Federals sue poultry producers, alleging unfair labor practices

The Justice Department filed a lawsuit Monday against some of the largest US poultry producers along with a proposed settlement that seeks to end what it claims are long-standing deceptive and abusive practices of workers.


What you need to know

  • The Justice Department filed a lawsuit Monday against some of the largest US poultry producers along with a proposed settlement that seeks to end what it claims are longstanding deceptive and abusive practices of workers.
  • The lawsuit, filed in federal court in Maryland, includes the names of the companies Cargill, Sanderson Farms and Wayne Farms, along with the data consulting firm known as Webber, Meng, Sahl and Co. and its boss
  • The government alleges the data consulting firm helped share information about workers’ compensation with companies and their CEOs
  • The lawsuit is the latest example of the Justice Department’s antitrust application targeting companies the government believes are engaging in anticompetitive behavior to stifle workers or harm consumers.

The lawsuit, filed in federal court in Maryland, includes the names of the companies Cargill, Sanderson Farms and Wayne Farms, along with the data consulting firm known as Webber, Meng, Sahl and Co. and its head.

In its lawsuit, the Department of Justice alleges that the companies were involved in a multi-year conspiracy to share information about wages and benefits for workers in poultry processing plants to reduce employee competition in the marketplace. The companies did not immediately respond to messages seeking comment.

The government alleges that the data consulting firm helped share information about workers’ compensation with companies and their executives. By implementing the scheme, officials claim, companies were able to compete less intensely for workers and reduce the amount of money and benefits they had to offer their employees, suppressing competition for poultry processing workers across the board, according to court papers.

The defendants and conspirators, whose names were not disclosed in the lawsuit, spent about 90% of all chicken processing jobs in the country.

The lawsuit is the latest example of Justice Department antitrust law enforcement targeting companies the government believes are engaging in anticompetitive behavior to stifle workers or harm consumers. It also comes as the department continues a broader investigation into labor abuses in the poultry industry.

“Through a shameless scheme to share wage and benefits information, poultry manufacturers have stifled competition and harmed a generation of factory workers who are facing difficult and sometimes dangerous conditions to earn a living,” said Dawha Makki, First Deputy Assistant Attorney General for Justice. Department of Antitrust Department.

The lawsuit was filed against the companies with a proposed consent decree – a settlement that would require companies to pay $84.8 million in compensation to workers harmed by the illegal information-sharing network.

The settlement will also put in place a federal monitor selected by the Department of Justice who will ensure compliance with the upcoming contract. The approval decree would also allow Department of Justice attorneys and investigators to inspect poultry processing facilities and interview their employees to ensure they comply with conditions, according to court documents.

The lawsuit comes as Cargill and Continental Grain, of which Wayne Farms is a subsidiary, formed a joint venture to acquire Sanderson Farms, paying $203 per share in cash to a company that last year processed more than 4.8 billion pounds (2.2 billion kilos). of meat.

The companies plan to combine Sanderson Farms and Wayne Farms to form a new privately owned poultry business. Operations will include poultry processing plants and ready-to-eat plants throughout Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina and Texas.

Wayne Farms has more than 9,000 employees. Products are made under brand names including Wayne Farms Fresh Prepared Chicken, Platinum Harvest Premium Fresh Chicken, Chef’s Craft Gourmet Chicken, Naked Truth Premium Chicken and Ladybird Premium Chicken.

Sanderson Farms in Laurel, Mississippi has 17,000 employees and 12 factories. It processes 13.6 million chickens per week.

The proposed consent decree would also resolve allegations that Sanderson Farms and Wayne Farms unfairly treated chicken farmers using a system that undercuts their pay for underperformance.

Farmers sign contracts to raise chickens, and processing companies provide birds and feed. The farmers’ salaries are then determined by how well they perform compared to other chicken farmers. The Department of Justice alleges that companies’ use of this compensation method, known as a “championship system,” has resulted in their failure to provide information to farmers to assess and manage financial risk.

In general, chicken producers enter into long-term contracts with meat companies, which farmers say lock them up in deals that set their compensation at unprofitable low levels.

As part of that settlement, Sanderson Farms and Wayne Farms will be prohibited from reducing basic payments to chicken farmers as a way to penalize them for poor performance. However, the approval decree will allow companies to offer incentives and bonuses to farmers.

The proposed consent decree with the poultry companies and the one with the data company was brought to court on Monday. Under federal law, the proposals will also be published in the Federal Register and there will be a 60-day period for people to submit their comments to the Department of Justice before the court accepts and finalizes the agreements.

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