Could The Tide Be Turning On The Enforceability of Private FLSA Settlements?
Earlier this week, the U.S. Supreme Court announced its decision to deny certiorari in Martin et al. v. Spring Break ’83 Productions, L.L.C. et al. This decision leaves in place the Fifth Circuit’s ruling enforcing a private FLSA settlement—a first for any federal appellate court.
In Martin, four union-represented plaintiffs filed a grievance against Spring Beak ’83 Louisiana, L.L.C. alleging that they had not been paid for all their hours worked. The employee’s union and Spring Beak ’83 Louisiana entered into a settlement concerning the disputed hours worked. In exchange for settlement payments, the plaintiffs waived their right to file any complaints or lawsuits. Before the settlement agreement was signed by union representatives, the plaintiffs filed a lawsuit against Spring Break ’83 Louisiana and several other individual and corporate defendants to recover their unpaid wages. On appeal, the Fifth Circuit affirmed summary judgment in favor of the defendants, holding that the four plaintiffs had waived their FLSA claims as part of the settlement—even though the settlement was never approved by the DOL or a district court.
In the cert petition, the plaintiffs argued that Supreme Court review was necessary because Martin created a circuit split with the Eleventh Circuit, which held in Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982) that FLSA claims may be settled only by court approval or DOL supervision. The plaintiff also argued that Supreme Court review was appropriate because the Fifth Circuit’s ruling conflicts with the Supreme Court’s earlier decision in Barrentine v. Arkansas-Best Freight Sys., 450 U.S. 728, 745 (1981), which held that a union cannot waive individual FLSA rights through collective bargaining.
As wage and hour practitioners know well, the vast majority of federal district and appellate courts historically have refused to enforce settlements and/or waivers of FLSA rights without Department of Labor or court approval. The Fifth Circuit’s ruling in Martin reverses this trend. The fact that the Supreme Court did not grant certiorari could be construed as a tacit acknowledgement that private FLSA settlements are appropriate. Indeed, the FLSA itself does not require court or DOL approval, and private settlements of claims brought under Title VII, the ADA, and other employments statutes passed well after the FLSA are routinely enforced.
Although the Fifth Circuit’s decision in Martin could signal the start of a significant change in this area, questions remain regarding its future impact because the Fifth Circuit’s decision thus far stands alone. Until more courts adopt the reasoning Martin, employers should still seek DOL or court approval for FLSA settlements if they wish to ensure that the release is valid.