In Law360 Article, Nathan Oleson Examines FLSA Claims Settlement Process
Law360 has published the article “Decoding Settlement Process For FLSA Claims At 2nd Circ.,” written by Akin Gump labor and employment partner Nathan Oleson. The article offers an analysis of Mei Xing Yu v. Hasaki Restaurant Inc. and how the decision by the U.S. Court of Appeals for the 2nd Circuit to hear an appeal of the case may impact settlements of claims under the Fair Labor Standards Act (FLSA).
Oleson explains that Mei involves the issue of whether certain procedural devices can be used to avoid the general rule that settlements of FLSA claims must be approved by courts or the Department of Labor to be enforceable. The rule, he writes, stems from decades-old Supreme Court precedent that is “intended to prevent employers from economically coercing employees into bargain settlements at rates of compensation below what the statute requires.” At the same time, however, “it also adds a significant layer of complexity to claims that employers often believe are of dubious quality and involve only a few thousand dollars in potential liability.”
In Mei, a case involving a sushi chef suing a restaurant for allegedly depriving workers of overtime by paying them at a flat rate, Oleson writes that the court will decide whether a procedural device permitting a defendant in federal court to make an offer of judgment on a plaintiff for the total amount of the settlement, which is then accepted and filed with the court without any court intervention, is permissable.
Oleson adds that the strategy faces “significant obstacles,” including a general perception that unscrupulous employers may use such devices to coerce favorable settlements from employees. If the 2nd Circuit finds that the use of Rule 68 “offers of judgment” to avoid court approval of FLSA settlements is prohibited, he says it will be another example of “a clever idea to solve a real problem for many that could not overcome the abuses of a few.”
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