Payroll Cards are Better than Individual Debit Cards
Because of the legal and geographical characteristics of farm workers, payroll cards make sense for farmers whereas traditional demand deposit or general purpose reloadable debit cards do not.
There are two reasons. First, for a bank to issue a card to an individual, it has to vet the applicant.
The first thing you must have as an employer is the Social Security number of your employee. While many farmworkers do not have a social security number (an “SSN”), H2A workers do have one. . With a few exceptions in places where a population of farmworkers has settled permanently, fewer have a home address. When I visited the eastern half of Riverside County, California, there were entire towns of farmworkers. Pickers have settled into mobile home communities in Thermal, Mecca, and Oasis. Their children go to local public school systems, they lead their community organizations, and except for when the temperature moves above 100 degrees, they live year-round. They would be suitable candidates for a traditional debit card.
Nonetheless, most farmworkers live in temporary housing and move frequently. Farmers must provide housing for H2A workers. Usually, that condition translates into dorm-style housing. The workers don’t have a lease or a utility to the bill to submit as evidence of a residence. Ergo, no bank accounts can be issued to these workers.
Some farmers told me that their workers want payroll cards as well.
“Usually the first two or three times, they ask for cash,” said a North Carolina sweet potato farmer, “but then someone steals their pay out of the dorm, and they want a card.”
The blueberry and sweet potato farmers that I spoke to generally used ADP’s Global Cash Card. ADP may have a niche in this space. I notice that ADP is the only company buying Google AdWords advertising for keyword searches related to paying H-2A workers.
Of the two, the lack of an address matters more. While a flexible bank might go to the effort to use additional steps to verify the identity for a person who does not have a social security number, no bank can accept a person who has neither an SSN nor an address. Banks have to mail debit cards to a physical address. Because of government regulators, they cannot send a debit card to a P.O. Box.
Farmworkers are no different than you or I - when it comes to their money, they like to have certainty. It’s a “once bitten, twice shy” proposition. It is hard enough getting people from unbanked countries to accept anything beyond a check or cash – the idea of a payment to a sight-unseen debit card is a big stretch.
Lots of liability in H2A
In rural North Carolina, there are lawyers whose entire practice focuses on providing counsel to farmers who want to hire in the H2A program. Sometimes farmworkers sign up with crew management companies. These firms move H2A workers up and down the coast, delivering labor to farmers when they need workers. Many times, a farm has a surge in work for a short period. These kinds of crews answer the need for a flexible workforce.
Using H-2A is not cheap. Contrary to the perceptions of many people outside of the industry, farmworkers earn a good living. In 2016, an H-2A worker made about $11.50 per hour. But they also receive other benefits that add to the cost borne by farmers. For example, by the terms of federal laws, farmers must provide housing to any worker who cannot return home by the end of the day. Experts say the all-in cost of an H-2A worker is over $14.50 per hour.
Still, when a farmer uses this kind of service, he wants to pay the farmworkers directly. If they are using h2a labor, the farmer takes on some liability for the integrity of a third-party. If they pay an independent manager of H2A workers and that company subsequently doesn’t make good on honoring the funds due to the workers, then the responsibility falls back to the farmer.
Back to list of blog posts