It has always been black letter law that any settlement of an FLSA claim must be approved either by a court or by the Department of Labor. In my experience, many defendants elect to “take their chances” with a private settlement that involves a single plaintiff. As a plaintiff’s attorney, I have generally thought that is a risk the defendant can take if they so choose. If an employer wants to pay my client money without getting a valid release, what do I care? However, I have always operated off the assumption that such settlements were not operable if they were challenged.
The Fifth Circuit seems to cast doubt on my assumptions. I suppose we have to take the Fifth Circuit with a “grain of salt.” It seems to be the place where employers always run when they want to make bad law for employees. Thankfully, the rest of the country often just scratches their head and ignores them.
Bad facts make bad law. Perhaps bad movies also make bad law. In a case called Martin v. Spring Break ‘83 Productions, LLC, the Fifth Circuit recently found that a private settlement in a wage and hour case was binding even though it had not been approved by the court. Martin was an unusual situation. A group of lighting and rigging technicians on the set of a movie filmed in Louisiana filed a grievance with their union. They complained that they were not paid for all of the time they worked. The union entered into a settlement agreement, which was never signed by the plaintiffs, in which they were paid for the disputed hours. The plaintiffs also filed a lawsuit. The Fifth Circuit decided that the settlement by the union was binding because the plaintiffs “personally received and accepted compensation for the disputed hours.” Martin, 688 F.3d at 257.
A couple of courts outside the Fifth Circuit have already objected the reasoning of Martin. See e.g. Dietz v. Budget Innovations and Roofing, Inc., No. 4:12-cv-0718 (M.D.Pa. Dec. 13, 2013). However, Martin may give employers a bit of comfort if they decide to settle small wage and hours cases and forgo court or Department of Labor approval.