United States District Court, N.D. Alabama, Northeastern Division
MADELINE HUGHES HAIKALA UNITED STATES DISTRICT JUDGE
parties to this FLSA action have informed the Court that they
have reached a settlement through mediation. On September 15,
2017, the parties filed a joint motion asking the Court to
approve their proposed settlement agreement. (Doc. 82). The
Court held a hearing on September 27, 2017 to discuss the
terms of the agreement with the parties. The Court will
approve the proposed settlement agreement because it is a
fair and reasonable compromise of a bona fide dispute.
Alvaro Salazar owns and operates two restaurants in
Hartselle, Alabama both named El Portal. (Doc. 50, p. 2). Mr.
Salazar operates these restaurants through the corporate
defendants in this action, the first restaurant through El
Portal, Inc. and the second restaurant through El Portales,
Inc. (Doc. 50, p. 2).
plaintiffs worked at the defendants' restaurants in
Hartselle. They assert claims for violations of the
FLSA. Plaintiff Oscar Marquez, a former
supervisor at El Portal, alleges that the defendants never
paid him in a manner compliant with the FLSA and that he
worked the final nine months of his employment with the
defendants without receiving pay. (Doc. 14, pp. 4-5). The
remaining plaintiffs, Eladio Gasper Domingo, Veronica
Segoviano, Erika Brito, and Jose Castillo, worked at the
defendants' restaurants as wait staff. (Doc. 14, p. 4).
These plaintiffs allege that the defendants required them to
work for tips without paying the plaintiffs an actual wage.
(Doc. 14, pp. 5-7). All of the plaintiffs allege that the
defendants regularly required them to work in excess of 40
hours per week without compensating them for overtime. (Doc.
14, pp. 5-7).
defendants dispute the number of hours that the plaintiffs
worked weekly. (Doc. 82, p. 10). The defendants assert that
they were entitled to a tip credit against any wages paid to
their wait staff employees. (Doc. 82, p. 14). With respect to
Oscar Marquez, the defendants argue that he was an exempt
employee under the FLSA. (Doc. 50, p. 23). The defendants
also dispute whether their business is covered by the
FLSA's enterprise jurisdiction. (Doc. 50, p. 15).
enacted the FLSA in 1938 with the goal of ‘protect[ing]
all covered workers from substandard wages and oppressive
working hours.'” Christopher v. SmithKline
Beecham Corp., 132 S.Ct. 2156, 2162 (2012) (quoting
Barrentine v. Arkansas-Best Freight Sys., Inc., 450
U.S. 728, 739 (1981) (alteration in Christopher)).
In addition to mandating a minimum wage, “the FLSA
obligates employers to compensate employees for hours in
excess of 40 per week at a rate of 1 ½ times the
employees' regular wages.” Id. (citing 29
U.S.C. § 207(a); see also 29 U.S.C. §
206(a)). Congress designed the FLSA “to ensure that
each employee covered by the Act would receive
‘[a] fair day's pay for a fair day's work'
and would be protected from ‘the evil of
‘overwork' as well as ‘underpay.'”
Barrentine, 450 U.S. at 739 (emphasis in original).
In doing so, Congress sought to protect “the
public's independent interest in assuring that
employees' wages are fair and thus do not endanger
‘the national health and well-being.'”
Stalnaker v. Novar Corp., 293 F.Supp.2d 1260, 1264
(M.D. Ala. 2003) (quoting Brooklyn Sav. Bank v.
O'Neil, 324 U.S. 697, 706 (1945)).
employee proves that his or her employer violated the FLSA,
then the employer must remit to the employee all unpaid wages
or compensation, liquidated damages in an amount equal to the
unpaid wages, reasonable attorneys' fees, and costs. 29
U.S.C. § 216(b). “FLSA provisions are mandatory;
the ‘provisions are not subject to negotiation or
bargaining between employer and employee.'”
Silva v. Miller, 307 Fed.Appx. 349, 351 (11th Cir.
2009) (quoting Lynn's Food Stores, Inc. v. U.S. ex.
