The Supreme Court has refused to hear an appeal on a 5th Circuit Court's ruling that allowed a private settlement of an overtime dispute. Previously, claims under the Fair Labor Standards Act (FLSA) could only be resolved by a court or the Department of Labor (DOL).

The Supreme Court's declining to rule on the private FLSA settlement issue means that future private settlements are possible in the 5th Circuit Court's area of Louisiana, Texas and Mississippi.

For any such settlement to be legal, however, three requirements must be met:

  1. There must be a genuine dispute over wages.
  2. The employee or employees involved must be aware of their rights under the FLSA.
  3. There must be little danger of the employee(s) being disadvantaged in bargaining power.

For the third, generally speaking the employee(s) must be represented by counsel or a bargaining unit.