## Facts

- The Department of Labor investigated Lynn’s Food Stores, Inc. and found violations of the Fair Labor Standards Act (FLSA), including minimum wage, overtime, and recordkeeping requirements.
- The Department calculated that Lynn’s owed employees more than $10,000 in back wages, plus statutory liquidated damages.
- After failing to reach a settlement with the Department, Lynn’s approached its employees directly and offered $1,000 total, to be split among them pro rata, in exchange for signed releases waiving FLSA claims.
- Fourteen employees signed the releases and accepted payments; they had not filed an FLSA suit and did not appear to have independent legal advice or a clear understanding of their rights and the value of the claims.
- Lynn’s filed a federal declaratory judgment action seeking judicial approval of the releases and a declaration that it had no further FLSA liability.
- The Secretary of Labor later filed an enforcement action seeking back wages, liquidated damages, and an injunction against future violations.

## Issues

1. Whether employees’ FLSA claims for back wages and liquidated damages can be waived through a private, unsupervised settlement and release when no FLSA lawsuit has been filed and the Department of Labor has not supervised payment.
2. Whether a district court may approve such private releases through a declaratory judgment action to bar later FLSA enforcement.

## Decision

- The Eleventh Circuit affirmed dismissal of Lynn’s declaratory judgment action.
- The court held that FLSA wage claims may be compromised only in two circumstances: (1) a DOL-supervised payment under 29 U.S.C. § 216(c), or (2) a court-approved settlement in an employee-filed action under § 216(b).
- The private, unsupervised releases obtained by Lynn’s were unenforceable and could not bar subsequent FLSA enforcement.

## Legal Principles

- FLSA rights to minimum wages, overtime, and related statutory remedies generally cannot be waived by private contract because waiver would defeat the statute’s remedial purpose and enable coercive settlements given unequal bargaining power.
- Under § 216(c), when the Secretary of Labor supervises payment of unpaid wages and the employee accepts payment in full, the employee’s acceptance constitutes a waiver of further claims for those wages and liquidated damages.
- Under § 216(b), when employees bring an FLSA action, a settlement may be approved only through a stipulated judgment after judicial review to ensure it is a fair and reasonable resolution of a bona fide dispute.
- Courts lack authority to validate, through declaratory judgment, a pre-suit private settlement that bypasses both DOL supervision and judicial scrutiny in a filed FLSA case.

## Conclusion

The Eleventh Circuit held that an employer cannot extinguish FLSA wage-and-hour liability through private, unsupervised employee releases; enforceable compromise requires either Department of Labor supervision under § 216(c) or court approval of a settlement reached in a filed § 216(b) action after fairness review.


Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982)