food law

It’s the time of year when many Ohio vegetable gardeners are wondering, “why in the world did I plant so many zucchini?”  And it’s also when we start hearing the question, “is there any liability risk in giving away my garden produce?”  The good news is that Ohio has a food donation immunity law.  The law encourages food donations by granting liability protection to those who give perishable foods like garden produce to agencies that serve individuals in need.  A new amendment to the law recently passed in Senate Bill 16 broadens the types of donations that qualify for liability protection.  If you’re up to your ears in garden produce, you may want to know about the food donation immunity law.

Here's how the law works.

1. The grant of immunity

The food donation immunity law is in Ohio Revised Code 2305.37.  It states in Section B that a person who, “in good faith,” donates “perishable food” to an “agency” is not liable for harm that may arise if the food, when distributed to an “individual in need,” is not “fit for human consumption.” 

2. The donation must be made “in good faith” that the food is “fit for human consumption” when donated

There is not a definition for the term “in good faith,” but it’s a term commonly used in legal situations.  It means that a person acted with an “honest intent” and not with an intent to deceive or conceal something. The food donation immunity law provides two conditions to help ensure a person is donating in good faith.  First, the immunity only applies if a person determines, prior to making a donation, that the food is “fit for human consumption” at the time it is donated to an agency.  The term “fit for human consumption,” though not defined by this law, means that it is edible and safe.  But note there is no responsibility on the donor to ensure the food will be edible and safe after it is donated, when it is actually consumed or distributed.  Second, when determining whether food is fit for consumption, a donor cannot act with gross negligence or willful or wanton misconduct.  These two conditions mean that if a donor doesn’t inspect the food at all before delivery or knows something happened to the food that could make it unsafe for consumption but donates it anyway, the law will not protect the donor from liability if the food causes harm. 

3. The law applies to “perishable food”

The law’s definition of “perishable food” is broad.  It refers to any food that may spoil or otherwise become unfit for human consumption due to its nature, age, or physical condition.  The definition includes fresh fruits and vegetables, fresh and processed meats, poultry, fish, seafood, dairy products, bakery products, eggs, refrigerated and frozen foods, and packaged foods.  It also includes food prepared but not served by a food service operation such as a restaurant, caterer, or hotel, and gleaned foods, discussed below.

4. Donations must be to “agencies” that serve “individuals in need”

Donations to friends and family don’t qualify for the liability protection—the law only applies to a donation to an “agency” that serves “individuals in need.”  Several definitions and conditions are important.

• An “agency” is an organization that distributes perishable food to “individuals in need,” either directly or indirectly. The term includes any nonhospital, charitable nonprofit corporation organized under Ohio nonprofit laws, or nonprofit charitable association, group, institution, organization, or society.  An “individual in need” is a person an agency determines to be eligible for food distribution due to poverty, illness, disability, infancy, or similar circumstances.
• A qualifying agency is one that does not charge a fee for the food.  However, Senate Bill 16 recently amended the law to allow donations to an agency that charges an amount no more than the cost of handling the food.  That change means even if individuals pay a food handling cost to receive the donated food, the donor of the food will receive immunity.
• Another section of the law, 2305.37(D), also grants immunity to an agency that distributes donated food as long as the agency determines the food is fit for human consumption when the food distribution occurs.

Ohio law also provides liability protection for “gleaning”

Growers can also be immune from liability when allowing someone else to pick or salvage the garden produce and donate it to an agency.  This is referred to as "food gleaning" and Ohio law also provides liability protection to those who allow food gleaning.  First, the gleaned food is considered “perishable food” and is covered by the food donation immunity law described above.  Second, the food gleaning immunity law in Ohio Revised Code 2305.35 grants a landowner or operator immunity for physical injuries sustained by a gleaner during the gleaning process. The landowner or operator is not liable for injuries to a gleaner resulting from any risks or conditions of the property or any normal agricultural operations on the property.

Ready to donate?

