Today marks the five-year anniversary of the U.S. Court of Appeals for the Second Circuit's decision in Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015), which held that the settlement of Fair Labor Standards Act (FLSA) claims by stipulated dismissal with prejudice requires court approval. In the five years since Cheeks was decided, the contours of what is permissible and impermissible in the settlement of FLSA claims have been developed by the district courts as they undertake "Cheeks" review of FLSA settlement agreements.

The 'Cheeks' Decision

Federal Rule of Civil Procedure 41 provides that—subject to any applicable statue—a plaintiff may dismiss an action without a court order by filing a stipulation of dismissal signed by the parties. The question in Cheeks was whether the FLSA was an "applicable statute" for purposes of the Rule, thus limiting a plaintiff's ability to dismiss FLSA claims without a court order.

Although the "FLSA is silent as to Rule 41," Cheeks held that the "unique policy considerations underlying the FLSA" and its " remedial purpose" to prevent employer abuses and remedy disparate bargaining power supported a finding that the FLSA is an "applicable statute," requiring court review of FLSA settlements prior to dismissal. Cheeks, 796 F.3d at 201, 207.