Employment – FLSA overtime settlement is approved

Where the settlement of an overtime claim was a fair and reasonable compromise of disputed issues, and the attorney’s fees were reasonable, the settlement was approved.

Background

Lee Bayless and BRX Inc. and Federal Express Corporation have filed a joint motion seeking approval of the Fair Labor Standards Act, or FLSA, settlement. Courts undertake this review to ensure that the settlement is a “fair and reasonable resolution of a bona fide dispute over FLSA provisions.”

The analysis can be broken down into three steps; the district court must determine: (1) whether there are FLSA issues in dispute, (2) whether the settlement is a fair and reasonable compromise over the issues and (3) whether the attorney’s fees, if included in the settlement agreement, are reasonable.

Issues in dispute

Courts have found a bona fide FLSA dispute where the parties disagree as to whether the plaintiff is entitled to overtime pay under the FLSA. Here, plaintiff alleges that defendants violated FLSA by not paying him the overtime wages that he was due.

Defendants have “at all times denied liability” and would have asserted various rebuttals and affirmative defenses should the case have proceeded to trial. Accordingly, the court finds a bona fide dispute between the parties over FLSA provisions.

Fair and reasonable

Courts typically weigh six factors in evaluating a settlement agreement of this nature, including (1) “the extent of discovery that has taken place”; (2) “the stage of the proceedings, including the complexity, expense, and likely duration of the litigation”; (3) “the absence of fraud or collusion in the settlement”; (4) “the experience of counsel who have represented the plaintiff[]”; (5) “the probability of plaintiff[’s] success on the merits” and (6) “the amount of the settlement in relation to the potential recovery.”

Here, all six factors support approving the settlement. The parties exchanged extensive wage and hours records from BRX and hours of service data from FedEx, which helped the parties support their respective positions and determine that a settlement was the optimal resolution of the matter.

Many issues here, including establishing hours worked and wages owed, whether FedEx was a joint employer and whether any alleged FLSA violations were willful, would have made litigation “complex, expensive, and protracted.” Settlement at this stage of the litigation through arm’s length settlement negotiations provides significant monetary relief to plaintiff and saves both parties substantial legal expenses.

Without any evidence to the contrary, courts presume that no fraud or collusion occurred between counsel. Here too, the court finds no evidence of fraud or collusion—the parties negotiated over several weeks through formal discovery and reached settlement through a settlement conference with the magistrate judge. Plaintiff’s counsel has substantial experience of litigating wage and hours cases in Virginia, and this experience weighs in favor of finding the settlement fair and reasonable.

Evidence presented that plaintiff faces significant hurdles to recovery under the FLSA weighs in favor of finding the settlement fair. If the parties pursued litigation, defendants would have argued that plaintiff was paid for all hours worked, that certain types of activities were not compensable and that liquidated damages would have been unavailable to plaintiff—all of which would have significantly limited plaintiff’s possible recovery.

Considering these hurdles and the chance that plaintiff could have recovered nothing if defendants prevailed at summary judgment or trial, the court finds plaintiff’s recovery of $10,000 for unpaid overtime to be reasonable and fair. This amount is over $3,000 more than plaintiff’s calculation of his unpaid overtime, which is the maximum he could receive without liquidated damages if defendants prevailed on their “good faith” defense.

Attorney’s fees

The court reviews the attorneys’ fees included in the settlement agreement to “assure both that counsel is compensated adequately and that no conflict of interest taints the amount the wronged employee recovers under a settlement agreement.”

Plaintiff’s counsel’s calculated lodestar fee is just under $30,000, and the settlement agreement allocates $15,000 to plaintiff’s attorney’s fees. FLSA cases are fact-intensive and require significant commitments of time and personnel to litigate. The court finds no evidence that the fee is unreasonable.

In fact, the bargained-for fee represents a significant discount from the lodestar calculation and plaintiff considers the settlement to be a significant success. Accordingly, the court finds that the attorney’s fees included in the settlement agreement are reasonable.

Joint motion for settlement approval granted.

Bayless v. BRX, Inc., Case No. 3:25-cv-00077, May 19, 2026. WDVA at Charlottesville (Yoon). VLW 026-3-221. 6 pp.

Full-Text Opinion
VLW 026-3-221