Trend Toward Enforcing FLSA Settlements

The general rule regarding out-of-court settlements for claims brought under the Fair Labor Standards Act (“FLSA”) is that in order to be enforceable, the settlement agreement must be approved by the Department of Labor or by a court. This rule has long posed a burden on employers because unlike many other employment-related claims that could be resolved through a private settlement agreement, settlement agreements in FLSA claims need to be filed in the public record for necessary court approval.

A recent ruling out of the Fifth Circuit Court of Appeals has provided a breath of fresh air for employers. In the case of  Martin v. Spring Break ’83 Productions, LLC, a group of film-industry technicians brought a claim under the FLSA for additional compensation for hours they allegedly worked. After an investigation, a union representative determined that it would be impossible to determine whether the technicians actually worked on the days they claimed.  Subsequently, the union and employer entered into a private settlement agreement regarding the disputed hours. Though the settlement agreement was entered, the technicians filed suit seeking unpaid wages under the FLSA. The employer moved to dismiss due to the previous settlement agreement. The Fifth Circuit ultimately ruled that there existed a bona fide dispute as to the number of hours allegedly worked. Because of this, the court held that the settlement payment 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.”

Importantly, the court allowed this private settlement because it “resolve[d] a bona fide dispute as to the number of hours worked – not the rate at which [the technicians] would be paid for those hours.” Employers must take note that nothing in this opinion allows for employees to privately waive or release substantive rights provided under the FLSA. For example, nothing in this opinion would allow an employer to enter into a settlement agreement whereby the employer would settle to pay half of an employee’s claimed overtime compensation or where the employer negotiated to pay a higher rate of pay than allowed for hours worked in excess of 40 per workweek.

Although the Fifth Circuit came to this conclusion, other jurisdictions may not necessarily reach a similar conclusion.  The Fifth Circuit is the appellate jurisdiction covering Louisiana, Mississippi, and Texas. The Fourth Circuit covering Virginia and Maryland has not yet permitted a private settlement waiver of FLSA overtime claims.  This decision calls into question the long standing principle that FLSA settlements must always be approved by a court or the Department of Labor to be valid. Employers should take note of this opinion and discuss with counsel its potential impact on any FLSA settlement.

Posted by Nick Johnson, Associate Attorney at Berenzweig Leonard, LLP, a business law firm in the DC region.  Nick can be reached at NJohnson@BerenzweigLaw.com.

Social Media Policies Under Scrutiny by the Government

Social media is everywhere.  Most people are interacting through social media outlets such as Facebook, Twitter and LinkedIn.  The ability to interact with friends, family and colleagues in real-time is unprecedented in modern day society.  However, given the transparent nature of social media outlets, privacy issues can be problematic, especially in the employment context.

Recently, the National Labor Relations Board (“NLRB”) has taken an aggressive stance on analyzing employee social media policies and has issued multiple reports over the last year guiding employers in drafting them.  The NLRB’s main focus is whether the policies hinder or violate an employee’s right to engage in protected concerted activity, such as discussing the terms and conditions of employment. Given the uptick in social media, most policies receive scrutiny when an employee is terminated based on discussions or comments posted on a social media site.

Important take-aways regarding recent NLRB opinions:

• Employers are allowed to prohibit employees from sharing confidential and/or proprietary information online.  It is Best Practice to give examples of what is considered confidential and/or proprietary information.
• Employers are allowed to prohibit employees from posting vulgar or obscene language, as well as intimidating or harassing material. 
• A simple disclaimer such as “nothing herein prohibits protected conduct under Section 7 of the NLRB” will not, by itself, save an overly broad social media policy. However, it is Best Practice to include it, thus ensuring that the remaining social media policy is not overly broad. 
• Policies cautioning employees about posting inaccurate, misleading or internal company information have been determined to be overly broad.
• Policies stating that employees are prohibited from disparaging or defaming the company through social media have consistently been struck down, thus employers should avoid such language. 

There is a clear trend from the NLRB to strike down social media policies that are overly broad or determined to be restrictive.  As an ever-evolving area of the law, social media policies that may have been acceptable a few years ago may no longer be considered lawful. Employers should be mindful of this and understand that drafting employee handbooks and policies is not a one-time event, but rather a continuing and evolving process.

Nick Johnson, is an Associate Attorney for Washington, DC business law firm, Berenzweig Leonard, LLP. Email Nick Johnson