Shorter v. Greenwich Homecare LLC

Each year federal courts are asked review and approve FLSA settlements in thousands of cases. In some Circuits like the Second and the Eleventh, settlements must be approved for fairness under almost all circumstances. Certain clauses, like general releases and non-disparagement often raise red flags and result in denial of approval. Although many employer-defendants and their counsel often seek to include non-reemployment clauses in such settlement agreements, a recent case from the District of Connecticut holds that such clauses may be taboo as well.

In that case, the court held that inclusion of a non-reemployment clause in the settlement agreement in an individual FLSA/wage and hour case was impermissible and thus, denied the motion for approval. Addressing the issue, the court explained:

ORDER denying 63 Motion for Settlement Approval. The Court finds that approval of the proposed settlement is precluded by an impermissible provision of the agreement itself. The settlement agreement here contains a total ban on Plaintiff’s ability to seek future employment with Defendant. See ECF No. 63 -2 Paragraph 4.3. The FLSA “was not created as a vehicle for employers to fire their employees,” and thus courts in this circuit generally do not approve any agreement by the parties containing a “no re-employment clause.” Vega v. Brown Roofing Co., Inc., No. 3:21-cv-64 (CSH), 2021 WL 6048926, at *5 (D. Conn. Nov. 19, 2021) (collecting cases). The parties have included no caselaw as to why the inclusion of this provision should be permitted.

Thus, the court denied the motion for settlement approval without prejudice, and directed the parties to address what it referred to as “the problematic agreement provision” in a renewed motion, “either by removing it or explaining why its inclusion is permissible under relevant authorities.”

Because the clause often provides little relief to the defendant-employers who seek its inclusion, it might be wise to forego such clauses going forward when settling FLSA cases in jurisdictions that require judicial approval of such settlements.