Blackstone-owned sanitation company ordered to stop using child labor to clean slaughterhouses
November 26, 2022
Earlier this month, a US District Court judge in Nebraska granted an injunction sought by the US Department of Labor to halt alleged “oppressive child labor” by Packers Sanitation Services Inc (PSSI)[1], a cleaning company owned by private equity firm The Blackstone Group.[2]
On November 9, the US Department of Labor asked a federal court to issue a nationwide temporary restraining order and injunction against Packers Sanitation – one of the nation’s leading providers of food safety sanitation – to stop the company from illegally employing dozens of minor-aged workers while the department continues its investigation of the company’s labor practices.[3]
Media coverage:
NY Times, Nov 11, 2022: “Labor Department Finds 31 Children Cleaning Meatpacking Plants”
The Department of Labor’s complaint alleges that since August 2022, PSSI had employed at least 31 children – from 13 to 17 years of age – in hazardous occupations. The jobs performed by children included cleaning dangerous powered equipment during overnight shifts to fulfill sanitation contracts at meatpacking plants in Nebraska and Minnesota.[4]
The Department of Labor also alleged that several minors employed by PSSI – including one 13-years-old – suffered caustic chemical burns and other injuries.[5]
The Department of Labor alleged that Packers Sanitation interfered with an investigation by intimidating minor workers to stop them from cooperating with investigators. PSSI also allegedly deleted and manipulated employment files.[6]
Blackstone has owned Packers Sanitation since 2018.[7] Blackstone Senior Managing Director David Kestnbaum[8] and Blackstone Operating Partner Jeffrey Overly[9] serve on Packers Sanitation’s board.
In March 2022, The Private Equity Stakeholder Project released a report, Profit Over Safety: Private Equity’s Leveraged Bet on Packers Sanitation, detailing how The Blackstone Group’s Packers Sanitation Services Inc has stood out as a dangerous workplace even as Blackstone and Packers’ previous private equity owners have collected hundreds of millions of dollars in dividends from the company. Since May 2018, when Blackstone acquired PSSI, the US Occupational Safety and Health Administration (OSHA) has conducted investigations of at least four amputations and three fatalities of PSSI employees, including a decapitation.[i]
In July 2021, the US Department of Labor’s Occupational Safety and Health Administration (OSHA) cited Packers Sanitation and three other companies in connection with a nitrogen leak that tragically caused the deaths of six workers and injured almost a dozen others at a Georgia poultry processing plant.[ii] PSSI is contesting the charges.[iii]
According to a 2017 report by the National Employment Law Project (NELP) looking at OSHA severe injury data, PSSI stood out as a particularly dangerous workplace with one of the highest numbers of serious injury reports compared to its relatively small number of employees.[iv]
Blackstone and Packers Sanitation’s previous private equity owners have extracted hundreds of millions of dollars from PSSI through debt-funded dividends. The private equity firms added debt to Packers Sanitation’s balance sheet in order to collect dividends for themselves.
