EL DORADO, Ark. -- Without admitting it violated the Fair Labor Standards Act of 1938, Pilgrim's Pride has agreed not to contest a judgment awarding more than $1 million to employees of its Dallas facility.

The judgment will award back pay to employees who were not previously compensated for the time spent putting on and taking off protective work clothing such as smocks, aprons and gloves required for their jobs at the plant.

Alleging the company violated "donning and doffing issues" under the FLSA, the U.S. Secretary of Labor filed the original complaint against Pilgrim's Pride on Aug. 6, 2007, in the Dallas Division of the Northern District of Texas. The case was transferred to the multi-district litigation pending in the U.S. District Court for the Western District of Arkansas, El Dorado division.

Pilgrim's Pride initiated the multi-district litigation on Jan. 17, 2007, and it currently consists of 13 private collective actions and one enforcement action brought by the Secretary of Labor. The 13 cases included claims from employees at 24 of Pilgrim's poultry production facilities.

The Department of Labor case was the only litigation to include claims from employees at Pilgrim's Dallas facility.

The lawsuits allege that Pilgrim's Pride failed to pay hourly processing employees time worked from the beginning and ending of their shifts when that time involved putting on, taking off or sanitizing necessary work-related clothing.

Court documents describe this as a principal activity that it is "integral and indispensable to the employee's work."

Pilgrim's filing for bankruptcy protection on Dec. 4, 2008, resulting in an automatic stay of the private lawsuits, however the Department of Labor litigation is not subject to that stay.

Shortly before the entry of the consent to judgment, all the parties agreed that it would be beneficial for the Department of Labor case to be removed from the multi-district litigation and remanded back to the Dallas federal court.

Before a remand could be issued, the Department of Labor and Pilgrim's Pride agreed to settlement.

In the agreement signed by U.S. District Judge Harry F. Barnes on Feb. 1, Pilgrim's Pride agrees it will not violate any provisions of the Fair Labor Standards Act, specifically stating that it will not employ anyone for longer than 40 hours per workweek without paying them overtime compensation.

This provision of the judgment will be effective within two years for non-union plants and for union plants that opt-in.

Pilgrim's Pride will reimburse employees at non-union plants for back pay with an additional two meal breaks. The Dallas processing plant employees will receive back-pay compensation.

Until the judgment is effective, the defendant will pay each employee at non-union plants with one meal break. The Dallas plant will receive compensation, equivalent to 82 percent of the previously unpaid time that will be calculated on a per-day basis. If necessary, an overtime premium will be added to these amounts.

Despite a collective bargaining agreement that states it is not necessary to pay for "donning and doffing time," union plants have 30 days to respond to the judgment to participate with the same terms as the non-union plants.

Under the terms of the agreement, Pilgrim's Pride will pay approximately $1 million to the Department of Labor to disperse to the eligible Dallas employees.

Approximately 800 current and former employees from the Dallas plant will receive overtime compensation, less the employees' share of income tax and social security deductions.

The agreement also reinforces that the company will maintain future compliance with the FLSA, including keeping adequate and accurate records of its employees' wages and hours. The Department of Labor reserves the right to continue to monitor for compliance but states that it will give Pilgrim's Pride an opportunity to correct any deficiency prior to initiating another enforcement action.

In a press release regarding the settlement, Pilgrim's Pride states it has agreed to modify its time collection procedures, which have been standard for decades.

"Both Pilgrim's Pride and the Department of Labor acknowledge that the agreement does not constitute any admission that the company violated any provision of the Fair Labor Standards Act," the press release states.

Pilgrim's Pride emerged from bankruptcy protection in December 2009, shortly after Brazilian beef giant JBS agreed to pay $800 million for a majority stake in the company.

Pilgrim's Pride employs about 41,000 people and operates chicken processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico.

U.S. District Judge Harry F. Barnes is presiding over the multi-district litigation.

MDL Case No 1:07cv1832
DOL Litigation Case No 3:07cv1352

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