Source: http://www.elinfonet.com/fedarticles/9/37
Timestamp: 2019-04-21 18:01:55+00:00

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On March 6, 2018, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) announced a new nationwide program to resolve minimum wage and overtime violations under the Fair Labor Standards Act (FLSA). Referred to as the Payroll Audit Independent Determination (PAID) program, it is expected to be a six-month pilot initiative that allows employers to conduct self-audits of their payroll practices and voluntarily report underpayments to the DOL/WHD which, in turn, will supervise the back wage payments.
Seeking to resolve a split among the district courts in the Second Circuit, the Court of Appeals has accepted an interlocutory appeal to decide whether, in resolving cases involving FLSA claims, offers of judgment under Rule 68 require DOL or judicial scrutiny and approval. Yu v. Hasaki Restaurant, Inc., 2017 U.S. App. LEXIS 20698 (2nd Cir. Oct. 23, 2017).
Last month we wrote a post concerning the National Labor Relations Board’s (“NLRB”) rejection of a seemingly standard settlement agreement resolving, among other things, Fair Labor Standards (“FLSA”) claims. Since then, FLSA settlement agreements have come under more scrutiny from federal court judges, and some have even refused to grant a stipulated motion for dismissal without first reviewing the agreement. Not only are courts focusing on the fairness of the settlement terms, but judges are also questioning whether parties to an FLSA claim can reach a private settlement out of court and have the case dismissed with prejudice, without the court’s approval.
The National Labor Relations Board (“NLRB” or the “Board”) has once again weighed in on employer use of confidentiality and non-disparagement language, this time in the settlement arena. Recently, the NLRB withheld its approval of a global settlement of Fair Labor Standards Act (“FLSA”) claims and Board charges, stating its objection to the negotiated non-disparagement and confidentiality provisions in the parties’ settlement agreement.
A recent decision by the Second Circuit will likely make it more difficult for parties to enter into private Fair Labor Standards Act (FLSA) settlements in cases pending not only in the Second Circuit, but nationwide. On August 7, 2015, in Cheeks v. Freeport Pancake House, Inc., No. 14-299, the Second Circuit held that parties may not stipulate to dismiss an FLSA action with prejudice, pursuant to Federal Rule of Civil Procedure 41(a)(1)(A), without court approval, "even if the parties want to take their chances that their settlement will not be" enforced in future litigation.
Bringing some degree of clarity to the murky question of whether parties can dismiss a pending FLSA lawsuit on their own volition, the Court of Appeals for the Second Circuit has ruled that any dismissal with prejudice requires “the approval of the district court or the DOL to take effect.” Cheeks v. Freeport Pancake House, 2015 U.S. App. LEXIS 13815 (2d Cir. Aug. 7, 2015).
In Bodle v. TXL Mortgage Corp., No. 14-20224 (June 1, 2015), the Fifth Circuit Court of Appeals held that a generic, broad-form settlement release between an employer and two of its former employees did not bar those employees’ subsequent lawsuit under the Fair Labor Standards Act (FLSA) for alleged overtime violations.
The Eleventh Circuit U.S. Court of Appeals (with jurisdiction over Alabama, Florida, and Georgia) recently expanded the court's 1982 ruling in Lynn's Food Stores, Inc. v. U.S. limiting the settlement of claims under the federal Fair Labor Standards Act. Lynn's Foods said that such settlements between an employer and its current employees are permitted only (i) under the U.S. Labor Department's supervision, or (2) where a court has scrutinized the settlement for fairness and has entered a "stipulated judgment."
n 1982, the Eleventh Circuit Court of Appeals held in Lynn’s Food Stores, Inc. v. United States that employers and employees cannot settle claims under the Fair Labor Standards Act (FLSA) unless (1) the settlement is supervised by the U.S. Secretary of Labor, or (2) a court enters a stipulated judgment after “scrutinizing the settlement for fairness.” Since then, most federal district courts (not just those in the Eleventh Circuit) have followed this ruling, routinely holding that out-of-court settlement agreements, to the extent that they purport to waive FLSA claims, are per se unenforceable.
In Martin v. Spring Break ’83 Productions, LLC, No. 11-30671 (5th Cir. July 24, 2012), the Fifth Circuit Court of Appeals, addressing an issue of first impression, held that a union-negotiated settlement precluded plaintiffs, union members, from pursuing their claims under the Fair Labor Standards Act (“FLSA”) for unpaid wages, even though the settlement was never approved by the court or the Department of Labor (“DOL”). The ruling contravenes a long-standing Eleventh Circuit decision, Lynn’s Food Stores, Inc. v. United States, which had held that FLSA claims may not be settled without approval of the court or the DOL. The Fifth Circuit declined to read Lynn’s Food Stores to require approval from a court or the DOL in all instances, finding that settlement and waiver of FLSA claims may be effectuated without oversight in certain circumstances, such as those presented in Martin.

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