In 2016, a sushi restaurant worker, Mei Xing Yu, sued his employers at Hasaki Restaurant for unpaid overtime, on his own behalf and on behalf of his similarly situated coworkers. His employers responded several months later with an “offer of judgment” for $20,000 under Federal Rule of Civil Procedure 68, and Mr. Yu, represented by counsel, accepted. The parties then attempted to have the case dismissed without any judicial review or approval of the settlement agreement, as is typically required in wage theft cases brought under the Fair Labor Standards Act (FLSA). They argued that Rule 68 offers are not subject to judicial fairness review or approval. The district court held that judicial review and approval was required, but the case went up to the U.S. Court of Appeals for the Second Circuit.

Because the parties were aligned, the Second Circuit appointed Public Citizen Litigation Group as amicus curiae to defend the district court’s position. The U.S. Department of Labor also filed an amicus brief emphasizing that “[t]he Department’s longstanding position is that FLSA rights cannot be waived or compromised by private agreement and that, accordingly, an employee can only enter a settlement agreement that terminates her FLSA claim with prejudice if it is supervised by the Department or approved by a court.”

Workers in low-wage jobs—largely immigrants and people of color—depend on robust private enforcement of federal wage and hour protections, with FLSA settlements supervised by DOL or federal courts to ensure fairness.

On December 6, 2019, a split panel of the Second Circuit held that judicial review and approval is not required when employers use offers of judgment under Federal Rule of Civil Procedure 68 to settle cases. Senior Circuit Judge Guido Calabresi strongly dissented, arguing that the “majority misreads the language, the history, and the design of the Fair Labor Standards Act” and “ignores the longstanding position of the Supreme Court of the United States, the Department of Labor, and seven Courts of Appeals,” including the Second Circuit’s 2015 decision in Cheeks v. Freeport Pancake House Inc.

Public Citizen Litigation Group filed a petition in support of the full Second Circuit rehearing the case, arguing that the panel’s decision undermines the FLSA’s protections and conflicts with both Second Circuit and Supreme Court precedent. Last week, NELP filed an amicus brief in support of a reversal of the panel’s decision, citing the importance of judicial or DOL fairness review of wage theft settlements to promote compliance and transparency.

READ NELP’S AMICUS BRIEF IN FULL. 

NELP argues that workers in low-wage industries, largely immigrants and people of color, depend on robust private enforcement of the FLSA’s minimum wage and overtime protections—supervised by the U.S. Department of Labor (DOL) and by federal courts.

If the panel’s decision is not reversed by the full Court, Rule 68 offers will become the preferred method for settling FLSA cases, allowing attorneys to achieve an end-run around the FLSA’s mandatory wage-and-hour protections. This end-run will undermine robust private enforcement of the FLSA, with dire effects not only on workers, but also on law-abiding employers that are complying with the FLSA’s minimum wage and overtime requirements.

DOL and judicial review is especially critical to prevent harms flowing from employers’ inclusion of abusive confidentiality and non-disclosure provisions in FLSA settlements. The #MeToo movement has exposed the wide-ranging harms wrought by confidentiality provisions and NDAs in settlements of discrimination and harassment claims. Without DOL or judicial review, such provisions will be routinely included in FLSA settlement agreements to silence worker-plaintiffs—undermining the FLSA’s twin goals of rooting out wage theft and unfair competition by unscrupulous employers.

READ NELP’S AMICUS BRIEF IN FULL.