Incentive to settle FLSA claims with the DOL

Barkan Meizlish , May 13, 2015

The Fair Labor Standards Act (FLSA) authorizes the Department of Labor (DOL) Wage and Hour Division to initiate an investigation to determine whether an employer is in compliance with the Act’s requirements.  If any violations are found upon investigation, the investigator will meet with the employer to discuss corrective actions and request any back wages owed to employees for minimum wage and overtime violations.  A settlement demand will often follow the investigation or audit, leaving employers to decide whether to settle with the DOL or take the claims to court.

The law favors acceptance of settlement offers with the DOL.  The penalties section of the FLSA contains a waiver provision, which was added by Congress as an incentive to employers to settle wage and hour claims with DOL supervision.  Under the waiver provision to 29 U.S.C. § 216(c), the DOL is authorized to supervise the payment of back wages to individual employees, as well as the agreement of any employee to accept such payment.  If the employee accepts the payment after the DOL-supervised settlement, the employee thereby waives his or her right to sue for wages, overtime, and liquidated damages, so long as the employer pays in full.
Source:  Allison Oasis Kahn, The Employer ‘Discount’ of Settling Employee Wage Claims Through the Department of Labor, Jan. 9, 2015

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