The Eleventh Circuit held recently in Nall v. Mal-Motels, Inc. that private parties may not settle FLSA claims without the supervision of the Secretary of Labor or a court, even where the party seeking recovery is a former employee.
Previously, the Eleventh Circuit held in Lynn’s Food Stores, Inc. v. United States that employers and their employees may only settle or compromise FLSA back wage claims in one of two ways. The first is by the supervision of the Secretary of Labor. The second is by proposing a settlement to a court, which may then enter a stipulated judgment if it determines that the settlement process was fair. In Nall, the Eleventh Circuit held that the same rules apply to FLSA settlements between employers and their former employees.
Although many federal courts have followed Lynn’s Food Stores, it does not reflect a uniform rule. Several courts outside of the Eleventh Circuit have also upheld private, unsupervised settlements of FLSA claims. It is uncertain whether Nall will have any impact on those courts. Employers should therefore consult with counsel before attempting any private settlement of an FLSA wage claim.