Employers are accustomed to entering into private settlements in employment litigation, without the oversight (and potential interference) of a court. Employers should be aware that, when it comes to wage and hour claims under the federal Fair Labor Standards Act, it may not be so simple – or clear.
The FLSA itself is silent on whether Department of Labor (“DOL”) or court approval is required for settlements. Since 2012, there has been a Circuit split on whether such approval is required. To date, the Second Circuit has not decided the issue.
In 2012, the Supreme Court denied certiorari of the Fifth Circuit’s Martin v. Spring Break ’83 Productions decision, which enforced a private settlement that released claims under the FLSA, even though the settlement did not receive court approval and was entered into without DOL supervision. Martin broke with the 11th Circuit, which had held 30 years ago in Lynn’s Food Stores v. U.S. that a settlement and release of FLSA claims, absent DOL supervision, can be enforced only where a court has approved the settlement after scrutinizing for fairness.
Since the denial of certiorari in Martin, the confusion has only grown. In the Eastern District of New York alone, some courts have required a fairness hearing (Socias v. Vornado Realty, January 16, 2014) and others have held that no judicial approval is required in order to settle a private FLSA lawsuit (Picerni v. Bilingual Seit & Peschool Inc., February 22, 2013). The Second Circuit has not considered this issue.
Kelley Drye’s Wage and Hour Class Action Defense practice group can assist with all aspects of wage and hour issues, including FLSA settlements.