Gardeners ready to donate excess garden produce first need to locate an agency that serves individuals in need.  Find a local food bank, food pantry, soup kitchen, meals on wheels, or similar agency, and make sure the agency doesn’t charge individuals to receive the food or charges no more than the cost of handling the food.  These resources can help locate an agency: 

• Ample Harvest - https://ampleharvest.org/find-pantry/
• Ohio Victory Gardens -  https://u.osu.edu/ohiovictorygardens/donating-your-victory/
• Ohio Soup Kitchens, Food Banks, Food Pantries - https://www.homelessshelterdirectory.org/foodbanks/state/ohio

Before delivering garden produce to tan agency, be sure to inspect the produce and ensure it is fit for consumption—clean, not spoiled, and edible.  Don’t have time to pick and deliver?  Find a food gleaner who may be willing to glean your garden and donate the food to an agency.  Here’s a resource that lists Ohio food gleaners:  https://nationalgleaningproject.org/gleaning-map/states/ohio/?fwp_state=oh.

The world loves a good baker.  If you’re one of those good bakers and you want to sell your baked goods, do you need a license?  Maybe. Our newly revised law bulletin, “The Home Bakery Registration Law in Ohio,” explains when a license or “registration” is necessary for selling home baked goods in Ohio.

Whether you need to register for a Home Bakery license depends on the type of baked good you’ll produce. Certain foods are at lower risk of a food safety concern when produced at home, which we refer to as “non-potentially hazardous” foods.  Those foods might fall under the Ohio Cottage Food Law, which does not require a license or registration for those who want to produce and sell foods that are on the cottage foods list. When a home baked good does pose higher food safety risks, however, the home bakery law applies to that food and additional practices are necessary to reduce food safety.  The producer who wants to sell that type of home baked good must register as a “Home Bakery" with the Ohio Department of Agriculture to help ensure that food safety practices are in place.

Which home-baked foods fall into which category?  This chart illustrates the differences between non-potentially hazardous “cottage" foods and potentially hazardous “home bakery” foods. If a food falls into the “potentially hazardous” category, the producer needs to apply for a Home Bakery license. 

What’s required for the Home Bakery registration?  Our law bulletin explains the registration and inspection process and labeling requirements.  Read more about those parts of the Home Bakery Registration Law in our bulletin, available on the Farm Office Food Law Library at https://farmoffice.osu.edu/our-library/food-law.

There’s much disagreement over what we know about COVID-19, but one thing we can agree upon is that it has left an impact on the food supply chain.  For some food producers, that impact is creating opportunity.  Many growers see the potential of filling the gaps created by closed processing facilities, thin grocery shelves, and unwillingness to shop inside stores.   If you’re one of those growers who sees an opportunity to sell food, we have a few thoughts on legal issues to consider before moving into the direct food sales arena.  Doing so will reduce your risks and the potential of legal liability.

1.  Follow COVID-19-related guidelines

Perhaps this goes without saying, but businesses should take COVID-19 guidelines seriously.  Doing so will hopefully reduce the potential of a COVID-19 transmission in the operation while also minimizing the risk of an enforcement action and potential legal liability for failing to protect employees and customers.   Follow the Ohio Department of Health Responsible RestartOhio Guidelines that are now in effect.  Engaging directly with customers places a grower in the “Consumer, Retail and Services” sector guidelines, which are here.  Mandatory requirements include protecting the health and safety of employees, customers and guests by establishing six-foot distances or barriers, wearing face masks, handwashing and sanitizing, checking for symptoms daily, posting signs, deep cleaning, and dealing with suspected and confirmed cases of COVID-19.   The FDA has also issued “Best Practices for Retail Food Stores, Restaurants and Food Pick-Up and Delivery Services” here, and OSU’s direct marketing team has many helpful resources for implementing the practices here.   Develop protocols based upon the guidelines, carefully train employees on protocols, and document your compliance.

