In a pair of cases addressing the Fair Labor Standards Act, two federal appellate courts addressed whether illegal aliens can recover wages under the statute and whether judicial approval is required for settlement deals where an employee no longer works for the defendant employer.

Emphasizing the intent of the statute, the 8th U.S. Circuit Court of Appeals held that immigration status is irrelevant in an FLSA suit because employers should not be allowed to "exploit" an employee's immigration status or profit from hiring unauthorized aliens to avoid complying with fair wage laws.

Elmer Lucas and five other workers at the Jerusalem Café in Missouri were paid a weekly rate that averaged out to hourly wages ranging from $3.90 to $10.39. All six were not authorized to work in the United States. A federal court denied the employer's motion to dismiss for lack of standing based upon their immigration status, and the plaintiff won $283,728.08 in damages and an additional $156,000 in legal fees and expenses at trial.

The café owners appealed, but the 8th Circuit affirmed, noting the "sweeping definitions" of "employer" and "employee" in the FLSA, which "unambiguously encompass unauthorized aliens." Congress excluded specific categories of workers in the statute (like family members engaged in agricultural work and certain governmental employees) and could have also excluded illegal aliens, the court noted, but chose not to.

The employers' argument that the Immigration Reform and Control Act implicitly amended the FLSA to exclude unauthorized aliens was misplaced, the court said. The two pieces of legislation work in harmony to "promote dignified employment conditions for those working in this country, regardless of immigration status, while firmly discouraging the employment of individuals who lack work authorization." Holding employers liable for violating the IRCA by employing unauthorized workers - and additionally requiring them to pay the same workers legal wages - advances the purpose of federal immigration policy.

Exempting illegal workers from FLSA coverage would also incentivize employers to profit by hiring them and paying an illegal wage, the panel said. "[A]liens, whether authorized to work or not, may recover unpaid and underpaid wages under the FLSA," the court concluded, affirming the verdict.

In the 11th Circuit case, the panel reversed a district court's entry of a settlement agreement between Candace Nall and her former employer, Mal-Motels, Inc.

Nall's FLSA suit sought unpaid overtime for the time she worked as a front desk clerk and night auditor at Mal-Motels, for a total of $3,780. The owner of the company called Nall and asked to meet with her, without her attorney, to talk about the case. At the meeting the owner presented Nall with two documents to sign. He also gave her a check for $1,000 and another one or two thousand dollars in cash (the amount was disputed by the parties) to settle her suit.

Although she felt pressured, Nall signed the documents because she "was homeless at the time and needed the money." The owner then filed the documents - a voluntary dismissal and letter to Nall's attorney stating the case was settled - with the court. After a hearing, a magistrate judge recommended that the district court approve the settlement over Nall's objections.

Under prior case law, the 11th Circuit said there are only two ways in which FLSA claims can be settled or compromised by the employee in suits against a current employer: under the supervision of the Secretary of Labor or where a district court "enter[s] a stipulated judgment after scrutinizing the settlement for fairness." The court extended that rule to apply in cases between employees and a former employer as well.

Public policy justifications support the need to protect "certain groups of the population from substandard wages and excessive hours," the court said, and allowing employers to secure releases from workers in need of wages would "nullify the deterrent effect" of the FLSA.

"Given the 'often great inequalities in bargaining power between employers and employees,' mandatory protections 'not subject to negotiation or bargaining between employers and employees' are needed to ensure that an employer - who has a strong bargaining position - does not take advantage of an employee," the court wrote. "Ensuring that each FLSA plaintiff receives the damages including liquidated damages, to which she is statutorily entitled, is no less important when the plaintiff is a former employee."

Turning to Nall's case, the court found that "whatever else the judgment approving the agreement may be, it is not a 'stipulated judgment,'" as it "takes two (or more) to stipulate, and a judgment to which one side objects is not a stipulated one." The panel vacated judicial approval of the settlement and remanded the case.

To read the 8th Circuit's decision in Lucas v. Jerusalem Cafe, click here.

To read the 11th Circuit's decision in Nall v. Mal-Motel, Inc., click here.

Why it matters: Both decisions are significant victories for FLSA plaintiffs. The 8th Circuit's opinion allowing illegal immigrants to recover damages under the FLSA is in line with other courts that have considered the issue, including the 11th U.S. Circuit Court of Appeals and federal courts in California, Michigan, New Jersey, New York, and Oklahoma, as well as the position taken by the Secretary of Labor. And the 11th Circuit's holding extends the protections already granted to current employees engaged in FLSA litigation to former employees as well, rejecting private deals to resolve claims under the statute.