Employers often prioritize preserving the confidentiality of the terms of a settlement of a pending or threatened litigation. This, of course, includes the settlement agreement itself. The reasons vary from concerns about chatter among employees and copycat lawsuits to external publicity and press inquiries. Given that confidentiality is frequently a key incentive to enter into a settlement, with respect to a great many claims, it is respected and permitted by the courts.
FLSA Claims
Where a settlement concerns individual claims under the Fair Labor Standards Act (FLSA), however, an employer faces steep challenges in securing confidentiality. Cheeks v. Freeport Pancake House, 796 F.3d 199 (2d Cir. 2015), eliminated any doubt and confirmed that parties cannot enter into a private settlement and stipulate to dismiss FLSA claims with prejudice without approval of a court or the Department of Labor (DOL). As part of the approval process, a court must review the settlement terms to ensure that they are “fair and reasonable.” The review of the settlement terms transforms the settlement agreement into a “judicial document” to which a presumption of public access, or filing on the docket, attaches.
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