Class Action Alleging Sheep Herder Wage-Fixing Moves Forward

Last month, a district court allowed a group of seasonal guest workers alleging wage-fixing by an association of sheep ranchers to move forward with their antitrust suit. The decision comes three years after an appellate court threw out a similar class action suit claiming collusive behavior subjected sheep herders to artificially low wages among other unfair practices.

Tending America’s dwindling sheep flocks is grueling work. On commercial ranches in the rocky mountain west, isolated herders live alone in shanty campers often without a bathroom or basic food storage. Flocks require constant vigilance, and most herders are on call 24 hours, seven days a week. One survey of Colorado shepherds from 2010 found that over 70% did not have a single day off and over 80% were not allowed to leave their ranch or have visitors. Workers, including plaintiff Cirilio Ucharima Alvardo, say that some ranches confiscate their passports to prevent them from leaving. As of January 2023, the federal minimum wage for most sheepherders was just $1,900 per month. A chunk of these meager earnings may go to pay off debts from illegal recruiter fees. 

Two lawsuits have alleged that sheep and goat ranchers abuse labor and immigration policies to avoid competing for workers in order to hold down wages. Most open-range sheepherders in the U.S. are foreign guest workers hired on H2-A visas, a visa program for agricultural employers to hire temporary, seasonable labor from other countries. To hire guest workers, employers must show that they couldn’t fill their openings with domestic workers. Employers also cannot offer guest workers less than the prevailing regional industry wage as determined by U.S. Department of Agriculture and Department of Labor (DOL) surveys, called the “adverse effect wage rate” (AEWR).

Under the H2-A program, an agent, association, or lawyer can create H2-A job orders and hire guest workers on behalf of farmers and ranchers. Sheep and goat ranchers have set up a joint venture, the Western Range Association, which recruits and hires H2-A workers for members and offers the same, lowest legal wage across all their openings. David Seligman, the executive director of Towards Justice which represents range workers, argues that this joint wage-setting structure clearly violates antitrust prohibitions on concerted conduct. The WRA hires roughly two-thirds of all shepherd H2-A workers and put together the WRA and a similar association, the Mountain Plains Agricultural Service (MPAS), recruited and hired 91 percent of all open-range shepherds in the U.S. in 2014, all of them H-2A guest workers.

In addition to setting wages across the industry, the latest suit also alleges that the WRA requires workers to sign an attestation preventing them from leaving their work assignment for another ranch, thus keeping workers from shopping between employers and further limiting labor competition. Herding is a unique skill set, and job movement restrictions paired with flat posted wages mean herders with more experience cannot leverage their skills to find better pay or better working conditions, Seligman says. 

For two decades, the legal minimum wage for open-range shepherds remained flat at around just $750 per month until a 2015 rulemaking changed the AEWR calculation. But even with recent wage increases, the suits find that the effective hourly rates for sheep herders are still below the federal minimum wage, as low as $5 to $6 an hour, and allegedly below what workers could fetch in a more fair and competitive labor market. “If ranchers are operating independently, we’ve got good data that there would be upward pressure on wages,” says Seligman. “There are instances where similarly situated workers are offered wages well above what’s offered for herders, which suggests that their market wage is substantially more, and herders hired outside the cartel are also sometimes offered higher wages.”

Monica Youree, executive director of the WRA, denies these allegations, saying the WRA only exists to help ranchers navigate complicated legal systems to hire guest workers when they cannot fill jobs with domestic workers. “Western Range assists and supports small, often family-owned sheep and goat producers to comply with Federal H-2A regulations,” Youree said in an e-mailed statement. “Western Range does not fix wage rates – it promotes compliance with the DOL mandated wage floors and other regulations.” While H2-A employees can offer more than the AEWR to attract workers, it is common to post job orders at the legal minimum.

An earlier Tenth Circuit court ruling in a similar case found that there wasn’t enough evidence of a conspiracy or agreement between ranchers for the WRA’s joint hiring to qualify as an antitrust violation. The appellate judge that upheld this decision reasoned that no ranchers would logically offer wages above the minimum if they could find enough workers at the adverse effect wage rate. (Disclosure: The Open Markets Institute submitted an amicus brief in support of the plaintiff’s petition for a rehearing.)

The latest workers’ class action suit argues that absent the WRA, ranchers would have an economic incentive to offer higher wages for more experienced herders that bring ranchers greater returns. In fact, in some cases they already do, but in the form of allegedly infrequent and uncommon bonuses that are not reflected in H2-A job orders nor included in surveys that determine the adverse effect wage rate; thus these bonuses do not drive up the base-line wage rate, the complaint argues.

On March 21, a U.S. district court judge in Nevada denied WRA’s motion to dismiss this latest case, reasoning that the plaintiffs “plausibly alleged violations of the Sherman Act.” The court agreed that workers’ bonuses would not defeat “allegations of an unlawful agreement or overall wage-fixing scheme” and that it’s possible the WRA could serve both H2-A compliance and wage-fixing roles. The case will move forward into the discovery phase.

Calling it a significant victory for workers who use antitrust laws to challenge unfair competition for their labor as well as a crucial departure from the Tenth Circuit ruling, Seligman said, “This decision reinforces that structural concerted action out in the open can violate the antitrust laws, even when it’s been happening for a long time and even when the workers are exceptionally low wage.”