The Department of Labor (DOL) and the courts themselves have generally hewed to the ruling in the 1982 case of Lynn's Food Stores, Inc. v. the United States that the "substantive rights" afforded by the Fair Labor Standards Act (FLSA) cannot be bargained or negotiated outside of court except by the DOL. Such "substantive rights" include the FLSA guarantee of time-and-a-half pay for overtime work.
Now, a unique case of an overtime-pay settlement outside of court and DOL jurisdiction has been recognized by the 5th Circuit Court of Appeals as legitimate, but no one expects it to open the floodgates to other negotiated FLSA settlements.
The case involved a dispute over hours worked and overtime wages earned during the filming of a movie. The workers were represented by a union and protected by a collective bargaining agreement throughout the filming, and afterwards as well. When the workers filed for unpaid overtime wages when filming was over, an investigator determined that it was impossible to determine if overtime were actually worked, so the workers sued.
Subsequent to this, however, the union, production company and workers reached an agreement. Negotiated overtime wages were paid, and the affected employees cashed their checks. With this fait accompli facing it, the district court where the suit had been filed issued a summary judgment. Upon review, the 5th Circuit Court also let the negotiated settlement stand, noting that the workers had been well represented and thus had not abrogated their rights under the FLSA.
Mainly, however, the appeals court let the settlement stand because it was limited to a “bona fide dispute as to the number of hours worked” and did not constitute a waiver of the plaintiffs' "substantive FLSA rights."
The case in question is Martin v. Spring Break ’83 Productions, LLC.