This Wisdom of the Crowd, compiled from questions and responses posted on the Employment & Labor Law forum addresses FLSA release for incurred overtime back pay.
*(Permission was received from the ACC members quoted below prior to publishing their forum Comments in this Wisdom of the Crowd resource.)
Question:
In conjunction with our conversion of employees prompted by the "final" regulations, we decided to pay estimated back pay for overtime incurred over the last two years.
Do any of you have a release for that kind of payment? I want to make sure I am not missing anything (acknowledging of course that not all jurisdictions allow for the private settlement of Fair Labor Standards Act (FLSA) claims).
Wisdom of the Crowd:
Response # 1: It is my understanding that releases executed by employees in exchange for monies due under the FLSA mandatory overtime are NOT enforceable.1
Response # 2: Generally, FLSA claims cannot be waived, but there it least one circuit that has ruled that "parties may reach private compromises as to FLSA claims where there is a bona fide dispute as to the amount of hours worked or compensation due." The courts held that acceptance of the settlement amount in conjunction with the release was "an enforceable resolution of those FLSA claims predicated on a bona fide dispute about time worked and not as a compromise of guaranteed FLSA substantive rights themselves." Martin v. Spring Break '83 Productions, LLC, 688 F.3d 247 (5th Cir) 2012 cert denied. I am in the Seventh Circuit and it does not appear to have chimed in on this question. Other courts have discussed and distinguished it, but they do not appear to have not adopted the holding.2Response # 3: Given the acknowledged issues with getting an enforceable release, you may have to settle for a written acknowledgment that all monies due have been paid. This may prompt some questions regarding your calculation method and lead to some employees alleging they are due more dollars.3Response # 4: The focus should be on crafting language that would be effective to impeach later testimony alleging sums owed. In some cases, it may also be helpful to specify the particular dates/pay periods for which the settlement amount is being paid.4Response # 5: Where a private FLSA settlement is not technically valid (which is mostly), we do the following:.1. Have the employees submit their own estimate/claim of the number of unpaid hours. Even if you ultimately don't accept those numbers and agree to pay less as a settlement, you have a number that represents the maximum amount that the employee could try to claim later.2. Include in the settlement document a declaration/representation by the employee that the number of hours for which they are being paid is correct and accurate and that all hours worked are being compensated, which makes it harder for the employee to claim late that they "really" worked twice as many hours.3. Include a broadly worded waiver of claims. Even if it's not technically enforceable, it has a prophylactic effect.4. Include a covenant not to sue with a claw-back requiring the employee to repay the amount of the settlement if they breach the covenant not to sue. Again, even if not enforceable, it is a big disincentive for an employee to even think about going to a lawyer and filing a lawsuit after they sign the agreement and take the money.5
_______________________ 1Larry Silverman, Attorney, Pennsylvania (Employment & Labor Law, February 11, 2017).
2Teri Robins, Senior Attorney, ACGME, Illinois (Employment & Labor Law, February 11, 2017).
3Anonymous Poster, February, 2017.
4Timothy Sipe, Counsel, Employment and Labor, Payless ShoeSource, Inc., Kansas (Employment & Labor Law, February 11, 2017).
5Kevin Chapman, Associate General Counsel, Dow Jones, New Jersey (Employment & Labor Law, February 14, 2017).
Region:
United States
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