On August 7, 2015, the Second Circuit decided Cheeks v. Freeport Pancake House, Inc. (14-299), an FLSA dispute where the parties entered into a “private settlement agreement” where the district court refused to dismiss the action with prejudice under Federal Civil Rule 41.
The Unsettled Issue: Dismissing With Prejudice Through a Private Settlement
The Fair Labor Standards Act (FLSA) has been around for 70 years, having been enacted in 1938 to address post-Great Depression injustices rampant in the economy where employers routinely took advantage of destitute laborers for meager pay or no pay. In the past decade, there has been an explosion of FLSA wage and hour cases across the country. It is only now, after seven decades, that some fundamental issues are being settled by the courts.
One issue which is largely unsettled, and which the Courts of Appeals and District Courts are now grappling with, is the question whether parties to an FLSA action can enter into a “private settlement” and have the court dismiss the action under Federal Civil Rule 41. In Cheeks v. Freeport Pancake House, Inc., the Second Circuit resolutely answered that question in the negative, citing the strong legislative policy of ensuring that workers are properly paid. READ MORE