Can I Settle a Wage Claim under FLSA?

If you are a non-exempt employee, covered by the Fair Labor Standards Act ("FLSA"), and you have not been paid the required federal minimum wage, or earned overtime pay, then you may have a wage claim under the FLSA. Like nearly all legal disputes, a wage claim under the FLSA can be settled, short of going to trial. However, there are strict requirements for settlement of these types of claims, and any settlement must be done under the supervision of either the Secretary of Labor, or the federal courts.

What is a wage and hour claim?

There are two general categories of wage and hour claims brought under the FLSA. The federal minimum wage rate is currently $7.25 per hour. If an employer does not pay a non-exempt employee at least this amount, then the employer is in violation of the FLSA and can be sued for unpaid wages. Employers are also required, under the FLSA, to pay employees 1½ times the regular rate of pay for all hours worked, in excess of 40 hours per week. This is consider the required overtime pay. If this amount is not paid for overtime, or if employees are improperly categorized as exempt employees, in an effort to avoid paying overtime, the employer may be in violation of the FLSA.

How to settle a wage claim

Under the current law, settlement of any wage claim under the FLSA must be supervised by the Department of Labor or the federal courts. These are the only two valid ways to release or settle an FLSA claim. There are few exceptions to this rule. The Secretary of Labor is authorized by statute to supervise the payment of unpaid minimum wages or overtime owed to an employee. The statute requires that, once the employee accepts payment by settlement, it constitutes a waiver of those particular claims by the employee. This means, once the matter is settled, the employee cannot bring another claim for the same lost wages.

Court-Supervised Settlements

Subsequent case law has established that court-approved settlements of wage and hour claims is also allowed. This exception was based on the belief that "a [court-approved] settlement is more likely to reflect a reasonable compromise of disputed issues than a mere waiver of statutory rights brought about by an employer's overreaching." In reviewing these types of settlements, the courts are required to "scrutinize the settlement for fairness and determine that the settlement is a fair and reasonable resolution of a bona fide dispute over FLSA provisions." This type of review would be similar to that of a class action settlement.

Despite the hoops that must be jumped through in settlement FLSA claims, these cases can be very valuable, when handled by experienced employment attorneys. If you feel you have not been properly paid, or if you have any questions regarding your employment rights, please contact Wrady & Michel, LLC, either online or by calling us at (205) 265-1880.

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