Several years ago, I floated a proposal to tweak the Fair Labor Standards Act (“FLSA”) in a way that would benefit both employees and employers.
The proposal was simple, and it was well-received – enough so that it seems worth sharing again, in a different forum.
To set the stage for the proposal, let me share a quick story.
Years ago, I received a kind note on Labor Day from my opposing counsel in a wage-hour class action, thanking me and my firm for being their “partners” in addressing employment issues. (Perhaps the word he used wasn’t “partners,” but it was something close to it.)
At first, I thought he was joking. Then I realized that this attorney, for whom I have great respect, wasn’t joking at all. He understood.
He understood that employers are not looking to violate employment laws, and that the attorneys who represent them are not trying to help their clients violate those laws. (And that lawyers advising employers on how to violate the laws will soon be looking for new clients. And maybe for malpractice attorneys.)
He understood that the opposite is true – employers are trying to comply with the laws, they have an incentive to do so, and their attorneys are trying to help them do so.
No employer is hoping to get sued. Not one.
The general public may not understand this notion. That is not meant as an insult. They may just see employers and employees as natural adversaries.
But the desire of employers to comply with employment laws – and avoid litigation – plays out thousands of times every day. And it does so to the great benefit not employees.
All management-side employment lawyers worth their salt have stories about how they worked with their clients to prevent a client from terminating someone’s employment, cutting someone’s pay, or implementing a problematic policy, by explaining the law and the potential repercussions. Some lawyers likely have hundreds of these stories.
“You should give the employee another chance,” is an expression that may as well be on a tape recording, it’s used that often by management-side employment lawyers.
“Document the problem, sit down with the employee to explain how they need to do things differently, and give the employee a chance to correct it.”
“If you make that change, you’re walking right into a class action that you will have difficulty defending.”
Often – usually – employers will understand and follow their counsel’s advice once distanced from the heat of the moment.
They’re looking to do the right thing, to treat their employees fairly. And, yes, to treat their employees in compliance with the law.
It’s an approach that works in virtually every context except perhaps one – FLSA.
The FLSA actually works to dissuade employers from working with employees to correct many wage issues.
Why?
Because, unlike other employment laws, the FLSA generally doesn’t permit employers and employees to resolve wage disputes with finality short of the very litigation or agency complaint that neither employers nor employees really want.
Generally speaking, settlements of FLSA claims outside of litigation or an agency proceeding are not binding.
An employer who enters into an amicable settlement of FLSA claims with an employee runs the risk that the employee will sign the settlement agreement, accept the money, then still bring suit for FLSA violations in court.
And perhaps it’s time to change that.
In a perfect workplace, if employees have issues, whatever they might be, they would address those issues with their managers or with human resources and resolve their disputes amicably.
And, for the most part, the law not only permits them to do so, but encourages them to do so.
If employees believe they have been harassed, they can take their concerns to their employer and let their employer investigate and take corrective action, if appropriate.
If employees believe they have been discriminated against, they can share their concerns with their employer and resolve their disputes.
And if part of the resolution is a payment of some sum that the employer and employee agree to be fair, they can enter into a settlement agreement whereby those claims are resolved. That is, the employee can accept some agreed-upon sum of money and sign a release. And the employee can review the settlement agreement with his or her attorney beforehand in deciding whether the terms are fair. If not, the employee won’t sign it.
But these very same employers and employees who are able to amicably resolve virtually any dispute generally are not allowed to do so with FLSA claims, at least not with finality.
If employees believe they were not paid for all time they worked, they cannot simply speak with their managers or human resources personnel to resolve the issue, get the problem fixed, and move on – at least not in a manner that makes sense to most employers. No, generally speaking, the only way employers and employees can resolve the issue through a binding agreement is if a lawsuit is filed or if a complaint is filed with the Department of Labor (“DOL”).
If employees believe their overtime pay was miscalculated, the only way they and their employers can resolve the claim in a way that is binding is if the employee sues or raises the issue with the DOL.
If employees believe that they have been misclassified as exempt, they can’t resolve the issue with their manager or human resources personnel in a way that is binding. No, they have to sue or file a DOL complaint. Without a lawsuit or DOL complaint, the employer typically has no comfort that it won’t still be sued.
And if employers identify an issue themselves – an error on someone’s paycheck, or a concern that an employee might have been misclassified – the best they can do is to correct the issue and pay the employee, then sit back and hope that the employee doesn’t turn around and sue about the very issue the employer resolved.
It’s a system that is built to increase litigation, often unnecessarily, at the expense of amicable resolutions of issues that may arise.
There is no good reason that employers and employees can be trusted to resolve other employment disputes without litigation or an agency complaint, but can’t be trusted to do so with regard to wage-hour claims.
There is no good reason why employers and employees can be allowed to amicably resolve a race or sex discrimination concern, for instance, but they can’t be allowed to resolve a wage-hour claim – not even as part of the resolution of the race or sex discrimination concern.
The argument that an employee wouldn’t understand the nuances of the FLSA just doesn’t fly. The FLSA is no more nuanced than Title VII or the Americans with Disabilities Act, and employers and employees are allowed to resolve claims under those statutes without litigation or an agency complaint.
If you assume that employers and employees would like to have the opportunity to try to resolve their FLSA disputes prior to litigation or a DOL claim, then it is time to amend the FLSA to give them the right to do so.
The blueprint for any amendment is awfully easy to find. It’s right in the Age Discrimination in Employment Act (“ADEA”). Or, more specifically, it’s right in the Older Workers Benefits Protection Act (“OWBPA”) amendments to the ADEA.
For reasons that remain somewhat mystifying, settlements of age discrimination claims are treated differently than settlements of other types of discrimination claims.
The OWBPA requires that releases of age discrimination claims under the ADEA must include specific terms that releases of other types of federal discrimination claims do not require. Among other things, such releases must specifically reference the ADEA, they must advise employees that they have the right to consult with an attorney, they must provide the employee with 21 days to consider the release (or 45 days under some circumstances), and they must provide the employees with 7 days to revoke an agreement after signing.
If the OWBPA’s bells and whistles are satisfied (and if the employee doesn’t timely revoke a release), an ADEA release should be binding. (I say “should” only because there could always be some other contractual issues with the release.)
There is no reason that the FLSA couldn’t be amended to permit private settlements along the same lines as the ADEA was amended – with a requirement that the release specifically reference the FLSA, and that it advise employees that they have the right to consult with an attorney, that they have 21 days to consider the release, and that they may revoke the release within 7 days.
If you don’t like the FLSA settlement proposed by your employer, don’t sign it.
If you don’t understand it or have questions, talk with a lawyer.
If you need time to think about it, you would have plenty of time.
And if you have second thoughts after signing the agreement, you could revoke it.
If such bells and whistles are sufficient to protect older workers who wish to settle age discrimination claims, they should be sufficient to protect employees who wish to resolve FLSA claims.
Employees would benefit from a system that would encourage their employers to address – and resolve — wage-hour issues and get them payments swiftly. And, not incidentally, the employees might end up with more money in their pockets because they might not have to share 30-40% of their settlement with lawyers, as they typically do in litigation.
Employers would benefit from a system that would encourage them to resolve those issues without the fear that they will pay money and still be sued – saving the costs of attorneys in the process.
Not incidentally, the courts and the DOL wouldn’t be clogged with FLSA claims that cry out for resolution.
The only people who wouldn’t benefit from this proposed amendment would be the lawyers – both plaintiffs’ lawyers and management-side employers.
And if you’re worried about lawyers, you shouldn’t be.
