Jeffrey H. Ruzal, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s New York office, was quoted in the Bloomberg BNA Daily Labor Report, in “FLSA Judgment Offers Don’t Need Court’s OK, 2d Cir. Rules,” by Robert Iafolla, Kathleen Dailey. (Read the full version – subscription required.)
Following is an excerpt:
A New York sushi restaurant could use a procedural rule to settle a federal wage-and-hour lawsuit without getting the judicial approval typically required for such deals, the Second Circuit ruled Dec. 6.
The U.S. Court of Appeals for the Second Circuit overruled a federal judge who said Hasaki Restaurant Inc.’s settlement proposal—made via an offer of judgment under Federal Rule of Civil Procedure Rule 68—was subject to judicial review. A former chef had accepted the restaurant’s offer to settle his Fair Labor Standards Act lawsuit seeking unpaid overtime.
The ruling appears to give litigants a way to avoid judicial oversight on deals to resolve FLSA lawsuits. The Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, and Eleventh circuits have found that the FLSA generally prohibits private settlement of wage-and-hour claims.
Private settlements have several advantages over those that must go through a court, said Jeffrey Ruzal, an attorney with management-side Epstein Becker & Green who wasn’t involved in the Second Circuit case. Beyond not having to worry about a judge rejecting a deal that the parties want, keeping the agreement private allows for the inclusion of confidentiality and nondisparagement provisions, Ruzal said.
But some employers might be sensitive to having a judgment entered against them, Ruzal said. While such a judgment couldn’t be used as ammunition in other cases, it might raise some concerns about the optics, he said.