In almost every settlement agreement of every employment case there is a clause which requires the parties to keep the settlement confidential. Employers want this term so that word doesn’t spread that they paid. Employees want this term so that word doesn’t spread that they sued. Well, these clauses may be a thing of the past.
Employment Law 360 reported today that a federal judge in the middle district of Florida has recently refused to approve a settlement of an overtime case under the FLSA because it contained a strict confidentiality clause and a penalty against the employees if they violated it.
The clause provided that the plaintiffs would owe a refund of all monies paid if they violated the agreement, along with costs, interest and attorneys fees. Judge Steven D. Merryday held that such a provision would “empower an employer to retaliate against an employee for exercising FLSA rights and effect a judicial confiscation of an employee’s right to be free from retailation for asserting those rights.”
This writer isn’t so sure. First, if the employee is no longer an employee, he probably isn’t protected by the FLSA anymore. Even if he is still employed, his right to complain about FLSA violations might not be exercised simply by disclosing the amount and terms of his settlement. Finally, even if he, subsequent to the settlement, spoke out against his employer’s FLSA policies, he would not be violating the confidentiality clause unless he disclosed that he got a settlement.
I wonder what the defense bar thinks. Dan?