Employers beware: settling an FLSA lawsuit is not the place to hone your DIY skills. The 11th Circuit’s opinion in Nall v. Mal-Motels, Inc., No. 12-13528 (11th Cir. July 29, 2013), demonstrates why a few dollars saved upfront can cost you significantly down the road. In this case, a former employee sued her employer – a motel – for unpaid overtime. The motel owner contacted the employee to settle her lawsuit. Of course, he did so without the assistance of an attorney. In exchange for a couple thousand dollars, the employee signed a dismissal of her complaint and a letter to her attorney informing him the case had been settled. The motel later enforced the settlement agreement over the employee’s objection, and the employee appealed.
Understandably, the parties here did not realize there are only two ways to settle FLSA claims: (1) under supervision of the Secretary of Labor or (2) entry of a stipulated judgment by the district court. Because, by the time of filing, the employee objected to the settlement, it wasn’t a “stipulated judgment” and, thus, wasn’t a valid FLSA settlement. The Court of Appeals vacated the judgment and remanded for further proceedings, and further attorney fees. This certainly wasn’t the money-savings route the employer had wanted.