Smithfield Foods has agreed to pay $7.75 million to settle claims from workers that their overtime pay was set too low during the pandemic.
The agreement will resolve a class-action lawsuit brought on behalf of 30,000 Smithfield workers in an Illinois federal court. The average worker in Illinois will receive a payment of $244 according to the settlement motion, which will probably approximate the payment for the rest of the class.
Like most employers, Smithfield calculates overtime pay as a function of base pay. The issue was how that base pay should be determined. Starting in May 2020, during the early stages of the pandemic, Smithfield offered bonuses of $500 cash, plus extra hourly pay, to employees who showed up reliably. The lawsuit, filed in August, contended that these bonuses should have been figured as part of baseline pay when the overtime rate was calculated; Smithfield held that these were discretionary gifts.
The plaintiffs’ lawyers filed the settlement motion March 12, unopposed by Smithfield, according to Law360.com. The two sides had reached the settlement last month.
