On December 6, 2019, the the United States Court of Appeals for the Second Circuit decided an important case which clarifies the law concerning settling federal wage and hour cases. Today’s Long Island employment law blog takes a look at this decision.
In 2015, the United States Court of Appeals for the Second Circuit issued a decision which sent employment lawyers in New York into a panic. The decision, known as Cheeks, essentially requires that when parties settle a lawsuit arising under the Fair Labor Standards Act (FLSA), a court or the Department of Labor must approve the settlement. In other words, in the normal course, parties may settle cases under whatever mutually agreeable terms they decide on and the court has no say in the matter. Cheeks altered this practice for FLSA cases (the federal statute regulating minimum wage and overtime).
Moreover, Cheeks requires that when deciding whether to approve FLSA settlements, courts must review the settlement agreement for fairness and other requirements, including that the release is limited to wage claims and that the agreement does not require confidentiality. Further, courts review any amount of the settlement allotted for attorneys fees to ensure their reasonableness.