Thomasville, Georgia-based Flowers Foods reached a settlement agreement in a class action lawsuit alleging the producer and marketer of baked goods misclassified drivers as independent contractors.

The settlement calls for Flowers Foods to establish a $55 million common fund to cover settlement payments to a class of approximately 475 plaintiffs as well as service awards, attorneys’ fees and settlement administration expenses, according to a filing with the US Securities and Exchange Commission.

The settlement also requires a phased repurchase of approximately 350 distribution territories in California; once completed, the company plans to reclassify independent contractors and service its California market with an employment model. The repurchase of distribution territories is anticipated to be completed during the fourth quarter of fiscal 2024 at an estimated cost of approximately $50 million, net of outstanding notes.

Daniel Ludlow brought the lawsuit against Flowers Foods, alleging that he and other drivers were misclassified as independent contractors, law firm McGillivary Steele Elkin LLP reported.

This is not the first misclassification-related legal case for Flowers Foods, which has baked for brands such as Wonder Bread, Tastykake and Mrs. Freshley’s. It previously defended itself against some 26 lawsuits filed by its independent distributors claiming they were misclassified as independent contractors, as reported in CWS 3.0.