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Law360 (March 15, 2021, 7:58 PM EDT) -- Pork producer Smithfield Packaged Meats Corp. agreed to pay $7.75 million to more than 30,000 workers who claimed the company stiffed them on correct overtime pay while they toiled in dangerous conditions during the COVID-19 pandemic.
In an unopposed settlement motion Friday, named plaintiffs Douglas Canas and Vanessa Meschino asked an Illinois federal court to preliminarily approve both a collective and class action of workers who said Smithfield should have calculated overtime pay based on pandemic hazard bonuses the company handed out instead of on their regular base rates.
The proposed agreement is motivated in part by the parties' interest in averting lengthy and costly litigation, the motion said.
"By settling these claims, the [workers] are assured of a recovery," the filing said. "It is a considerable amount that will reach class members during this troubling time, when they need this money the most."
Illinois workers, numbering just over 2,400, can recover wages under Illinois Minimum Wage Law, as well as under the Fair Labor Standards Act
collective action, according to the proposed agreement.The Illinois class will get over $589,000 with an average individual payment of $244, according to the motion.
The FLSA group includes any current or former nonexempt employees who worked at Smithfield or Kansas City Sausage Co. anywhere in the country who got at least one of the bonus payments but whose overtime pay rate was not calculated with the bonus factored in.
Members of either class are expected to get at least $38, according to the motion.
In May, Smithfield paid its workers a so-called "responsibility bonus" of $500 plus extra hourly pay for straight time, according to court filings. Canas sued Smithfield in August 2020, arguing that the bonuses should have been incorporated into calculating overtime compensation.
The complaint invoked the frightening early days of the pandemic when factory workers across the country risked their lives to keep production lines going and a nation fed.
"Despite these dangerous work conditions, Smithfield still needed its workers to show up to work at its slaughterhouses and distribution centers because it is an enormous pork producer," the complaint said. "This bonus was well deserved: These workers were literally risking their lives by potentially contracting COVID-19."
Smithfield rebuffed these claims, arguing that the bonuses were gifts in recognition of these very hardships, according to court filings. As discretionary gifts, the bonuses need not be included in overtime pay calculations, Smithfield argued.
Moreover, Smithfield leaned on the conclusion of a U.S. Department of Labor evaluation of the responsibility bonus, which found they were discretionary payments, according to the motion.
"While [the workers] were confident in their claims, there was some uncertainty because an adverse ruling on these or other issues could result in plaintiffs receiving no damages whatsoever," the motion to approve the preliminary settlement said. "With a DOL investigator's opinion supporting [Smithfield's] position, along with the unchartered waters of operating in an unprecedented pandemic, Smithfield would likely argue that it acted in good faith."
The parties agreed to this preliminary settlement at a conference in February.
Canas and Meschino said they will request service awards of $7,500 each.
About $20,000 from the settlement will be reserved to cover any outstanding claims or possible mistakes. Whatever is leftover from that portion of the settlement will be donated to Feeding America's COVID-19 program, according to the motion for preliminary approval.
The plaintiffs' attorneys plan to request one-third of the nearly $8 million settlement fund at the final hearing on the agreement.
This proposed settlement is one of many wage and hour lawsuits brought on by pandemic hazard pay policies across the country.
Attorneys for the workers and Smithfield did not immediately respond to requests for comment.
The plaintiffs are represented by David Fish, Kim Hilton and John Kunze of the The Fish Law Firm PC.
Smithfield is represented by D. Christopher Lauderdale, Jeffrey L. Rudd and T. Chase Samples of Jackson Lewis PC.
The case is Canas v. Smithfield Packaged Meats Corp., case number 1:20-cv-04937, in the United States District Court for the Northern District of Illinois.
--Editing by Leah Bennett.
For a reprint of this article, please contact reprints@law360.com.
