Court Approval Is Not Required To Settle FLSA Claims Through Offers of Judgment

The U.S. Court of Appeals for the Second Circuit concluded that the Fair Labor Standards Act does not require judicial approval for settlement through a Rule 68(a) offer of judgment.

Federal Rule of Civil Procedure 68(a) provides:

At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.

The general understanding has been that the settlement of FLSA claims requires the approval of either the Department of Labor or a federal court. The issue before the Second Circuit in Yu v. Hasaki Restaurant, Inc. was “whether FLSA claims fall within the narrow class of claims that cannot be settled under Rule 68 without approval by the court (or DOL).” The Second Circuit found that they did not, as there is no clear expression in the FLSA of congressional intent to exempt the statute from the operation of Rule 68. Accordingly, Rule 68’s mandate that stipulated judgment “must” be entered should be given effect.