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April 23, 2014

Supreme Court Allows Fifth Circuit Ruling on Private FLSA Settlements to Stand

On December 10, 2012, the United States Supreme Court declined to review a recent ruling of the Fifth Circuit Court of Appeals, which approved a private settlement of employees' claims for unpaid overtime under the Fair Labor Standards Act (FLSA)

The plaintiffs, who requested the Supreme Court hear an appeal of the Fifth Circuit's decision, alleged there was a circuit split on this issue, citing an opinion from the Eleventh Circuit Court of Appeals requiring approval of any FLSA settlement from a court or the United States Department of Labor.  

Given the Supreme Court's denial of review, employers in the Fifth Circuit – which includes Texas, Louisiana, and Mississippi – now have the option to privately settle disputed claims under the FLSA. Before the Fifth Circuit's ruling, many employers and employment attorneys believed private FLSA settlements were unenforceable. 

For any such private settlement to be valid, however, three elements should be present:

  1. a genuine dispute regarding the compensation owed to the employee;
  2. the employee must be aware of his or her rights under the FLSA; and
  3. there must be little danger of the employee being disadvantaged by unequal bargaining  power. 

The third factor can be satisfied when the employee is represented by an attorney or a union; even a suggestion to consult with an attorney may suffice. 

The Fifth Circuit's decision, Martin v. Spring Break ’83 Prods., LLC, 688 F.3d 247 (5th Cir. 2011), can be found here.

© 2014 Bracewell & Giuliani LLP

About the Author

Robert E. Sheeder, Labor Law Attorney, Bracewell Giuliani Law Firm
Partner

In private practice since 1976, Bob Sheeder represents clients in all aspects of labor and employment law before federal and state agencies and courts. As head of the firm's labor and employment section, his practice includes litigation and counseling in areas of discrimination, harassment, collective actions and class actions, union organizing and wage-hour issues.

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