Several months ago, an employer asked me why settlements under the Fair Labor Standards Act (“FLSA”) are typically accessible to the public.  I explained that these settlements must be approved by either a United States District Court or the United States Department of Labor (“DOL”) to constitute a valid release.  Since documents filed with the court are open to public access, many jurisdictions have reasoned that settlement agreements and motions to approve settlements should also be available to the public.

The Fifth Circuit’s recent ruling in Martin v. Spring Break 83’ Productions may be the first step in changing this view by the courts.  In Martin, the Fifth Circuit enforced a private settlement (not approved by either the DOL or the court) for unpaid wages under the FLSA. The Fifth Circuit reasoned that no approval was necessary because the wages owed to the employees were in dispute and could not be verified.  In that instance, the settlement agreement was not a compromise of guaranteed rights under the FLSA, but only a compromise of the employees’ claims.  Essentially, the Fifth Circuit differentiated between settlements of wage claims where the allegations could be substantiated and claims where the underlying facts are in dispute.

This decision could make the resolution of wage and hours claims much more appealing to employers as it would enable the parties to keep the terms of the settlement confidential.  Perhaps other jurisdictions will follow or adopt the Fifth Circuit’s reasoning.

To be continued…