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Recent Unpaid Overtime Settlement:
An October 4th decision out of the Orlando Division of the District Court for the Middle District of Florida shows how a district judge will evaluate whether to approve the settlement of a Fair Labor Standards Act claim. Yes, believe it or not a judge has the authority to disapprove a settlement even if both the employer and employee agree to the terms. 

The Act provides that any settlement of a claim for unpaid wages requires either approval from the Department of Labor or a district court judge. To approve the settlement, the judge must scrutenize the entire settlement and determine whether it is a fair and reasonable resolution of a bona fide dispute. If the settlement is reasonable, the judge may approve the settlement in order to promote the policy of encouraging settlement in litigation.

In this particular case, the parties agreed to settle the wage claim for $2,600. The wage and hour records reflected the settlement reprsented about 75% of the claimed unpaid wages. Furthermore, the employee admitted that he occassionally took 1/2 hour lunch breaks which were not reflected in the time records.

The judge found the settlement was reasonable because it paid the majority of the wages sought and reflected a reasonable deduction for the risk associated with the lunch breaks.

The Court also found the attorney fee award to be reasonable. The court examined the number of hours the attorney spent on the case and the attorney's hourly rate. The court factored in a risk that the employee might lose in which case the attorney would receive no fee award. The fees paid under the settlement reflected about 70% of the maximum the attorney might recover and was thus reasonable.

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