HR Magazine Guest Article: Protect Against Derivative ERISA Claims


Smock, hairnet, earplugs, bump cap, steel-toed boots, safety glasses and cut-resistant gloves. Each day poultry processing employees across the nation arrive early - well before their shifts begin - to sanitize and don this protective gear. When their shifts end, those employees, covered in the offal of slaughtered chickens, head back into the locker room to reverse the process.

In 1997, the U.S. Department of Labor (DOL) ruled that employers must pay employees for time spent donning and doffing (removing) protective equipment. At the time, this wasn’t the practice of most poultry industry employers. As a result, while they adjusted to the new rule, their employees began suing for back pay.

One poultry processor, Perdue Farms, faced a donning and doffing class-action lawsuit under the Fair Labor Standards Act (FLSA) - with a new twist. Rather than put all their eggs into the wage and hour basket, the 16,000 employees also scrambled up a side dish of derivative claims under the Employee Retirement Income Security Act (ERISA). The employees squawked that, because they were underpaid for donning and doffing time, they received smaller contributions in their employer-sponsored retirement accounts than what the plan required.

Excerpted from HR Magazine, January 10, 2014. To read the full article, click here (subscription required).

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