Rel. U.S. Dep't of Labor, 679 F.2d 1350, 1352 (11th
Cir. 1982)); see also Brooklyn Sav. Bank, 324 U.S.
at 707. “Any amount due that is not in dispute must be
paid unequivocally; employers may not extract valuable
concessions in return for payment that is indisputably owed
under the FLSA.” Hogan v. Allstate Beverage Co.,
Inc., 821 F.Supp.2d 1274, 1282 (M.D. Ala. 2011).
parties may settle an FLSA claim for unpaid wages only if
there is a bona fide dispute relating to a material issue
concerning the claim. To compromise a claim for unpaid wages,
the parties must “present to the district court a
proposed settlement, [and] the district court may enter a
stipulated judgment after scrutinizing the settlement for
fairness.” Lynn's Food, 679 F.2d at 1353;
see also Hogan, 821 F.Supp.2d at
1281-82. “[T]he parties requesting review of
an FLSA compromise must provide enough information for the
court to examine the bona fides of the dispute.”
Dees v. Hydradry, Inc., 706 F.Supp.2d 1227, 1241
(M.D. Fla. 2010). The information that the parties provide
also should enable the Court “to ensure that employees
have received all uncontested wages due and that they have
received a fair deal regarding any additional amount that
remains in controversy.” Hogan, 821 F.Supp.2d
at 1282. “If a settlement in an employee FLSA suit does
reflect a reasonable compromise over issues, such as FLSA
coverage or computation of back wages, that are actually in
dispute, ” then a court may approve a settlement.
Lynn's Food, 679 F.2d at 1354; see also
Silva, 307 Fed.Appx. at 351 (proposed settlement must be
fair and reasonable).
Court has reviewed the proposed agreement and determined that
it represents a fair and reasonable compromise of the
parties' disputes concerning FLSA coverage and hours
worked by the plaintiffs. The defendants have agreed to pay
to each plaintiff $5, 500 in back wages and $5, 500 in
liquidated damages for a total of $11, 000 paid to each
plaintiff. (Doc. 82, 12-13). The parties reached this amount
by agreeing that the defendants would compensate the
plaintiffs for all of their claimed hours according to the
following formula: the defendants would pay the plaintiffs
for all normal hours at a rate of $2.13 per hour which
represents the minimum wage of $7.25 minus a tip credit of
$5.12; the defendants would pay the plaintiffs for all
overtime hours at a rate of $5.76 per hour which represents
the standard overtime wage of $10.88 minus the tip credit of
$5.12. (Doc. 11, p. 23). Under this formula, the parties
agree that the wages calculated are less than the $11, 000
sum that the defendants will pay to each plaintiff under the
settlement agreement. (Doc. 82, p. 11).
proposed agreement includes a petition for attorney's
fees that the Court must examine before approving the
settlement. The Court reviews the attorney's fees awarded
under the 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.” Silva, 307 Fed.Appx. at
351 (citing Lynn's Food, 679 F.2d at 1352).
Counsel for the plaintiffs have submitted time records for
the Court's review, and the Court notes that
plaintiffs' counsel will receive through the settlement
roughly half of the fees they would claim and attempt to
prove at trial. Under the circumstances, the Court finds this
amount to be fair and reasonable. There is no conflict
between the employees' interests and recovery and
plaintiffs' counsel's fee.
addition, the plaintiffs have agreed to release certain
claims against the defendants as part of the settlement.
(Doc. 82, pp. 15-16). The Court must review this provision to
ensure that the employer does not “use an FLSA claim (a
matter arising from the employer's failing to comply with
the FLSA) to leverage a release from liability unconnected to
the FLSA.” Moreno v. Regions Bank, 729
F.Supp.2d 1346, 1351 (M.D. Fla. 2010); see also
Hogan, 821 F.Supp.2d at 1282 (stating that an employer
may not require valuable concessions for wages due under the
FLSA). The language of the release provision indicates that
the plaintiffs are releasing only claims that relate to the
dispute over compensation for hours they worked at the
defendants' restaurants. Counsel for both parties
confirmed this interpretation of the release provision during
a discussion with the Court. Because the release provision
covers only the plaintiffs' FLSA-related claims, the
Court approves the release language.