Senate President Pro Tempore Jim Hendren is seeking dismissal of a wage-and-hour lawsuit against his plastics company for use of unpaid labor on the strength of a state law enacted less than three weeks ago. Opposing lawyers say the new law was passed under false pretenses and cripples the minimum wage law increase approved by voters last November.
The developments are outlined in filings in a class action lawsuit in federal court in Fayetteville against DARP, a drug rehabilitation program, and Hendren Plastics, owned by Sen. Jim Hendren. The foundation of the lawsuit, one of several similar actions in Oklahoma and Arkansas, is that Hendren’s company, Simmons Poultry and others used unpaid labor supplied by the rehabilitation agency, to which drug court defendants had been assigned. Hendren dropped out of the program after controversy and lawsuits developed. He said at the time that he had paid the equivalent of the minimum wage to the rehab agency. It contends the room and board the workers received from the agency amounted to legal compensation. Hendren has also sued one of the lawyers suing him for defamation for equating the unpaid work programs to slave labor during a TV interview.
The lawsuit in Fayetteville was filed in the name of Mark Fochtman by Holleman and Associates of Little Rock. The court dismissed involuntary servitude and human trafficking claims, but allowed claims to continue under the Arkansas Minimum Wage Act and certified the case as a class action, over defendants’ objections.
A new wrinkle came after Act 853 became law April 10 (it became law without the governor’s signature). It was filed in March as House Bill 1751, sponsored by Rep. Robin Lundstrum and Sen. Mat Pitsch. It was one of a bundle of bills aiming at rolling back the voter-approved minimum wage increase. Others were defeated, but this one passed with little notice or debate. In its initial late-night run through a House committee March 12, there were no questions for Lundstrum as she described it as a technical cleanup bill. Little was said in subsequent House and Senate approval. Sponsors indicated it didn’t amend the minimum wage bill, though the legal pleadings suggest that it did, if not in the dollar-minimums in the law.
The new law clearly is viewed as significant by Hendren’s attorney in the minimum wage claim case. The day after the bill became law, Hendren’s attorney, Tim Hutchinson, the governor’s nephew, asked for dismissal of the lawsuit. He contended the new law changed procedural, but not substantive, rules for challenges under the minimum wage law. Among other things, it now says violations must be willful for plaintiffs to receive liquidated damages and also said written consent must be given by anyone for whom damages are sought, an effective curb on class actions. It also set a two-year statute of limitations on claims. And it removed a provision limiting to 30 cents the credit an employer could be given for providing food, housing and clothing, replacing it with a “fair and reasonable” standard. Though Lundstrum pitched this as a pro-worker bill, it worked to help employers, the lawyers for plaintiffs contend.
Hendren’s motion said a ruling to allow the lawsuit to proceed despite the new law could lead to “financial ruin of many employers” and permit “windfall” payments to some workers.
The plaintiffs’ lawyers take exception to the request for dismissal.
For one thing, the new law doesn’t take effect until July and so the old law should apply. For another, they contend it modifies the minimum wage act approved by voters, but was passed by less than two-thirds majorities in both the House and Senate. A two-thirds vote normally is required for changes in voter initiatives. It also says the law dictates court rule-making, which the Arkansas Supreme Court has repeatedly said was a legislative breach of the separation of powers. They wrote:
Act 853 is a slap in the face of Arkansas’ voters. Arkansans overwhelming voted to increase the minimum wage. Dissatisfied with the result at the ballot box, certain legislators tried to change the Arkansas Minimum Wage Act to avoid the will of the people. Although most of those efforts failed, the sponsoring representatives – Representative Robin Lundstrum and Senator Mathew Pitsch – misled their colleagues about the nature of Act 853. Time and again, Representative Lundstrum and Senator
Pitsch announced that bill was just a “clean-up” bill that did not amend the minimum wage. Both portrayed the bill as something favorable to workers without even mentioning that the bill takes away provisions favorable to Arkansas’ workers and
restricts the statute of limitations and availability of liquidated damages vis á vis the Fair Labor Standards Act. The Court should deny DARP and Hendren’s motions relating to Act 853.
Here’s the motion by Tim Hutchinson on behalf of Hendren Plastics to dismiss the complaint.
Here’s the response from the Holleman firm in defense of the class action.
The bill passed by a bare minimum of 18 votes in the Senate without a ruling that a two-thirds vote was required. Hendren did not vote. And he does not sit on the committee that endorsed the bill. He responded by email to my query about the lawsuit:
I have no comment the lawsuit since we are in the midst of litigation. However, I will say that I had no part in the passage of any legislation regarding changes to the minimum wage laws of Arkansas. I am not a member of any committee in which this bill was heard. I was made aware that HB1751 would be on the Senate floor the night before it was on the calendar. I discussed with our Senate Legal counsel how I should ensure there would be no conflict. I was advised that I should not vote or participate in any way. I did not discuss the legislation with any member of the legislature, was out of the chamber during the debate, and did not vote on the legislation.
I’ve also sent messages to Lundstrum and Pitsch to ask if they knew HB 1751 would have immediate benefit to Hendren’s firm in defense of this lawsuit.
UPDATE: Said Pitsch:
No, I had no conversations with any business or person on the bill in question.
My understanding (as I read the bill) was this bill put us in line with Federal Minimum Wage Laws.
I also asked David Couch about the bill. He’s the Little Rock lawyer who led the minimum wage campaign. He said lawyers who studied HB 1751 when it was introduced said it had no impact on the minimum wage increase itself, so it wasn’t contested. “It was definitely sold as a cleanup bill because some members asked me about it and they told me that was how it was being presented.” He’s asking today for a further review from experts who were consulted on the issue at the National Employment Law Project.
Hendren led a high-profile campaign to clean up the ethical image of the legislature in the aftermath of multiple felony indictments for bribery. One byproduct was a rule in the Senate on written disclosure of potential business conflicts. These were filed. Hendren was among those who filed a letter. This situation illustrates, at least inadvertently, that such disclosures don’t always reveal connections to pending legislation. His letter to Ann Cornwell, secretary of the Senate: