The Second Circuit held this month in Cheeks v. Freeport Pancake House, Inc , case no. 14-299-cv (Aug 7, 2015) that parties are now required to get approval in order to settle a case arising under the Fair Labor Standards Act (FLSA). The federal FLSA guarantees most employees certain wages and overtime rights. When an employer violates the FLSA, by failing to pay overtime for example, the affected employees (or the Department of Labor on the employees’ behalf) can file a suit in court against the employer.
As a common practice in American litigation, parties often try to save the time and costs of court proceedings by coming to a private settlement agreement. These settlements are submitted to the court and the case is dismissed. The Second Circuit has ruled that the cases are no longer automatically dismissed, and now require the court or Department of Labor to approve.
The FLSA was enacted to grant rights to employees that would otherwise be taken advantage of. The government does not permit these rights to be waived because doing so could allow employers to pressure employees to waive wage rights, thus defeating the purpose of the Act. According to the Second Circuit, the government has the ability to deny settlements that appear to be waivers of FLSA rights.
If parties agree to settle an FLSA claim within the Second Circuit, the settlement must now be docketed with the court. The court, or the Department of Labor, reviews the settlement and must approve of it in order to have the case dismissed. This makes the settlement a part of public record. Although the courts are sympathetic to the fact that smaller claims cannot always justify lengthier court proceedings, the Second Circuit held that FLSA rights are uniquely important and the extra approval step is necessary for settlements.