Challenging Conventional Wisdom - Private Settlements of FLSA May Be OK

Posted 5:40 PM by Michael Fox

It seems to be a time of re-examination of what is accepted as well established law in the employment arena. Professor Charles Morris has written a book, The Blue Eagle At Work: Reclaiming Democratic Rights In The American Workplace which makes the argument that the NLRA guarantees that employees have a viable right to engage in collective bargaining through a minority union on a members-only basis. If that is true, it would be a shock to almost every practitioner in the area of labor/management relations. Check out Phillip Wilson's view at Laboring Away at the Institute, that this is an argument that may have more merit you might think.

But perhaps even more amazing, earlier this year, Judge Xavier Rodriguez, of the Western District of Texas, who before becoming a member of the judiciary was a practicing labor and employment lawyer, has challenged another musty principle -- that a private employer cannot resolve a wage and hour dispute without either the participation of the Department of Labor or court supervision. In a well reasoned opinion, after exploring past Supreme Court decisions, the legislative history of the Portal to Portal Act, its judicial treatment and a review of circuit court decisions in this area, Judge Rodriguez comes up with the following conclusion:

Therefore, the Court holds that, according to the language of the FLSA, its amendment by the Portal-to-Portal Act of 1947 and the Fair Labor Standards Amendments of 1949, and its interpretation in the case law, parties may reach private compromises as to FLSA claims where there is a bona fide dispute as to the amount of hours worked or compensation due. A release of a party's rights under the FLSA is enforceable under such circumstances.

Martinez v. Bohls Bearing Equipment Co.(W.D. Tx - 2/28/05) [pdf]. [The link takes you to the general website of Courtweb, but you will have to use the search function to find the full opinion.] Before going whole hog in getting releases, make sure you read the portion of the opinion where the Judge lays out the argument and its parameters since "bona fide dispute" might be considered a limiting term (pp. 15 -38). And in some circuits, such as the 11th, the argument is clearly foreclosed by existing precedent. But for an area where many, if not most, practitioners had accepted the conventional wisdom that all such settlements were foreclosed, Judge Rodriguez' opinion at a minimum provides a principled basis for arguing otherwise.

Update: If you don't want to go through the trouble of finding the whole opinion, you can find a thorough summary at the Thompson publishing website, Court Permits Private Parties To Settle FLSA Overtime Dispute.

Labels: FLSA

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