2.  Determine what food safety regulations apply to you

For food safety purposes, the Ohio Department of Agriculture and local county health department require licensing or inspection of certain types of food sale activities.  The regulations are a bit messy, and it’s challenging to know when an operator is affected by these regulatory requirements.  We’ve explained licensing laws pertaining to sales directly at the farm in this law bulletin, “Selling Foods at the Farm:  When Do You Need a License?”   There are more stringent requirements for those who sell meat, process food, or sell higher risk foods or several different types of foods.   We’ve provided a few simple guidelines in the chart at the end of this post, but please refer to the above law bulletin for further details.  Additionally, produce growers need to comply with Good Agricultural Practice (GAPs) and Food Safety Modernization Act (FSMA) rules.  Learn more about those on our Fruit and Vegetable Safety Program website here.

3.  Check your zoning

If you’re within a municipality, you may have zoning regulations that apply to your production and sales activities.  Check your local zoning regulation to ensure that those activities are “permitted uses” within your designated zoning district.  If not, you may need to seek a “conditional use” permit.  Also be aware that some municipal zoning regulations regulate “home businesses,” and a home bakery or cottage food operation that has customers coming to the home to purchase the goods might fall into that category. 

If you’re outside a municipality, Ohio’s agricultural exemption from county and township zoning applies to your production and sales activities.  Local zoning can’t prohibit your activities regardless of your zoning district, with limited exceptions if you’re in a “platted subdivision” situation (on a lot under 5 acres in a platted area of at least 15 other contiguous lots).  Note, however, that county and township zoning can regulate a “farm market” that receives more than 50% of its gross income from goods that weren’t raised on the owner’s farm.   You might need to comply with a few zoning regulations that pertain to the size and setback lines for your structure, the parking area, and ingress and egress points for customers.

4.  You may have to collect sales taxes on some items

Most takeaway food items to be consumed off-site, such as meat and produce, aren’t subject to Ohio’s sales tax.  But if you sell items that are not exempt from sales tax, you’ll need to collect sales taxes on the items.  If you’re planning to sell ready-to-eat items on site, beverages, flowers, or container plants, you must charge and collect sales taxes and obtain a vendor’s license in order to submit the taxes to the state.  Find more details in our law bulletin on vendor’s licenses and sales taxes here.

5.  Review contracting situations

You’ll likely be presented with a contract or agreement in many situations, such as a farmers’ market contract or an agreement for selling on an online sales platform.  Or you may need to generate your own contract for selling whole animals or establishing a “community supported agriculture” operation.  In either instance, read your contracts carefully.  Be sure to include and review important terms such as price, quality delivery dates, payment processes, late fees, data use, and other provisions related to your type of sale.   Don’t hesitate to involve an agricultural attorney to be sure that you’ve minimized your legal risk.

6.  Talk to your insurance provider

Direct food sales might not be adequately covered by your insurance policy.   You’ll need to know whether you have sufficient premises liability coverage if a customer is harmed on your farm, coverage for transporting foods or for selling at a farmers’ market (typically required by the market) and product liability coverage in case someone claims illness or other injury from consuming your food.  You may need to increase coverage or purchase additional riders to the policy, depending on your risk level.  Reviewing your policy with your provider and aligning coverage with your food sales activities is imperative to reducing your liability risk.

7.  Do you need a separate business entity?

Consider whether your food sales activities put other assets at risk, and whether your insurance is sufficient to address that risk.  If not, you should consider forming a separate business entity for your direct marketing business.   Forming a Limited Liability Company for your direct food sales activities can help shield your other assets from the liability of the food sales.  Talk with an agricultural attorney to assess your needs and determine what type of entity is best for your situation.

8.  Keep great records

This one applies to everything above.  Maintain records of what you do in regards to COVID-19 precautions, employee training, food safety compliance, and financial records of your expenditures and sales.  If a liability incident arises, document it carefully.  Keep the records for the required amount of time, which is typically three years for receipts for purchases and sales, ten years for insurance and employee records, and permanently for other records.

9.  Don’t stop here

This list is a starting point for legal considerations for direct food sales, but it shouldn’t be the end.  There may be other legal issues that affect your particularly situation.  To learn more and fully consider all risks of direct marketing, talk with others who’ve directly sold food, visit with your accountant, lawyer and insurance provider, and learn the best practices for growing and marketing your food products. 

