7 Lessons in Employee Management from the Tyson Foods Contract Worker Ruling

The court ruled 6-2 to uphold a decision that Tyson pork-processing workers in Iowa must be paid a total of $5.8 million as a class for time they spend putting on their protective material and cleaning up their equipment used in slaughtering and processing animals. If you hire contract workers, you might want to spend some time with your legal counsel and chief human resource officer to find out if there are any similarities to the Tyson case that could affect your business down the road, and look at possible proactive corrective measures that might reduce your risk.

Tyson had hoped to be protected by the principle of the court’s ruling in a 2011 sexual-discrimination case, Wal-Mart vs. Dukes, in which the Supreme Court held that all of Wal-Mart’s female workers couldn’t be considered a class for purposes of the suit.

“Wherever gear is definitively required by the work itself, it is advisable for employers to carefully consider compensating such donning and doffing time.”

But the court sided with the workers in Tyson Foods vs. Buaphakeo in ruling that the employees did represent a class and that after-the-fact evidence of the amount of time it took them for work preliminaries and post-liminaries was enough to find that the company owed them some back pay—even though Tyson didn’t keep records of the time its workers put into such activities.

“If CEOs put their ears to the ground, they can hear the galloping four horsemen of the class action bar heading toward large businesses everywhere,” opined Rich Trimber, a business attorney who also has been COO of two manufacturing companies that had to address the issue of how to track hourly employees who wore safety gear.

Here are 7 lessons that executives and legal experts believe CEOs and COOs should apply from the Tyson ruling.

1. Throw out reassuring assumptions. Many business leaders “took false comfort” in the court’s previous rulings in Walmart and one involving a purported class action against Comcast, “as if those decisions meant that class actions based on statistical evidence were effectively dead,” said Mark Konkel, partner in the labor and employment practice at the Kelley Drye & Warren law firm.

2. Snoop out potential problems. Trimber urged manufacturing executives to “find out what is happening in your company’s operations” in relevant areas. “Get the payroll reports and hourly reports to determine if there is an inchoate liability (currently not paying overtime that should be paid) or an expense liability (employees on the clock longer than necessary to clock out) and change the organization to fix the issue.”

3. Pay up. Companies’ examination of their vulnerabilities in this area might lead them to the conclusion that they need to compensate workers for such activities before being pressed to do so. “Wherever gear is definitively required by the work itself, it is advisable for employers to carefully consider compensating such donning and doffing time,” said Stefani Schwartz, employment-law attorney at Schwartz Simon Edelstein & Cels.

4. Don’t think a lack of records will help. Just because a company failed to record activities doesn’t mean worker plaintiffs—and judges—won’t fill the vacuum. “Courts will be inclined to find a way to provide a remedy, as the court did here, even if doing so results in assumption-laden ‘rough justice’ that potentially overpays some employees and underpays others,” said Kevin McGinty, co-chair of the class action working group at the Mintz Levin law firm. “This is Monday morning quarterbacking at its finest.”

5. Redouble efforts to keep accurate records. Some attorneys believed that the Supreme Court would have acted more charitably toward Tyson’s point of view if the company had bothered to keep its own records of its workers’ activities, understanding that they obviously were job-related. “According to the majority’s opinion, the employees were forced to use representative evidence because Tyson failed to maintain records of donning and doffing activity,” noted Justin Wolosz, litigation partner at law firm Choate Hall & Stewart. “Perhaps the court would be less inclined to credit statistical or representative evidence in a case where there is no suggestion that the defendant is responsible for any evidentiary gaps.”

6. Be ready to challenge others’ evidence. At the same time, Wolosz said, “Defendants facing class-action allegations need to explore any viable challenge to this type of statistical evidence, which can smooth over differences that would otherwise require individual determinations and could make class treatment appropriate.”

7. Make sure you take a global approach. Sometimes manufacturing leaders can open themselves up to Tyson-type problems because of inconsistencies in policy application. “Review your global policies and examine how those policies are actually being implemented at the local level,” advised Christopher Trebilcock, co-leader of the employment and labor group at the Miller Canfield law firm in Detroit. “If you are going to be held to having a common policy, you should be sure it is actually the practice.”