Settlement of wage and hour actions just got harder in New York, Connecticut, and Vermont. On Aug. 7, 2015, in Cheeks v. Freeport Pancake House, the U.S. Court of Appeals for the Second Circuit, which covers New York, Connecticut, and Vermont, issued a decision that prevents parties from stipulating to the dismissal of a case in which there are claims alleging violations of the Fair Labor Standards Act (FLSA).
Generally, when parties settle a federal court action, they simply file a stipulation pursuant to Rule 41(a)(1)(A) of the Federal Rules of Civil Procedure that dismisses the case with prejudice. By filing such a stipulation, the parties do not have to provide the court with a copy of their settlement agreement and the terms of any such agreement can remain private and confidential. In Cheeks, the Second Circuit held that parties cannot use Rule 41(a)(1)(A) to dismiss FLSA cases with prejudice and instead the parties must submit their settlement agreement to the District Court for review so that the District Court can determine whether the settlement is fair and equitable.
Case Background
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