When employees file a grievance under their collective bargaining agreement regarding a complaint of not being paid overtime, as required by the Fair Labor Standards Act, the union negotiates a settlement of those claims with the employer, and the complaining employees cash their respective settlement checks, they are bound by the settlement and may not pursue an FLSA lawsuit to recover additional amounts.*
In Spring Break, four employees on a movie production crew complained to their union that they had not been paid fully for the hours they had worked. The union investigated the allegations, found the evidence inconclusive, and negotiated a settlement of the claims with the employer. A settlement check to each employee was issued, and the checks were cashed. The Settlement Agreement was never signed by the grievants. Meanwhile, the four proceeded in court with a FLSA claim. The district court held, and the Fifth Circuit affirmed, that the four workers were bound by the Settlement Agreement.
The document specifically represented that the Union had "the full power and authority to enter into this Settlement Agreement on behalf of IATSE Employees and bind them in accordance with the terms hereof." Further, the Settlement Agreement promised that the Union "on its own behalf and on behalf of the IATSE Employees agrees and acknowledges that the union has not and will not file any complaints, charges or other proceedings against Producer, . . . with any agency, court, administrative body, or in any forum. . . ." Further, the document said that - "disputes remain between the parties as to the amounts that may be due" - "the Union has agreed on its own account and as the authorized collective bargaining representative on behalf of the IATSE Employees to accept those amounts as provided herein."
The Fifth Circuit distinguished other cases that have invalidated private settlements of FLSA claims when the settlements have not been approved by a court or the U.S. Department of Labor. In those cases, the Court ruled, there was no bona fide dispute over the hours worked by the employees and the wages due to them. In this case, however, there was a bona fide dispute, as the plaintiffs' fellow employees disputed the claimed hours worked.
The Court also distinguished cases in which courts have ruled that unions cannot bargain away employees' FLSA rights. In the Spring Break case, the Court ruled that the union did not waive or bargain away FLSA rights, but rather, pursued the claims on behalf of the four workers, to settlement.
* Martin v. Spring Break '83 Productions, L.L.C., No. 11-30671 (5th Cir. July 24, 2012).