Dave’s Killer Breads producer to pay $9m to settle distributor class action lawsuit

By Douglas Yu

- Last updated on GMT

Flowers Foods does not plan to change its independent distributor model any time soon.  Pic: Flower Foods
Flowers Foods does not plan to change its independent distributor model any time soon. Pic: Flower Foods

Related tags Flowers foods Fair labor standards act Plaintiff

Flowers Foods has reached deal to settle a class action lawsuit that alleged it misclassified three distributors as independent contractors, according to a filing to the US Securities and Exchange Commission.

The Georgia-based bakery company is one of the largest producers of packaged bakery goods in the US, according to its website. Flowers Foods generated $3.8b sales in its fiscal year 2015.

The filing,​ signed by Flowers Foods’ executive vice president and CFO Steve Kinsey, said the settlement provides for payment of $9m, comprised of $5.2m in settlement funds and $3.8m in attorneys’ fees.

“The settlement also contains certain non-economic terms that are intended to strengthen and enhance the independent contractor model, which remains in place,” ​the filing said.

Did not receive employee benefits

The lawsuit against Flowers Foods and it's North Carolina-based subsidiary, Flowers Baking Company of Jamestown, was filed by several distributors, including Scott Rehberg, in March 2013 in the US District Court for the Western District of North Carolina, Charlotte Division.

Rehberg alleged that Jamestown violated the Fair Labor Standards Act (FLSA) and the North Carolina Wage and Hour Act (NCWHA). He also claimed the bakery misclassified them as independent contractors instead of employees.

The distributors are therefore entitled to certain benefits under the two acts, namely, “time-and-a-half pay for hours worked in excess of 40 per week,”​ according to the lawsuit.

“Plaintiffs (distributors) also allege that Defendant (Flowers Foods) made deductions from their wages without written notice, which is unlawful under the NCWHA,”​ the suit said.

Confident in independent distributor model

Flowers Foods argued that no commonality exists among the distributors, because there were “significant differences as to the distributors’ level of investment in their distributorship and use of hired help.”

However, the court said the differences were caused by variations in personal style and circumstance, and all distributors carried out their jobs under the same agreement and claimed the same violations of the NCWHA.

In a statement Flowers Foods sent BakeryandSnacks, it said, “We are confident in the independent distributor model and believe that it creates significant benefits for distributors, their customers and for Flower Foods.”

“We do not believe that any of the lawsuits being brought against the company have merit,”​ the bakery added.

Flower Foods does not have any further comment on whether it will change the distributor model in the future.

In March 2015, US district judge Max Cogburn Jr. concluded all distributors are indeed Flowers Foods’ employees and entitled to receive benefits from the company.

The settlement covers approximately 270 distributor territories, and is subject to court approval, the filing said.

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