in Newswire Published on March 25, 2022

PepsiCo Failed to Track Workers’ Hours Following Kronos Ransomware Attack, Class Action Alleges [UPDATE]

Last Updated on March 6, 2023

Marshall v. PepsiCo, Inc. et al.

Filed: March 23, 2022 ◆§ 7:22-cv-02370

A class action claims PepsiCo and Bottling Group failed to properly pay employees in the weeks following a data breach that crippled their timekeeping system.

Defendant(s)

PepsiCo, Inc. Bottling Group, LLC

Law(s)

Fair Labor Standards Act Pennsylvania Minimum Wage Act

State(s)

New York

March 6, 2023 – $36.6 Million Settlement Reached in PepsiCo Class Action; Deal Awaits Final Approval

The proposed class and collective action detailed on this page has been settled for approximately $36.6 million.

The official settlement website can be found at https://stevensvpepsicosettlement.com/.

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The settlement, which awaits final approval, covers all current and former employees of PepsiCo, New Tiger or one of their subsidiaries who, during the 17 weekly pay periods between December 5, 2021 and April 8, 2022, received an inaccurate pay stub or inaccurate compensation due to the Kronos timekeeping system outage.

Eligible consumers will receive a share of the roughly $23.9 million settlement—which court documents say represents the unpaid wages believed to be owed to class members—as well as a share of an additional $12,750,000, which court documents say the defendants have also agreed to pay should the deal be granted final approval.

United States District Judge Nelson Stephen Roman preliminarily approved the plaintiffs’ settlement motion on December 2, 2022, almost six months after the parties’ joint motion to consolidate a number of related lawsuits in light of a “global settlement” was granted.

In a 13-page preliminary approval order, the judge determined the terms of the deal were “fair, reasonable and adequate, and in the best interests of Plaintiffs” and class members.

Eligible class members will receive a settlement payment without having to file a claim or take any other action.

Class members may challenge the accuracy of their individual payment amounts within 90 days of the deal’s preliminary approval on December 2, 2022, settlement documents relay. Those who wish to pursue their own individual claims or be part of any related lawsuit against the defendants can “opt out” of the class and will forego a share of the settlement.

A telephonic hearing to grant final approval to the settlement is scheduled for April 4, 2023.

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A proposed class action claims that PepsiCo, Inc. and joint employer Bottling Group, LLC have failed to properly pay employees in the weeks following a data breach that crippled the companies’ timekeeping system.

The 14-page lawsuit says that on December 11, 2021, third-party payroll vendor UKG announced to customers, including PepsiCo, that its Kronos timekeeping system had become inoperative due to a ransomware attack. In the wake of the incident, the defendants failed to accurately track employees’ hours and instead resorted to estimating how much the workers should be paid for each pay period, the suit alleges.

Many workers, the case claims, have been underpaid as a result of PepsiCo’s failure to keep track of their time.

The suit alleges that the defendants have run afoul of federal and state labor laws, including the Fair Labor Standards Act (FLSA), by failing to properly pay their employees.

According to the lawsuit, PepsiCo employees normally record their hours by swiping an electronic card on a Kronos device to clock in and out for each shift. On December 11, however, UKG informed PepsiCo and its other customers that the Kronos timekeeping system was down as the result of the ransomware incident, and that the outage would “potentially last several weeks,” the suit relays.

The case claims, however, that the Kronos system was inoperative for a roughly 10-week period, and that during the time PepsiCo failed to accurately track workers’ hours. The lawsuit says that the defendants failed to have in place a functional backup plan in the event that their timekeeping system stopped working.

According to the suit, PepsiCo paid its employees following the Kronos incident based on an estimated weekly pay. For many workers, the case says, these wages were less than they were actually owed for the hours they worked. The complaint adds in a footnote that PepsiCo’s alleged failure to pay proper wages was “especially harmful” given the outage period fell during the holiday season, when employees often work more hours than usual and have an “immediate need” for extra cash to cover holiday-related expenses.

The plaintiff, who worked for PepsiCo at its Allentown, Pennsylvania warehouse between May 2021 and March 2022, says that he and other PepsiCo workers still have not been paid correct wages for the hours they worked during the Kronos outage period.

The lawsuit looks to represent non-exempt hourly employees who worked for PepsiCo at any time since December 1, 2021, whose weekly hours were tracked by the Kronos timekeeping system, who were paid estimated wages during the Kronos outage period and whose estimated payments were less than the amount they earned over that time.

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