California District Court Rejects Broad General Release Provision in FLSA Claims – Los Angeles Wage & Hour Claims Attorneys Blumenthal, Nordrehaug & Bhowmik

by Norman B. Blumenthal on March 15, 2013

OvertimeAnother court has joined the growing number of courts nationwide that reject a broad general release provision within a Fair Labor Standards Act (FLSA) settlement agreement, thus protecting the rights of employees, who typically lack any real bargaining power with regard to their employers (or former employers).  McKeen-Chaplin v. Franklin American Mortg. Co.

Plaintiff Gina McKeen-Chaplin filed a wage-and-hour class action and collective action suit on behalf of herself and all others similarly situated against Defendant Franklin American Mortgage Company ("Defendant").  Plaintiff alleged that Franklin failed to pay her and the other class members overtime pay, provide accurate wage statements, or provide meal breaks.  After the Court denied Defendant's motion to dismiss, the parties reached a settlement agreement for all the claims.  In exchange for the settlement, the Plaintiffs also agreed to release Franklin and others from "any and all claims … whether known or unknown, arising from, relating to, or in any way connected with [their] employment with or termination of employment from [Defendant].  The parties then filed a motion seeking court approval of the FLSA agreement and dismissal of the lawsuit with prejudice.

The Court denied the motion.

The court reasoned the general release provision was improper because it released the Defendants not only “from claims to settle their wage claims, but also claims that are unrelated to the claims asserted in the complaint.”  Further, since the parties have not explained why the release of “any and all claims … whether known or unknown, arising from, relating to, or in any way connected with [Plaintiff's] employment with or termination of employment from [Defendant]” is fair and reasonable, there has been no showing that Plaintiffs have been independently compensated for the broad release of claims unrelated to any dispute regarding FLSA coverage or wages due, including, among others, claims for discrimination under Title VII, intentional infliction of emotional distress, and “outrageous conduct.”   Nor has there been a showing that the Plaintiffs have a full understanding of or have been fully informed of what they are releasing and the consequences in exchange for a settlement payment.

Blumenthal, Nordrehaug & Bhowmik is an experienced California employment law firm with offices located in San Diego, San Francisco and Los Angeles. The firm dedicates its practice to contingency fee employment law work for issues involving misclassification as a salaried worker exempt from overtime, failure to pay vacation wages, misclassification as an independent contractor, off-the-clock work, wrongful termination, discrimination and other California labor laws.

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