Packers Sanitation paid a $135 million dividend to the Blackstone Group in June 2019 and another $297 million dividend in November 2020.[v]
The Blackstone Group loaded PSSI with $350 million in debt financing in November 2020, refinanced the company’s $1.1 billion in debt in February 2021, and added another $185 million in debt in August 2021.[vi]
In Bloomberg Businessweek’s 2017 investigation of Packers Sanitation, “America’s Worst Graveyard Shift is Grinding Up Workers,” David Michaels, head of OSHA during the Obama Administration, suggested that high debt is a potential red flag, “Are they reducing the costs to pay debt by pressuring workers to work faster? That’s a common danger with highly leveraged companies.”[vii]
[1]“US Department of Labor seeks nationwide court injunction to stop Packers Sanitation Services’ ‘oppressive child labor’ violations at processing facilities,” US Department of Labor, Nov 9, 2022. https://www.dol.gov/newsroom/releases/whd/whd20221109
[3] “US Department of Labor seeks nationwide court injunction to stop Packers Sanitation Services’ ‘oppressive child labor’ violations at processing facilities,” US Department of Labor, Nov 9, 2022. https://www.dol.gov/newsroom/releases/whd/whd20221109
[4] “US Department of Labor seeks nationwide court injunction to stop Packers Sanitation Services’ ‘oppressive child labor’ violations at processing facilities,” US Department of Labor, Nov 9, 2022. https://www.dol.gov/newsroom/releases/whd/whd20221109
[5] “US Department of Labor seeks nationwide court injunction to stop Packers Sanitation Services’ ‘oppressive child labor’ violations at processing facilities,” US Department of Labor, Nov 9, 2022. https://www.dol.gov/newsroom/releases/whd/whd20221109
[6] “US Department of Labor seeks nationwide court injunction to stop Packers Sanitation Services’ ‘oppressive child labor’ violations at processing facilities,” US Department of Labor, Nov 9, 2022. https://www.dol.gov/newsroom/releases/whd/whd20221109
[7] 20181208: Blackstone Core Equity Partners NQ L.P.; Green Equity Investors VI, L.P., Federal Trade Commission, May 11, 2018. https://www.ftc.gov/legal-library/browse/early-termination-notices/20181208
[8] Alight, Inc. Form 424B3, Nov 14, 2022. https://www.sec.gov/Archives/edgar/data/1809104/000119312522283580/0001193125-22-283580-index.html
[9] Performance Food Group director profile, Jeffrey Overly, accessed Nov 25, 2022. https://investors.pfgc.com/governance/board-of-directors/person-details/default.aspx?ItemId=71a0b914-acc8-4925-a11f-271312613e91
[10] Information was gathered from two OSHA databases; “Enforcement Cases with Initial Penalties of $40,000 or Above | Occupational Safety and Health Administration.” Accessed August 18, 2021. https://www.osha.gov/enforcement/toppenalties; and “Establishment Search Page | Occupational Safety and Health Administration.” Accessed August 18, 2021. https://www.osha.gov/pls/imis/establishment.html. USDOL/OSHA Establishment Search Results between January 1, 2018 – August 18, 2021 resulting in 49 results. It should be noted that some inspections may still be open or were incomplete. This list only reflects 12 most serious accidents as reported to OSHA and not a claim of guilt or innocence.
[11] “US Department of Labor cites Foundation Food Group Inc., three other
companies after Jan. 28 investigation finds six deaths were preventable,” OSHA, Jul 23, 2021. https://www.osha.gov/news/newsreleases/national/07232021
[12] Inspection: 1513598.015 – Packers Sanitation Services, Inc. Ltd., OSHA, accessed Nov 25, 2022. https://www.osha.gov/ords/imis/establishment.inspection_detail?id=1513598.015
[13] “OSHA Severe Injury Data From 29 States: 27 Workers a Day Suffer Amputation or Hospitalization,” National Employment Law Project, Apr 27, 2017. https://www.nelp.org/publication/osha-severe-injury-data-from-29-states/
[14] Moody’s affirms Packers Holdings’ B3 CFR following dividend recap; outlook stable,” Moody’s, May 2, 2019, https://www.moodys.com/research/Moodys-affirms-Packers-Holdings-B3-CFR-following-dividend-recap-outlook–PR_401554. “Moody’s says Packers Holdings’ term loan add-on is credit negative,” Moody’s, Nov 17, 2020, https://www.moodys.com/research/Moodys-says-Packers-Holdings-term-loan-add-on-is-credit–PR_436355.
[15] Pitchbook Profile on Packers Sanitation Services, accessed November 25, 2022. https://my.pitchbook.com/profile/10503-28/company/profile#deal-history/159779-26T
[16] “America’s Worst Graveyard Shift Is Grinding Up Workers” Bloomberg, Dec 29, 2017. https://www.bloomberg.com/news/features/2017-12-29/america-s-worst-graveyard-shift-is-grinding-up-workers
