Dive Brief:
- Meat industry giants, including JBS USA, Cargill, Hormel Foods, Tyson Foods, Perdue Farms and Smithfield Foods, are accused of conspiring to keep employee wages low in a federal class action lawsuit filed in Colorado earlier this month. Former processing employees at Smithfield, National Beef Packing Co. and Iowa Premium filed the lawsuit, but if certified, the class could include everyone employed at all of these companies from 2014 to the present.
- The lawsuit claims beef processors had secret annual meetings to discuss compensation of their employees, during which results of a survey by compensation consulting firm Webber, Meng, Sahl and Company (WMS & Company)— also a defendant in the case — were discussed. The lawsuit claims pork processors used highly detailed information from data collecting firm Agri Stats — another defendant — to set wages.
- Workers have accused meat producers of conspiring to keep wages low for years. In July, the U.S. Justice Department filed an antitrust lawsuit against Cargill, Sanderson Farms and Wayne Farms.
Dive Insight:
In the last several years, there has been quite a bit of successful pushback against the way meat processors have done business. This class action lawsuit is the latest example of former meat processing workers seizing the moment to argue for justice.
The lawsuit describes two separate conspiracies involving two separate industries. For beef companies, annual secret “Red Meat Compensation Meetings” were held behind closed doors. During the gatherings, company representatives discussed both the current compensation and benefits for their employees, plus future bonuses and raises, the suit says.
WMS & Company worked with this secret group to put together a detailed annual survey that recorded indepth compensation information for companies. The lawsuit says consultants who presented the survey results were often not present for the discussions. According to the lawsuit, the survey violated federal law because it was controlled by the companies themselves and included current and future salary information.
For pork producers, the lawsuit says companies used extremely detailed information on Agri Stats to compare labor costs. According to the lawsuit, businesses give Agri Stats their information and received access to the same information from competitors in return.
While the data is anonymized, the lawsuit said it’s easy for companies to know to whom it belongs to. Agri Stats, according to the lawsuit, “operate[s] a secret clearinghouse of information for the protein industry to aid companies in maximizing their profit margins at the expense of consumers, and in this case, workers.”
Most companies implicated in the litigation either had no comment or did not respond to requests for comment. Cargill said in an email that the company “conducts business in a legal, ethical and responsible manner” and “sets compensation independently to ensure that it pays fair and competitive wages to employees in each of the company’s plants.”
The issues at the heart of this case are similar to those that the DOJ and Biden administration have focused on recently.
The lawsuit outlines the power the large meat companies hold. Collectively, the defendants control more than 80% of all red meat production in the U.S. and about 140 processing plants. By keeping wages fairly standardized, as well as by adding non-compete clauses to employment contracts, it’s difficult for workers to move to other jobs that pay better, the lawsuit argues.
The DOJ’s antitrust lawsuit earlier this year against Cargill, Sanderson and Wayne Farms ended with an $84.8 million settlement to pay restitution for workers harmed by the purported scheme. WMS & Company also was implicated in the DOJ’s poultry lawsuit. A proposed settlement requires the company not to provide any more services about poultry industry compensation, as well as to cooperate with investigators in future poultry salary antitrust investigations.
Aside from taking action against what investigators have called conspiracies to keep worker wages down, the federal government also has supported actions to break up the meat processing monopoly.
Earlier this year, the Biden administration announced the commitment of $1 billion in American Rescue Plan funds to help independent meat producers compete with industry giants. Whether the federal government will get behind the impetus for this lawsuit is not known.
