Unpaid wages

The Settlement Process in Wage-and-Hour Cases

You attended a mediation with your attorney and settled your unpaid wages case. Now you’re wondering – when will I receive my settlement check?

After your wage case settles, your attorney and the defendants’ attorney must work together to draft a settlement agreement that conforms with Cheeks v. Freeport Pancake House.[1] In August 2015, the Second Circuit (which controls the federal courts in New York) explained that all Fair Labor Standard Act (“FLSA”) wage and hour cases must be reviewed and approved by the Court. This includes all settlements for cases involving unpaid overtime and other unpaid wages. Your attorney and the defendants’ attorney must adhere to certain requirements outlined in the Cheeks decision which requires that all “releases” in your settlement agreement be narrowly tailored to release only wage-and-hour claims.[2] In addition to narrowly tailored releases, the settlement agreement cannot include any confidentiality provisions – meaning that the parties cannot be prohibited from discussing the case or the settlement with others.[3] Lastly, Cheeks requires counsel to submit the agreement, along with a motion for settlement approval, to the Court for review and approval.

The Cheeks review process requires several steps that your attorney needs to follow. First, your attorney must draft a settlement agreement jointly with the defendants’ attorney. This often requires multiple “rounds” of edits on both sides until everyone agrees on the terms of the settlement agreement. Next, the parties will review and sign the agreement with their respective attorneys. After this, your attorney must prepare and file a motion for settlement approval Court. The fully signed settlement agreement will be attached to this motion for the Court’s review. Once the Court receives the motion for settlement approval with the fully signed settlement agreement, the Court will schedule a “Fairness Hearing.” During the Fairness Hearing, the Judge will inquire about the terms of the settlement agreement to determine whether the settlement agreement is “fair and reasonable” and thus conforms with Cheeks.

If the Court finds that the settlement agreement conforms to the requirements outlined in Cheeks, then the Court will approve the agreement. The defendants are then required to disburse the settlement checks according to the terms of the settlement agreement which outlines the time frame in which the checks should be dispersed following court approval of the agreement. If the Court finds that the agreement does not conform with the requirements of Cheeks, the Court will order the attorneys to redraft the settlement agreement, and the entire process starts again.

Ultimately, Cheeks provides further protection for Plaintiffs in the FLSA cases to avoid any unfair or predatory terms in settlement, especially in light of the FLSA’s public policy to “remedy the disparate bargaining power between employers and employees.”[4] Though this is beneficial, it requires your attorney to follow additional steps and requirements in order to ensure that the settlement agreement will be approved. So, please remember – be patient after settling your case!