Employees Sue Plant over “Gang Time” Pay

A lawsuit against a meat processing plant asks the question of whether employers or the law have the final say on what aspects of a job are compensable. The lawsuit, which was filed on behalf of workers at Creekstone Farms Premium Beef in Arkansas City, Kan., recently received conditional class action status from a federal judge.

At the heart of the suit is whether the plant properly compensated its estimated 700 workers for overtime they accrued. The plant has a policy to pay all hourly line employees using a compensation scheme known as gang time.

“Gang time is an industry term of art that means the employees get paid, essentially, for the time they spend on the production line,” says Mark Kistler, an attorney at Brady & Associates who is representing the plaintiffs in the case. “They generally don’t get paid or get underpaid for the rest of their compensable time, which is mostly pre-shift and post-shift.”

In the case of the Creekstone employees, this alleged unpaid compensable time includes such duties as putting on and removing protective gear. The plant does allocate each employee an extra 10 minutes of paid time to account for these activities, but the plaintiffs allege this is insufficient.

“Employees have to go to their locker rooms, put on protective gear, stand in line to get more gear and sometimes stand in line to be issued tools and cutlery,” Kistler says. “And they have to walk to different stations in this large facility for all this. And they have to do this all off the clock. That’s illegal, in a nut shell.”

Improper Pay Scheme

Gang time pay schemes are most often found in labor-intensive settings, such as line workers at a factory. Employers sometimes also use such a pay scheme in call centers. For instance, many call center employees are only paid per a set schedule. However, oftentimes these employees must arrive early to open computer programs and respond to emails, both of which are compensable activities.

Leonard Emma

“Essentially, gang time is when people are compensated for the time during which processing is moving forward as opposed to other means of considering hours worked, such as when the person walks into the building and clocks in with a punch card,” says Leonard Emma, an attorney at the Law Offices of Randall Crane.

Besides completing compensable duties outside of paying hours, another issue that arises with gang time is if work suddenly stops. For example, if an assembly line is temporarily down due to a technical issue, would an employee not be able to collect pay during this? This issue was brought up in a 2005 Supreme Court case known as IBP v. Alvarez that also dealt with workers at a meat processing plant.

“What the Alvarez case decided was that under the continuous workday rule, there is no such thing as an employee performing a few minutes of work and then being off the clock and then back on the clock and then off,” Kistler says. “Once the worker is on the clock, the continuous workday rule applies.”

A Calculated Risk

Kistler estimates that each employee involved in the Creekstone lawsuit may have a claim of about $1,000. If he can prove that Creekstone violated labor laws intentionally, he can seek double that amount for his clients. This means the suit could potentially cost the meat supplier as much as $1.4 million.

Although this represents a huge expense to the company, Kistler says these kind of wage-hour disputes are all too common in certain industries, such as meat processing.

Mark A. Kistler

“The Department of Labor has made it clear that putting on this gear, sanitizing it and walking through the facility to do all this is considered compensable time,” he says. “But I would say the majority of food processing employers just ignore that.”

Kistler says these companies take a calculated risk based on the nature of the law. Under federal law, these types of class action cases require employees to opt in to participate in the lawsuit. This is different than the normal class action process where eligible class members usually have to actively opt out.

“I think that most of these employers in these labor-intensive industries have decided it pays to break the law,” Kistler says. “They think fewer than 50 percent of employees will opt in to a lawsuit so why not violate the law?”

However, increasingly there are state statutes that allow for plaintiffs to bring an opt-out class action in addition to exercising their rights to an opt-in class action under federal law. Kansas is one of these states.

“I think a lot of employers going to have a rude awakening when they discover some states’ laws can provide for an opt-out class action,” Kistler says.

What Can You Do?

Many of these employees who are being inappropriately compensated aren’t even aware of their rights under the law. And those that are often refrain from exercising their legal rights for fear of retaliation by their employer.

Furthermore, some of these employees are subject to collective bargaining agreements that allow the employer to compensate employees in a way that would normally violate federal law.

“People’s rights can be modified via a collective bargaining agreement,” Emma says. “These agreements can have provisions that diverge from the law.”

Kistler recommends that employees who do decide to confront their employers issue their grievance in writing. This way, in the event that retaliation does occur, a copy of the grievance can be provided as evidence of retaliation in court.

If you are not comfortable directly confronting your employer, seek out the assistance of a knowledgeable employment lawyer who is familiar with wage-hour laws.

“Employees defer to their employers with regard to believing the employer can decide what is and is not compensable time,” Kistler says. “And that is not true. The employer does not get discretion. The law does.”