A judge in New Jersey’s federal district court recently refused to dismiss a case filed under the Federal Labor Standards Act (FLSA), even though the parties appear to have settled. The case, Kessler v. Joarder Props., LLC, highlights an interesting aspect of cases filed under federal wage and hour laws: Any settlement must either be approved by the courts or the Department of Labor.

Former Domino’s driver files suit alleging minimum wage and overtime violations

Daniel Kessler, a former delivery driver for a Domino’s location in New Jersey, filed a lawsuit in 2018 on behalf of himself and other employees of the defendant’s Domino’s franchises. Five other people joined the case against Joarder, alleging failure to pay employees minimum wage and overtime.

A few months after the lawsuit began, the defendants filed a motion to dismiss – saying that Kessler had expressed an intent to drop the case because of a private settlement agreement. Interestingly, Kessler’s counsel also filed a motion for voluntary dismissal because the other potential plaintiffs had also made agreements to settle.

However, these settlement agreements did not comply with FLSA requirements.

How unpaid wage cases settle under the FLSA

Under Section 216(c) of the FLSA, an employer accused of violating federal wage and hour laws can pay back wages under the supervision of the Secretary of Labor – in return, the employee waives their right to sue.

In the case described above, the court followed a decision from the Eleventh Circuit Court of Appeals (Lynn’s Food Stores, Inc. v. United States). Lynn’s Foods held that in litigation, the court must determine whether a settlement agreement reached in an FLSA case is a “fair and reasonable resolution of a bona fide dispute over FLSA provisions.” Considering this rule, the judge in Kessler denied both party’s requests for dismissal.

This case serves as an excellent reminder that FLSA cases are unique. Both employees and employers should keep in mind that an FLSA case cannot settle in the same way as other lawsuits. By consulting with an attorney experienced in wage and hour violations cases, they can avoid this roadblock.