Why North Carolina Businesses Should Know About the Flower Foods Case

Date: March 15, 2016

A class-action lawsuit concerning state labor laws is a step closer to trial in Charlotte.

Why North Carolina Businesses Should Know About the Flower Foods Case

A federal judge recently ruled that the class-action lawsuit against Flower Foods, a national bakery company, could proceed toward a trial in Charlotte, and this has implications for North Carolina businesses.

The lawsuit alleges that Flower Foods violated state and federal overtime laws as a result of employee misclassification—classifying the workers who deliver the company’s baked goods to grocers and retailers as independent contractors instead of employees. As employees, workers are entitled to benefits like overtime pay under federal and state labor law.

Employee misclassification has been an important issue in the last few years, and Gov. McCrory became stricter about cracking down on businesses for these types of violations last year. And now, U.S. District Judge Max Cogburn Jr.’s ruling allowing the case to proceed brings state labor law on this issue into a new light. According to the Charlotte Observer, Cogburn ruled that the liability release forms that some of the Flower Foods workers signed do not block claims brought under the North Carolina Wage and Hour Act, which deals with minimum wage and overtime, among other business requirements.

If the lawsuit is resolved in the plaintiffs’ favor, Flower Foods—which has approximately 900 employees and 430 independent contractor distributors in North Carolina—could be forced to change its business model, which has been in place since the mid-1980s. This would mean benefits, such as overtime pay and healthcare coverage, for the workers currently classified as independent contractors, but it could also mean lower pay.

And for other North Carolina businesses, it could mean they need to be even more vigilant about how they classify their workers. To make sure your business isn’t running afoul of the law, consult the NFIB Guide to Independent Contractors.

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