Court Requires Release of Wage Information in Settled Suit

The U.S. Court of Appeals for the Second Circuit has ruled that litigants involved in a suit under the federal Fair Labor Standards Act must share details of their out-of-court settlement.

Specifically, the court ruled that a federal district court or the U.S. Department of Labor must approve the settlement.

The decision arose in a suit filed against restaurant owners by a former server and manager who alleged, among other things, that he had been improperly denied overtime pay required by the Act.

The parties settled out of court, and the plaintiff, pursuant to the settlement, sought to dismiss the suit. The trial court refused to approve the settlement and dismiss the suit unless the agreement was made public on the court docket and the parties demonstrated to the court that the settlement was reasonable.

Since neither party wanted to disclose the terms of the settlement, they appealed to the Second Circuit, which affirmed the lower court’s decision and found that FLSA wage-and-hour disputes cannot be settled out of court in the manner sought by the parties.

The moral: Employers and employees fighting over wages or hours should try to settle their disputes before taking them to the Department of Labor or the courts. S 

Source: The Howe & Hutton Report