Sanderson Farms to pay $2.6M to settle suit

Chicken producer Sanderson Farms Inc. said Monday it will pay $2.6 million to former and current hourly workers that claimed the company owed them compensation.

The company said a Louisiana court approved the settlement agreement for the 8,337 employees. Under the agreement, all pending litigation will then be dismissed.

The employees filed suit against Sanderson Farms claiming they were entitled to compensation for time spent walking to and from their workstations and donning and doffing protective gear.

"While we are confident our pay practices are and have been legal and appropriate, a United States Supreme Court decision involving other companies created uncertainty regarding whether time spent donning and doffing protective gear, hair nets and smocks is compensable," said Sanderson Farms Chief Financial Officer Mike Cockrell. "We have always had excellent relationships with our employees, and look forward to continuing that relationship."

Cockrell said it has not established any reserves to pay the settlement and that the amount of the charge will be recognized during the current fiscal quarter.

Sanderson Farms shares rose 68 cents to $39.39 in electronic after-hours trading. During regular trading, the shares fell $1.42, or 3.5 percent, to close at $38.71.