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Decision could open door for out-of-court FLSA settlements

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in Human Resources,Overtime Labor Laws

by Christopher C. Murray and Flyn L. Flesher, Esqs., Ogletree Deakins

Since 1982, lawyers have assumed that settling Fair Labor Standards Act (FLSA) cases out of court isn’t a viable option. That’s because the 11th Circuit Court of Appeals ruled that employers and employees cannot settle FLSA claims unless either:

  • The settlement is supervised by the U.S. Secretary of Labor, or
  • A court enters a stipulated judgment after “scrutinizing the settlement for fairness.”

Most federal district courts follow this principle, routinely holding that out-of-court settlement agreements, to the extent that they purport to waive FLSA claims, are unenforceable. That has made it difficult and expensive for employers to resolve pay issues, even when they realize they made a mistake and want to compensate the employee fairly.

New opening

Last year, the 5th Circuit Court of Appeals took a more pragmatic ap­­proach in Martin v. Spring Break ’83...(register to read more)

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