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A federal wage and hour lawsuit against Perdue Farms Inc. exposes the well-known chicken processor to $60 million or more in potential liability for allegedly underpaying its employees. The suit arose out of the chicken processor’s demands that employees don, doff and clean various items of safety equipment on their own time at processing plants, even though work rules require the equipment. U.S. District Judge Roderick McKelvie approved class action status for the suit in August — although the 3rd U.S. Circuit Court of Appeals has agreed to hear an appeal of McKelvie’s order. As currently constituted, the class covers about 50,000 workers and former workers in eight states, including Delaware. “What it really boils down to is that employees are required to work at certain times that they are not paid for,” said James M. Finberg, plaintiffs’ counsel from Lieff Cabraser Heimann & Bernstein in San Francisco. “All we are saying is you’ve got to pay people for the time that you require them to work.” ERISA VIOLATIONS CLAIMED Nine plaintiffs filed suit against the large chicken processor in December 1999, seeking damages for the uncompensated time under the federal Fair Labor Standards Act and state wage and hour laws. Plaintiffs also claimed damages under the Employment Retirement Income and Security Act for the company’s failure to contribute to a supplemental retirement plan. “Perdue’s practice of requiring or permitting its hourly non-exempt employees to work off-the-clock is in violation of the FLSA because members of the plaintiff class perform work in excess of 40 hours per week without receiving” overtime compensation, the complaint alleged. State laws are violated because no straight and overtime pay is allowed, according to the suit. The FLSA charges cover all Perdue nonexempt employees who have worked at any time from Dec. 16, 1996, to the present in one of the company’s 16 processing plants in eight states. The plaintiffs also are suing under state wage and hour acts in Delaware, Kentucky, Maryland and North and South Carolina. Some of the states allow damages to be tripled if Perdue is found to have willfully shorted employees, Finberg said. The FLSA permits doubling of damages for willful violations. Thus Perdue’s liability could be significantly greater than $60 million, which is the estimated amount of straight and overtime (time-and-a-half) wages and pension contributions owed. The off-the-clock work violates ERISA, the suit continues, because plaintiffs cannot accrue benefits under the retirement plan as Perdue doesn’t record, report credit and compensate employees for the work. Under the pension plan, Perdue is supposed to match 2 percent of an employee’s contribution, Finberg said. ‘LINE TIME’ PAY Perdue employees are paid only for “line time,” the suit alleges. Under this method of compensation, employees’ paid time starts only when chickens arrive at the beginning of a process line. Time spent putting on, taking off and cleaning safety equipment isn’t compensated for, the lawsuit states. “At the end of the paid line time, a supervisor … ‘clocks out’ all employees on the production line when the last chicken or chicken product enters the beginning of the line. Thus, at approximately the same time that the first person on the line performs his or her work on the chicken, the supervisor records an end to paid time for all employees on the line at once,” according to the lawsuit. “The chicken that the first employee processed, however, continues moving down the line, even though paid line time has ended. Employees farther down the line must continue to work on the line, without compensation, until either a replacement worker arrives or they have completed their particular assigned task.” Defense attorneys contacted would not comment on the suit. However, in Perdue’s answer to the complaint, the company claimed that plaintiffs failed to use the supplemental retirement plan’s dispute resolution process to establish that they would be entitled to any additional benefit. Thus the company maintains that plaintiffs “failed to establish that any act or omission of defendant Perdue … prevented the attainment of any right under the plan.” Perdue also pleaded estoppel and “unclean hands” on the part of the plaintiffs as defenses against alleged ERISA violations. The “equitable doctrines … [are] applied to prevent parties from accepting the advantages of arrangements with others (as, in this case, a relatively higher hourly rate of pay), and then seeking to enrich themselves unjustly,” the company asserted. The answer further states that Perdue “had no knowledge of, nor should they have had knowledge of, any alleged off-the-clock work by plaintiffs.” Potter Anderson & Corroon in Wilmington, Del., is counsel for Perdue, which is also represented by Haynsworth Baldwin Johnson & Greaves of Greenville, S.C. Local counsel for plaintiffs is Heimann Aber Goldlust & Bakern in Wilmington, Del. An attorney at the local firm had no comment. The case is Leon Trotter, et al. v. Perdue Farms Inc, et al., Case No. 99-893.

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