Donna Scarano of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union Local 125 said workers voted to accept the contract on Tuesday, a day after union and management negotiators met with a federal mediator.
The settlement affects about 175 employees, she said.
She said the company wouldn't budge in its contract offer and threatened to replace all of the striking workers if they didn't accept it.
Scarano said the main sticking point in the labor dispute was an increase in health care costs for employees.
She said the company previously had paid the entire deductible for employees and will continue to pay that cost for the first year of the three-year contract.
But she said the company will only pay half of that cost in the second year, and won't pay any of the deductible in the third year.
Scarano said that under previous contracts, employees had made concessions to accept lower wages in return for the company paying the deductible.
"Health care is a big issue," she said.
Under the new contract, she said, employees will receive a small wage increase of 30 cents an hour in the first year and another 35 cents in each of the second and third years.
American Licorice also is offering a one-time payout of $10,000 for employees who retire, she said.
Company spokesman Michael Kelly said in a statement that workers "voted to return to their jobs under the terms of the final contract offer that had been made to them in November."
He said, "The three-year contract provides an increase in wages each year, improved healthcare for associates and their families as well as an improved retirement benefit."
Kelly said, "We're pleased that all of our associates have decided to return to work and look forward to their ongoing contributions to our business in the years ahead."
Scarano said the company is gradually bringing union employees back to work, with some returning today and with everyone else coming back by Monday.
She said that since the strike began on Dec. 5, the company has operated on a smaller scale than normal by using a small group of replacement workers.
During the strike, workers picketed 24 hours a day, seven days a week.
Occupy Oakland protesters joined the workers on the picket lines during the past week, and on Monday they participated in a large rally at the plant.
American Licorice Co., which was founded in Chicago in 1914, has its headquarters in Bend, Ore., and has another plant in La Porte, Ind.