Employment – FLSA settlement is approved

Where the settlement resolved a bona-fide dispute over overtime wages and was fair and reasonable, it was approved.

Background

This is a collective action lawsuit for unpaid overtime wages pursuant to the Fair Labor Standards Act, or FLSA. The parties agreed to settle the matter at a settlement conference with the magistrate judge. Thereafter, the parties submitted a joint motion for settlement approval.

Analysis

The court must first determine if the settlement resolves a bona fide dispute over an alleged violation of FLSA provisions. It does. The parties disputed whether the plaintiffs were entitled to unpaid overtime wages under the FLSA. Disagreements over rates of pay and entitlement to additional wages can constitute a bona fide dispute over defendant’s liability.

Crediting the parties’ representation that they “know the important facts affecting the case and have adequately assessed the respective benefits of the settlement and potential risks of continued litigation,” the court finds that the parties have had opportunity to “fairly evaluate the liability and financial aspects of [the] case.”

Further, when the parties reached a settlement agreement, this case had been pending for over six months. The parties have stated that they “had sufficient opportunity to evaluate their claims and defenses and engage in an arms-length settlement negotiation.” Additionally, without settlement, the parties faced proceeding “complex, expensive, and protracted” litigation, including “disputes through class discovery” and challenges “in briefing on certification and decertification, liability, and damages.” The parties appreciated that “trial would be a difficult, unpredictable, and costly undertaking” with risks to both sides—including the risk of “an uncertain and unpromised resolution of contested issues.”

There is no evidence in the record that the settlement agreement is the product of fraud or collusion. Therefore, the court finds that the absence of fraud or collusion further weighs in favor of settlement approval.

Upon review of their experience and credentials, the court finds that plaintiffs’ counsel possess the breadth of relevant experience and knowledge needed to litigate and resolve this matter in the best interests of the plaintiffs. Accordingly, this factor weighs in favor of approving the proposed settlement.

In light of the potential defenses and the risk to the plaintiffs’ claims, the plaintiffs’ success was not guaranteed. Consequently, this factor also weighs in favor of approving the proposed settlement.

Payments

The settlement agreement provides that each eligible plaintiff will receive a proportionate share of the net settlement fund of $35,000, representing 20% back wages and 80% liquidated damages. The parties represent that “resolution now is warranted by the juxtaposition of the costs of protracted litigation against the possible damages available.” Based on these representations, the court is satisfied that the settlement amount is reasonable in relation to the plaintiffs’ potential recovery.

Additionally, the court approves as fair and reasonable the payment of a $500 service award to each of the two lead plaintiffs in this case. Plaintiffs’ counsel represents that the lead plaintiffs were “instrumental in the initiation of this suit, as well as throughout its successful prosecution,” that they “spent time meeting with counsel, discussing both the facts and circumstances of the claims, and engaging in litigation strategies” and that “[w]ithout their efforts, this litigation may never have been brought.”

Attorney’s fees

The proposed settlement provides for the payment of attorney’s fees in the amount of $24,000. Based on the experience of counsel, the prevailing fees in the relevant market and the agreement of the parties, the court finds that counsel’s hourly rates of between $375-$575 are reasonable. The court finds that counsel billed a reasonable amount of time in this case in light of the time and labor expended, the novelty and difficulty of the questions raised, the skill required to perform the legal services, the experience and reputation of counsel and the results obtained.

Joint motion for approval of FLSA settlement granted.

Hernandez Chirinos v. Avena Contracting LLC, Case No. 2:25-cv-418, March 23, 2026. EDVA at Norfolk (Walker). VLW 026-3-141. 21 pp.

Full-Text Opinion

VLW 026-3-141
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