Flowers Foods Escapes Distributors’ Worker Classification Suit

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Carmen Castro-Pagan

Flower Foods Inc. defeated a lawsuit by three distributors accusing the baking company of misclassifying them as independent contractors to deny them retirement benefits.

The distributors’ claim to recover benefits under the Employee Retirement Income Security Act fails because they couldn’t show that they were eligible for participation in the plan, Judge Thomas W. Thrash Jr. of the U.S. District Court for the Northern District of Georgia held July 16.

The decision is a victory for Flowers Foods, one of the largest wholesale bakeries in the country, in a lawsuit that sought to hold it liable for allegedly classifying certain individuals as independent contractors rather than employees eligible for overtime compensation and benefits. Last year, the distributors agreed to voluntarily dismiss a claim for overtime compensation under the Fair Labor Standards Act because a similar claim is pending in federal court in Florida.

Individuals who are distributors and have a written agreement with a member of Flowers Foods’ controlled group, as the plaintiffs in this case, aren’t eligible to participate in Flowers Foods’s 401(k) plan, Thrash said. The plan’s terms provide that distributors aren’t eligible employees and may not participate in it, Thrash said.

Even if the plaintiffs could ultimately prove that they are employees due to the nature of their work and relationship with Flowers Foods, their ERISA claim would still nevertheless fail, Thrash said.

Faruqi & Faruqi LLP and Robert W. Killorin represent the distributors. Ogletree Deakins Nash Smoak & Stewart PC represents Flowers Foods.

The case is Ryan v. Flowers Foods, Inc., 2018 BL 251353, N.D. Ga., No. 1:17-cv-00817-TWT, order granting defendants’ motion for summary judgment 7/16/18.

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