8th Circuit overturns judgment against Arkansas senator’s company

A federal appeals court on Thursday reversed a more than $1.1 million judgment against Arkansas Sen. Jim Hendren’s company over its acceptance of labor from participants in court-ordered drug and alcohol treatment programs.

A federal judge in Fayetteville had found that a substance-abuse treatment program and Hendren Plastics failed to pay the rehab-program participants for work in violation of the Arkansas Minimum Wage Act.

However, the three-judge panel of the 8th U.S. Circuit Court of Appeals found that the rehab participants weren’t required to be paid for their work because they had an “unusual” work arrangement that allowed them to avoid incarceration and other legal consequences in exchange for their participation in the work-based treatment program.

In the arrangement, Hendren paid the program — run by the Decatur-based DARP Foundation — more than the minimum wage for the full-time work it received from program participants.

Not all of that money flowed to the workers, who instead were provided treatment and living arrangements from DARP.

“The participants resided at DARP for the purpose of recovery or rehabilitation, and their ‘work recovery program’ was performed to avoid adjudication in the criminal justice system,” Thursday’s ruling states. “That work performed by a participant in a court-ordered recovery program also benefitted a third-party business did not make the participant an employee of DARP or Hendren.”

The 2020 class-action ruling by U.S. District Judge Timothy Brooks threatened to upend work-recovery programs across the U.S, and the case has been closely watched due to its implications for similar diversion court programs.

Brooks’ ruling found that Hendren Plastics benefitted from bel0w-market-cost labor, but the 8th Circuit panel disagreed.

“While Hendren may have paid less for DARP participants’ labor than the company paid for the labor of other entry-level employees, Hendren accepted workers whose checkered histories might well have justified a market-based pay differential,” the panel wrote.

Reached Thursday, Hendren, an Independent from Sulphur Springs, said he was pleased by the ruling.

His company cancelled its agreement with the drug-court program due to the litigation. He said it may participate again after evaluating Thursday’s ruling.

“I’m pleased that the ruling is going to ensure there are paths for people with drug addiction other than putting them in prison and throwing away the keys,” Hendren said.

“If this ruling had gone the other way this could’ve caused the end of drug court all across this country.”

Tim Steadman, the attorney who represented the plaintiffs, said he was disappointed in the panel’s decision, and the plaintiffs intended to ask the full 8th Circuit Court of Appeals to hear their appeal.

“It’s a bad decision not just for our workers but for workers across the state of Arkansas,” Steadman said. “The Minimum Wage Act should protect those who labor for for-profit business.”

“We think the court overlooked key facts that would lead to a different result,” he added.

Hendren at the time the lawsuit was being brought was the Arkansas Senate president pro tempore. He later left the Republican party and is not running for re-election.

*This story has been updated with comments from an attorney for the plaintiffs.