In Excellent Pancake, Inc. v. Giannattasio, Civil Action No. 18-cv-176, 2018 WL 3913109 (E.D. Pa. August 15, 2018), the Court approved a settlement agreement to the extent that the agreement releases Defendants from claims that fall within the statutory and common law causes of action. Plaintiff in the case worked as a waitress at Defendant’s restaurant. Plaintiff alleged that Defendant engaged in “time shaving” by deducting time from server’s paychecks for breaks that the servers did not take. Plaintiff also alleged that Defendants did not pay Plaintiff overtime when she worked more than forty hours per week.
A majority of courts have held that bona fide FLSA disputes may only be settled or compromised through payments made under the supervision of the Secretary of the Department of Labor or by judicial approval. A proposed settlement agreement may satisfy judicial review if it is a “fair and reasonable resolution of a bona fide dispute over FLSA provisions”. Such an agreement resolves a bona fide dispute if its terms “reflect a reasonable compromise over issues such as back wages” and the court will determine whether the agreement is fair and reasonable to the plaintiff.
In this case, the Court found that the agreement resolved a bona fide dispute because the agreement paid the amount of back wages allegedly owed. Further, the Court found that the terms of the settlement agreement were fair and reasonable because the agreement awards the claimed unpaid wages along with liquidated damages and attorney’s fees.