By Ellen Essman, Sr. Research Associate

On September 25, 2018, USDA found a Cleveland, Ohio company to be in violation of the Perishable Agricultural Commodities Act, or PACA.  USDA initiated the complaint against Forest City Weingart Produce (Forest City) in November 2017.  Forest City’s failure to pay $716,689, collectively, to numerous produce sellers is considered “unfair conduct” under PACA.  The complaint was determined to be valid, and consequently, Forest City is not permitted to “operate in the produce industry” for a time.  Because USDA found Forest City’s violations to be “repeated and flagrant,” under PACA, the Secretary of Agriculture had the authority to revoke the company’s license.  According to USDA’s press release, Forest City will be able to reapply for a PACA license on September 21, 2020.  The principal officers of the company are also banned from being “employed by or affiliated with any PACA licensee” through September 21, 2019.  Since Forest City has been found to have violated PACA by participating in unfair conduct, the law states that the company is liable to those they took advantage of “for the full amount of damages,” which in this case, would be the aforementioned $716,689. 

What is PACA?

PACA was passed in 1930.  The Act’s purpose is to promote “fair business practices” when buying and selling “perishable agricultural commodit[ies].”  A perishable agricultural commodity is defined in the law as “fresh fruits and fresh vegetables of every kind and character,” which can also be “frozen or packed in ice,” including “cherries in brine.” 

PACA contains a list of what the law considers to be “unfair conduct.”  Such unfair conduct is unlawful for commission merchants, dealers, or brokers, who are essentially the middle-men of the perishable agricultural commodities industry, to engage in.  The following actions are deemed to be “unfair” under the law, and therefore illegal when the transaction is in interstate or foreign commerce:

• Using any unfair, unreasonable, discriminatory, or deceptive practice when weighing, counting, or determining the quantity of a perishable agricultural commodity;
• Rejecting or failing to deliver perishable agricultural commodities under the terms of the contract, if there is no reasonable cause for the failure;
• Discarding, dumping, or destroying any perishable agricultural commodity received without reasonable cause;
• Making a false or misleading statement, for a fraudulent purpose, in connection with any transaction involving a perishable agricultural commodity; failing or refusing to make full, prompt, payment in such a transaction; or failing to perform any specification or duty in such a transaction without reasonable cause;
• Misrepresenting by word, act, mark, stencil, label, statement, or deed, the character, kind, grade, quality, quantity, size, pack, weight, condition, degree of maturity, or State, country, or region of origin of any perishable agricultural commodity;
• Removing, altering, or tampering with any card, stencil, stamp, tag, or other notice upon any container or railroad car containing any perishable agricultural commodity, if such notice contains a certificate or statement under the authority or law or regulation of the federal or state government concerning the grade, quality, or origin of the commodity;
• Making any change by way of substitution or otherwise in the contents of a load or lot of any perishable agricultural commodity after it has been officially inspected for grading and certification. 

PACA also makes it mandatory for commission merchants, dealers, and brokers to be licensed.  In order to obtain a license, both an application and fee are required.  If all the requirements are met, the Secretary of Agriculture may issue the license.  Licenses can be annual or cover multiple years, depending on the type of entity licensed.  The Secretary may also suspend or revoke a license. 

Violations, Complaints, and Liability

PACA specifically states that when any commission merchant, dealer, or broker is found to have participated in unfair conduct (discussed above), they are “liable” to those injured by their conduct “for the full amount of the damages sustained in consequence of such violation.”  Liability can be enforced through the complaint process or through the courts.  Complaints of unfair conduct can be sent to the Secretary of Agriculture up to nine months after the unfair conduct occurs.  Notifications of violations by merchants, dealers, or brokers can also be sent to the Secretary by officers of state agencies.  The Secretary is then able to investigate complaints and notifications.  If the investigation shows violations occurred, then the Secretary can “have the complaint served” on the violator.   If the alleged damages are more than $30,000, the Secretary must provide the violator with the opportunity for a hearing.  After a hearing, the Secretary can “determine whether or not the commission merchant, dealer, or broker has violated” any part of the law regarding “unfair conduct.”

Those interested in background information on PACA, fees, licensing, etc. can find it at the USDA’s website, here.  The federal regulations that accompany PACA are here.