Case Proceeds to Trial in Wage and Hour Litigation Against Flowers Foods

Distributors of bakery products for Flowers Foods, Inc., and its local North Carolina subsidiary scored a major victory in their wage and hour case against the company. This case is the first of over 15 related cases proceeding against Flowers Foods throughout the United States regarding the company’s classification of its distributors.

Distributors of bakery products for Flowers Foods, Inc., and its local North Carolina subsidiary scored a major victory in their wage and hour case against the company. This decision comes on the heels of a recent ruling by the same federal district court in North Carolina certifying a class of nearly two hundred and fifty North Carolina distributors who claim the company wrongly classified them as independent contractors. The case will now proceed to trial. This case is the first of over 15 related cases proceeding against Flowers Foods throughout the United States regarding the company’s classification of its distributors.

In its 45-page memorandum and order, The United States District Court for the Western District of North Carolina held that North Carolina employers may not require employees to waive their rights under the North Carolina Wage and Hour Act through general releases. The Court also denied Flowers Foods’ and Flowers Baking Co. of Jamestown’s request that the court rule as a matter of law that the distributors were exempt from the overtime protections of the Fair Labor Standards Act.

“This is good news for all employees working in North Carolina because the court has ruled that companies may not require employees to sign away their rights under the North Carolina Wage and Hour Act through a general release.” says Shawn J. Wanta, partner at Wanta Thome PLC, class counsel in the lawsuit.

Rehberg et al. v. Flowers Foods, Inc., et al., Court File No. 12-00596, is a class action lawsuit brought on behalf of a class of individuals who operate(d) as bakery product distributors for Defendants Flowers Foods, Inc. and Flowers Baking Co. of Jamestown, LLC. Flowers employs “distributors” to deliver bakery and snack food to their customers, which includes grocery stores, mass retailers, and fast food chains. Defendants run their business on an outdated distribution model, classifying distributors as independent contractors operating their own businesses, even though the reality of today’s commercial bakery industry requires Flowers to make the important, governing business decisions for their distributors including determination of the price, product selection, and promotion of bread items. This action challenges both the classification of distributors as independent contractors and Defendants’ denial to Plaintiffs and the class members of the rights, obligations, privileges, and benefits owed to them as employees (including overtime and other benefits). Plaintiffs allege violations of the Federal Fair Labor Standards Act, the North Carolina Wage and Hour Act, and North Carolina common law.

The court’s decision today is a landmark decision for several reasons. First, for the first time, a court in North Carolina found that a general release of NCWHA wage and hour claims is void for public policy reasons. The court reasoned that, like the FLSA, public policy mandates of the NCWHA prohibit employers in North Carolina from requiring employees to waive wage and hour claims through general releases, either under state or federal law. Here, the court concluded that the releases that Flowers compelled distributors to sign at the time they left the company did not bar their claims under the NCWHA and that these claims could proceed to trial.

Second, the Court applied the federal Motor Carrier Act (“MCA”) to the FLSA to conclude that employees who drive small vehicles (weighing 10,000 pounds or less) as part of their job are not precluded from protections under the FLSA by virtue of also driving large trucks regulated by the Motor Carrier Act.

As a result of the court’s decision, the distributor-plaintiffs can proceed to trial with their claims under the North Carolina Wage and Hour Act and the FLSA on a class and collective basis.

Flowers Foods, Inc. is one of the leading producers and marketers of packaged bakery foods in the United States, hiring distributors from thirty-one states across the eastern and southern United States. The impact of the Court’s decision isn’t limited to the distributors involved in the current lawsuit. It also means that distributors operating out of other Flowers bakeries—who are subject to the same practices—may have claims for overtime and other legal violations that they can pursue on a class-wide basis without having to bear all the costs and risks associated with individual litigation.