Dive Brief:
- Flowers Foods, producer of U.S. baked goods, agreed to pay $9 million to settle a lawsuit charging it with violating the Fair Labor Standards Act, reports the Atlanta Business Chronicle.
- Distributors of Flowers Foods’ products filed a class-action suit accusing the baked goods giant of misclassifying them as independent contractors. They filed the suit in 2012 in Charlotte, NC. The company was defending itself from 24 distributors as recently as November, says the Atlanta Business Chronicle. A separate suit filed against one of its subsidiaries involved 49 distributor territories and a settlement payout of $1.25 million.
- Flowers Foods says a portion of the settlement has noneconomic provisions that it clams will strengthen the role of distributors as independent contractors.
Dive Insight:
The lawsuit is massive, covering 270 distributor territories. The sheer number of distributors involved must have outweighed any argument the company made on its own behalf in court.
Given the lopsidedness of the case, the company was wise to settle. But it might have avoided the suit and the big settlement payout entirely if it had known how to classify distributors properly under FLSA. With the rise of the gig economy, the DOL and other pro-worker organizations have been particularly fierce in examining who is an independent contractor and who is not. Uber has been stuck in a cycle of lawsuits, for instance, the largest still in play in California.
