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Tyson, Perdue Farms, Pilgrim's Pride, Others Accused of Wage-Fixing

Sept. 3, 2019
The plaintiffs allege that leaders of the companies conspired with one another in order to fix wages for low-opportunity workers.

Companies producing more than 90% of America’s chicken have conspired to depress wages for a largely immigrant work force in some of the nation’s most dangerous jobs, according to a lawsuit.

The case filed last week is mostly based on interviews with former employees, and claims the conspiracy among 18 companies, their subsidiaries and affiliates and two consulting firms continues until today. It was filed on behalf of three former workers, but seeks class-action status for hundreds of thousands, many with limited language skills and few other prospects for employment.

Since 2009, leaders of the firms’ human resources and compensation departments have held annual secret meetings at a Destin, Florida, hotel to discuss pay and benefits for line and maintenance workers at about 200 plants, according to the complaint in Baltimore federal court. Using consulting agencies as intermediaries, the suit says, they share detailed wage information. Plant managers also cooperate, for example calling each other when one announces an expansion to find out what new positions will pay, it says.

Chicken producers are getting used to being on the receiving end of litigation. Three years ago, a class-action lawsuit filed by Maplevale Farm, a food distributor, accused them of price fixing enabled by the Indiana-based data company Agri Stats Inc. Lawsuits from consumers, distributors, grocery chains and food companies followed, and this summer the Justice Department intervened. It asked the court to halt proceedings while it pursued its own criminal investigation.

Big Chicken

The new litigation targets 18 processors including Tyson Foods Inc. (IW500/30), Sanderson Farms Inc. (IW500/280), Mar-Jac Poultry Inc., Wayne Farms Inc., Perdue Farms Inc. and Pilgrim’s Pride Corp. (IW500/107), their subsidiaries and affiliates, as well as Agri Stats and Pennsylvania consultant Webber, Meng, Sahl and Co. Inc.

“We do not believe this suit has any merit,” Andrea Staub, a Perdue spokeswoman, said in an email. “Our compensation philosophy is to pay fair and in some cases above average wages.”

Tyson, Mar-Jac, Wayne and Sanderson declined to comment. The other companies and consultants didn’t reply to requests for comment.

The suit, which seeks unspecified damages, is about more than money, said the lead plaintiff attorney.

“These workers are some of the most vulnerable workers in the United States,” George F. Farah, a partner at Handley Farah & Anderson PLLC, a Washington-based firm that pursues cases against corporations on social-justice grounds. “I can’t think of a more important case I’ve pursued in my entire career.”

Chicken is the country’s most popular and cheapest protein: Americans will eat an estimated 94.3 pounds each in 2019, according to the National Chicken Council, and they will pay only $1.90 a pound. Preparing all that meat is gruesome and hazardous. Poultry workers suffered occupational illnesses at a rate five times higher than other U.S. workers in 2013, according to a 2015 Oxfam report, and 72% reported significant work-related illness or injuries.

Targeted Population

Finding people willing to do the job has become a challenge, as a 2018 industry report noted, and tougher immigration enforcement has made that even harder than usual.

On Aug. 7, federal agents raided seven Mississippi plants, arresting 680 undocumented workers. Under President Donald Trump, who ran on limiting legal immigration and forcibly removing undocumented residents, work-site investigations by U.S. Immigration and Customs Enforcement surged to 6,848 in fiscal 2018 from 1,691 the year before. Trump praised the Mississippi raids as a “good deterrent.”

The defendants in the new case have employed hundreds of thousands of workers, according to the complaint. A laborer may be exposed to live animals, sharp knives, repetitive motions and a litany of other dangers. Wages average about $11 per hour, keeping employees near or below the poverty line, Oxfam found.

Most of the country’s chicken comes from a concentrated region in the Southeast. Plants are so near that each company “owns and operates a chicken processing plant that is within 28 miles of a competitor’s processing plant,” according to the suit. That should make the labor market competitive, with workers able to move to the employer that pays best. Instead, the would-be competitors collude, according to the suit.

“As a pure antitrust matter it looks really strong, like there was a pattern of coordination in shared control over wages,” said Peter Carstensen, a former antitrust lawyer for the Justice Department and a University of Wisconsin law school professor.

Giving, Taking

While companies have said they are paying more and offering new benefits and better conditions, the plaintiffs claim that wage increases were offset with changes to other benefits, like higher health-insurance premiums. Further, their economists found that wages at non-poultry food plants were both higher and increased faster than those at the defendants’ plants.

The scheme began in 2009 or even earlier, according to the filing. Executives in charge of human resources, compensation and benefits would meet at “off the books” meetings in Destin, often around the same time as an annual human-resources seminar held by the U.S. Poultry & Egg Association. The meetings didn’t appear on published schedules, according to the suit.

The association didn’t respond to request for comment on the case.

Information was also shared through annual surveys commissioned by a rotation of the largest three processors, the suit says. Webber, Meng, Sahl ran the studies and provided data including average wages for each position on a processing line and the number of people in a given plant that held such a position. Benefit information like insurance premiums, time off and retirement-plan contributions were also included. Data were technically anonymous -- numbers replaced company names -- but the highly specific information made firms readily identifiable when officials met, the suit says.

Senior executives of the accused companies chastised rivals “that had deviated -- by making unauthorized increases to worker compensation -- from agreed-upon wages that had been fixed at prior in-person meetings,” the suit alleges.

Poultry Nexus

Information-sharing was also enabled by Agri Stats, according to the suit. The company was accused in the previous suit of playing a central role in fixing prices, an allegation denied by the defendant companies. Agri Stats also collects and distributes wage and compensation data for each category of worker, according to the new filing.

The anonymous information exchanged each month through Agri Stats is specific enough that it is traceable to specific plants: The companies “used the Agri Stats exchange of current wage data to fix and harmonize the wages,” the suit said. They used the data “to monitor, and confirm that no conspirator deviated from, the wage-fixing conspiracy.”

The allegations against Agri Stats are essential to the case, said Carstensen, the law professor.

“The kind of information that Agri Stats is producing for its subscribers, the detailed wage information, raises serious concerns, because it gives everyone involved a basis to restrict and limit how they compete,” Carstensen said.

Corporate headquarters also instructed plant officials to obtain wage information at competitors, according to the complaint. Human resources staff would regularly speak to discuss pay, raises and benefits.

In 2017, for example, a Tyson plant in Union City, Tennessee, was planning to expand, and a manager at a nearby Pilgrim’s plant requested future pay rates for the positions, according to the complaint. Another manager at the Pilgrim’s plant called a nearby Perdue facility for its rates. This information and more was then compiled into a document and sent to Pilgrim’s executives at corporate headquarters in Colorado.

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