Tyson Foods and U.S. Government Agree On Wage and Hour Plan

Tyson Foods, Inc. (NYSE:TSN) and the U.S. Department of Labor (DOL) have reached an agreement that could serve as a model for the way some workers in the poultry industry are paid.

Tyson and the government today filed a joint motion in federal court to resolve a May 2002 DOL lawsuit, which sought back wages at the company's Blountsville, Alabama, poultry plant and prospective injunctive relief at the company's other poultry processing facilities. The DOL alleged the company violated federal law by not paying overtime compensation to workers for putting on and taking off certain sanitary and protective clothing before and after their production shifts. Company officials denied any wrongdoing and said the case is an example of an ongoing, nationwide legal debate over what types of activities are compensable under the Fair Labor Standards Act.

Tyson's position was almost completely vindicated in November 2009 when a federal jury in Birmingham, Alabama found no evidence of a recordkeeping violation by the company and awarded only $250,000 of the $8 million the DOL requested for workers at the Blountsville plant. The money was meant to compensate 3,000 workers for overtime wages over a ten year period.

The company and DOL subsequently negotiated the resolution, which was filed in court today. Under the agreement, Tyson will gradually modify timekeeping practices at its poultry plants and certain prepared foods plants over the next two and half years. The company will provide 8 or 12 minutes of extra pay per shift on an interim basis to certain hourly processing line workers. By December 2012, the company will implement a more permanent modification, making arrangements for workers to "clock in" before they put on certain clothing items and "clock out" after the clothing items are taken off.

"We value our employees and like other business across the country, have strived to comply with federal wage and hour laws that are not precise in their description of what activities are compensable," said Ken Kimbro, Senior Vice President Human Resources for Tyson Foods. "We've decided to resolve this case and modify our pay practices for certain jobs in order to avoid the continued expense and disruption of further litigation."

The changes in pay practices are expected to affect between 33 and 47 Tyson plant locations across the country and as many as 38,000 employees.

Tyson poultry workers who are represented by a union will not be affected by the interim measures. However, the unions may choose to accept the post-December 2012 system if they "opt-in" during the next 60 days.

As part of the agreement, Tyson will also pay $500,000 to resolve all monetary and injunctive relief issues in the case, including all claims for back pay. The DOL will distribute the payments to an estimated 3,000 current and former Blountsville workers. The payments will range in value from $1 up to about $2,500, before legally-required withholdings.

If approved by the U.S. District Court in the Northern District of Alabama, the agreement between Tyson and the DOL will take effect on June 8, 2010.

Tyson Foods, Inc., (NYSE:TSN), founded in 1935 with headquarters in Springdale, Arkansas, is one of the world's largest processors and marketers of chicken, beef and pork, the second-largest food production company in the Fortune 500 and a member of the S&P 500. The company produces a wide variety of protein-based and prepared food products and is the recognized market leader in the retail and foodservice markets it serves. Tyson provides products and services to customers throughout the United States and more than 90 countries. The company has approximately 117,000 Team Members employed at more than 400 facilities and offices in the United States and around the world. Through its Core Values, Code of Conduct and Team Member Bill of Rights, Tyson strives to operate with integrity and trust and is committed to creating value for its shareholders, customers and Team Members. The company also strives to be faith-friendly, provide a safe work environment and serve as stewards of the animals, land and environment entrusted to it.