Chicken industry conspired to keep wages low, lawsuit claims

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Dive Brief:

  • Three former chicken plant workers from Arkansas are suing 18 processing companies, subsidiaries and affiliates, and two consulting firms. They accuse the companies of conspiring to keep wages and benefits low for non-supervisory production and maintenance employees at about 200 plants, starting in 2009. The employees filed the lawsuit on their own behalf, but plaintiffs could include thousands of similar workers if it becomes a class action case.

  • The defendants include some of the largest chicken companies in the U.S. — Tyson Foods, Perdue Farms, Pilgrim’s Pride, Sanderson Farms, Koch Foods and several others — which process and produce more than 90% of chicken sold in the country.

  • The lawsuit, filed in federal court in Maryland, claims the companies took turns paying for yearly meetings at a Florida hotel to share wage and benefit information among human resources staff and other industry representatives. They would then use the information to fix wages and benefits at their plants, according to the complaint.

Dive Insight:

If successful as a class action, this lawsuit could cost some of the largest U.S. chicken processors a lot of money in damages. Even if it doesn’t succeed, the move could deliver another publicity black eye to an industry that has been accused of colluding to keep broiler chicken prices high. As Bloomberg reported, other lawsuits from consumers, distributors, retailers and food firms have followed the price-fixing complaint, and the U.S. Justice Department has intervened — with the potential outcome of criminal charges.

So far, the defendants in this latest complaint haven’t said much. Bloomberg noted most of them declined to comment about it, although Perdue spokeswoman Andrea Staub told the business news agency in an email that the company does not believe the lawsuit has any merit.

“Our compensation philosophy is to pay fair and in some cases above average wages,” she told the news agency.

The lawsuit goes into some detail laying out its case, saying the facts as presented are based on investigation by counsel, interviews with industry participants, consultation with economists and a review of public statements. A 2015 Oxfam America report cited in the complaint put average poultry processing line wages at about $11 per hour, with annual income between $20,000 and $25,000.

The complaint describes plant employees as “migrant workers, refugees, asylum-seekers, immigrants employed under EB3 visas, prison laborers and participants in court-ordered substance abuse programs.” Such people are already in a vulnerable position, according to George Farah, a lead plaintiff attorney and a partner at Handley Farah & Anderson in Washington, D.C.  He told AL.com chicken processing work is “grueling and extremely dangerous.”

The industry has had trouble finding enough workers to staff processing plants, and recent immigration raids have only piled onto the problem. Possible additional raids could mean more costs for the poultry companies, which may have to find other workers on short notice. The added operational costs could show up as higher prices at the grocery store.

According to 2017 U.S. Department of Labor data cited by Forbes, 57% of the U.S. agricultural workforce is undocumented. Since U.S. unemployment remains relatively lowfood businesses looking to fill processing positions are having a tough time, even when they only hire documented workers. 

So far, these challenges don’t seem to have had a serious negative impact on the chicken industry. Per-capita consumption is up — it hit a record of 93 pounds last year — and many consumers find chicken to be a versatile and convenient protein option. Whether they will feel the same way if the price-fixing or wage conspiracy lawsuits are successful remains to be seen.

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