Sealing FLSA Settlements

August 11th, 2011 by JBWK

As an employer, you know (or should know) the importance of keeping accurate time records for employees under the FLSA.  You’ve probably also have had–in some form–a dispute with an employee over their hours worked or entitlement to overtime.  But once that dispute turns into a lawsuit, you may be surprised to learn that even a voluntary settlement with an employee must be judicially approved by the court before the case may be dismissed.  But that’s not all–the court may refuse to “seal” the settlement, meaning you can’t keep it confidential between you and the employee.

Highlighting this rule, a federal judge in Alexandria recently denied a motion to seal an FLSA settlement between Ruby Tuesday’s and several employees who claimed they were denied wages for hours they worked.  They reached an out-of-court settlement; it was contingent on being sealed by the court.  Despite both Ruby Tuesday’s and the employees jointly requesting that the settlement be sealed, the judge refused, citing the need for the public and legislators to review aggregate FLSA settlements to make sure its purposes are being served.

The takeaway: if you let FLSA claims turn into a lawsuit, be prepared to share any settlement–including the exact dollar amount–with the whole world.

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