Tyson, JBS Settle on Wage-Fixing Case

by Andy Schwab

JBS USA Food Company and Tyson Foods reached a combined $127.3 million settlement with a group of current and former employees who alleged in a 2022 lawsuit the companies conspired to suppress wages, according to a motion filed in a federal court.

In November 2022, a group of employees filed a class-action lawsuit in the U.S. District Court for the District of Colorado. That lawsuit alleges a group of food companies conspired to keep wages low, damaging the employees’ future earnings potential.

In August 2023, the plaintiffs announced a $10 million settlement with Seaboard Foods and an agreement with Triumph Foods to cooperate in the ongoing case against the other companies. In addition, the plaintiffs agreed to a $1.3 million settlement with Perdue Farms Inc.

According to the latest settlement announced in federal court at the end of last week, Tyson agreed to pay $72.3 million and JBS $55 million — bringing the grand total to about $138.5 million.

“The sizable financial recovery alone would render the settlement agreements adequate but the settlement agreements also contain meaningful cooperation terms that will help plaintiffs to prosecute their antitrust claims against the remaining defendants,” according to a motion for preliminary approval of the agreement filed in court.

Settlements have not been reached with the remaining defendants in the case, including Cargill Inc., Cargill Meat Solutions Corp., Hormel Foods Corp., American Foods Group LLC, Seaboard Foods LLC, National Beef Packing Company, Iowa Premium LLC, Smithfield Foods Inc., Smithfield Packaged Meats Corp., Agri Beef Company, Washington Beef LLC, Agri Stats Inc. and Webber, Meng, Sahl and Company Inc.

The original lawsuit alleged that since at least 2014 the companies “conspired and combined to fix and depress” compensation to employees at about 140 red meat processing plants across the country, in violation of the Sherman Antitrust Act. The companies named in the lawsuit produce about 80% of all red meat sold to U.S. consumers.

The lawsuit said senior executives at the companies established and approved hourly wage rates, annual salaries and employment benefits.

“This highly regimented process for determining compensation allowed defendant processors to compare compensation practices — and collectively suppress compensation — across their workforces,” the employees alleged.

“Defendants implemented, monitored and enforced their conspiracy to fix and depress compensation paid to class members through a series of overt acts.”

The complaint said the companies conducted “secret” compensation surveys and held “secret” annual meetings that included executives from the companies named in the lawsuit.

“The purpose, intent, and outcome of these annual red meat industry compensation meetings was to depress and fix the wages, salaries and benefits of class members at artificially depressed levels,” the complaint alleged.

In addition, the lawsuit said the companies were in direct communication via senior executives who “extensively discussed, compared, and in turn further suppressed compensation through email and phone communications.”

The complaint said the companies entered into no-poach agreements, preventing the companies from recruiting the other companies’ employees.

“The intended and actual effect of defendants’ conspiracy to fix compensation has been to reduce and suppress the wages, salaries and benefits paid to class members since January 2014 to levels materially lower than they would have been in a competitive market,” the employees said in the lawsuit.


DTN – 2024

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