New DOL independent contractor rule may not be a cure-all for chicken farmer

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by Dave Dickey, Columnist, Investigate Midwest
June 5, 2024

Chicken farmers have long chafed at Big Poultry’s tournament system where neighboring farms are pitted against one another.

Big Poultry says the system is all puppy dogs and blue skies.

It isn’t.

Producers working under a tournament contract have little control of their businesses. It’s the poultry companies that decide what to give farmers – including the number and quality of chicks and feed.

Poultry companies also decide which producers must make facility upgrades that can potentially drive growers into debt. If it sounds like poultry companies have growers under their collective thumbs…well, they do.

And here’s the kicker. Big Poultry exerts all this control over most every step of production while simultaneously insisting poultry farmers are not company employees but independent contractors.

For Big Poultry, keeping farmers off the company payroll is good business. Otherwise, poultry companies would be on the hook for guaranteed wages and benefits like reimbursement of expenses, overtime, vacation, paid time off, pensions, and health insurance.

Independent contractors get none of that.

To be sure, poultry producers classified as independent contractors by poultry companies have brought lawsuits, notably Roger Parker v. Perdue Farms Inc, et al, and Michael Diaz, Jean-Nichole Diaz and Diaz Family Farms v. Amick Farms, LLC. Neither case has gained much traction in the courts.

Earlier this year, the Department of Labor finalized what it calls a “totality-of-the-circumstances” framework for determining whether someone is an independent contractor under the Fair Labor Standards Act.

The DOL says the new analysis will use six non-exhaustive factors:

  1. Nature and degree of control by the employer over the worker
  2. Extent to which the work performed is integral to the employer’s businesses
  3. Investments by the worker and the employer
  4. The opportunity for profit or loss depending on managerial skill
  5. Degree of permanence of the work relationship
  6. Skill and initiative

On the surface it would seem that poultry farmers will have new compelling arguments at their disposal to claim they are employees of Big Poultry entitled for fair wages and benefits.

Poppycock. You can bet Big Poultry attorneys are drawing up new contracts right now to get around the DOL rule and force poultry producers to waive their rights or make it difficult to prove employee status. Here are some things poultry companies might consider:

  • A clause that makes it clear that poultry companies in no way exert control over the work performance of chicken producers.
  • Stripping contracts of all references to poultry companies having an exclusive agreement or exclusive arrangement that controls all aspects of grower production.
  • A clause that adds arbitration policy along with a class-action waiver to prevent producers from banding together.

You get the idea. Big Poultry is sure to be proactive in ensuring poultry farmers stay independent. Which will lead to yet another round of lawsuits.

Not to mention that the DOL rule has no effect on state employee classification standards. And the new DOL is transitory. That means yet another independent classification standard could be in the cards if Joseph Biden loses the presidency in November. After all, totality-of-the-circumstances analysis replaced two core factor analysis instituted by former president Donald Trump’s DOL.

Being brutally honest, poultry producers have been stepped on by Big Poultry for decades. And it isn’t likely to change soon.

This article first appeared on Investigate Midwest and is republished here under a Creative Commons license.

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