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Claim Your Free Copy of Top 100 FLSA Overtime Q&As

We’ve compiled a list of the 100 most commonly asked questions we have received on the federal Fair Labor Standards Act (FLSA) overtime regulations.
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This report, "Top 100 FLSA Q&As", is designed to provide you with an examination of the federal FLSA overtime regulations in Q&A format, including valuable tips for bringing your workplace into compliance in an affordable manner.

At the end of the report, you will find a list of state resources on wage and hour issues. This report includes practical advice on topics such as:
  • FLSA Coverage: How FLSA regulations apply to all employers and any specific exemptions from the overtime requirements
  • Salary Level: Qualifying for exemptions and nonexempt employees
  • Deductions from Pay: Deducting for violations, disciplinary reasons, sick leave, or personal leave


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February 18, 2013
Can an employer settle an FLSA claim out of court?

In April 20112, four workers filed a lawsuit claiming that a roofing company had failed to pay them the overtime premium wages due them. In addition, the workers claimed they were not paid at all for many of their work hours. The workers sought back wages under the Fair Labor Standards Act (FLSA) and the Pennsylvania Minimum Wage Act.

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Without their attorney’s knowledge, the workers entered into a settlement agreement with the company, Budget Innovations and Roofing, Inc., shortly after the lawsuit was filed. The settlement was reached before the workers gained class certification and before Budget responded to the complaint. Their attorney sought review in district court, arguing that FLSA settlements must be approved by the court or made under supervision of the federal Department of Labor (DOL).

What the court said. Because the FLSA grants workers fundamental protections against underpayment of wages, employees cannot waive their rights under the Act. District Judge Christopher Connor, ruling for the U.S. District Court for the Middle District of Pennsylvania, cited the 5th Circuit’s decision in Martinez v. Bohls, which permitted private compromises on FLSA claims when there is a bona fide dispute as to liability.

Connor noted, however, that it is “simply impossible to ensure that an agreement settles a bona fide factual dispute over the number of hours worked or the regular rate of employment in the absence of judicial review” of the agreement. Citing the 11th Circuit’s ruling in Lynn’s Food v US, Connor affirmed that employees can settle FLSA claims only under DOL supervision or upon judicial review for “fairness.” 

In the present case, Connor noted that Budget had not even answered the original complaint, giving the court no grounds on which to decide whether the settlement was fair or warranted. The judge ordered the workers and Budget to submit any proposed settlement agreements to the court, along with arguments “addressing whether the compromise settles a bona fide dispute and is a fair and reasonable resolution of the claim.” Dietz v. Budget Innovations & Roofing, Inc., M.D. Pa. No. 4:12-CV-0718 (12/13/13).

Point to remember. The FLSA applies to most employers regardless of size, and the price of noncompliance is steep, including double the amount of wages owed plus costs and fees. As this case illustrates, by the time a complaint is filed, an employer’s options are limited.

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