Before you settle a Fair Labor Standards Act () claim for what you might consider “peanuts,” remember that any settlement will probably include court-authorized legal fees that you will have to pay to the employee’s lawyers.
That’s because any success in collecting unpaid overtime or minimum wages also means the employee who wins that money is entitled to have his legal fees paid. And that can be a large sum relative to the recovery.
Recent case: Donia sued her employer over unpaid overtime, which she agreed to settle for the princely sum of $1.02. However, her attorney asked the court to order the employer to pay her $8,500 legal bill.
The court considered the request—and agreed to reduce it to $2,800, but only because the attorney’s bill wasn’t detailed enough to suit the court. Still, that’s a hefty cost for a one-dollar case. (Robinson v. KBDC Investments, No. 12-1473, DC MN, 2013)
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