In 2012, the Court of Appeals for the Fifth Circuit held that union members who worked on a film shoot and later brought FLSA claims subsequently waived those claims through a private agreement between their union and the production company. Martin v. Spring Break ’83 Productions, L.L.C., 688 F.3d 247 (5th Cir. 2012). On Monday, the Fifth Circuit limited the holding in that case to a private settlement of “bona fide disputes” regarding hours worked and overtime compensation due, rejecting a general release’s applicability to FLSA claims. Bodle v. Txl Mortg. Corp., 2015 U.S. App. LEXIS 9091 (5th Cir. June 1, 2015).
In Bodle, two former employees of a Texas mortgage firm were Defendants in a non-compete action brought by their former employer in a state court. They subsequently brought FLSA claims in a separate federal action. The trial court in the FLSA matter concluded that the general release the plaintiffs signed in connection with resolution of the state court lawsuit “validly barred the plaintiffs’ subsequent FLSA claims because the topic of unpaid wages for commissions and salary arose in the settlement negotiations . . . [and] the plaintiffs were aware of their claims for unpaid overtime because they had [already] signed consent forms to join the [FLSA] lawsuit . . . the plaintiffs chose . . . to remain silent about their overtime claims.” The Circuit reversed, holding that the “Martin exception does not apply to the instant case because not only did the prior state court action not involve the FLSA, the parties never discussed overtime compensation or the FLSA in their settlement negotiations. Therefore, there was no factual development of the number of unpaid overtime hours nor of compensation due for unpaid overtime.”
The supervision doctrine continues to pose challenges for FLSA litigants and all employers seeking to comply with the statute and minimize legal risk. All stakeholders must be aware of the judicially-fashioned rules and procedures in their jurisdiction under the FLSA, and, state law.