Flores v. Greenwich BBQ LLC

Background

Brenda Flores brought claims under the Fair Labor Standards Act (FLSA) and New York Labor Law. She alleged that the defendants failed to pay the lawful minimum wage, that managerial employees kept part of the tips customers paid her, and that the defendants failed to provide required wage notices and wage statements. She also alleged retaliation for complaining about the allegedly unlawful policies.

The parties submitted a proposed settlement dated May 7, 2021. The agreement provided for a $15,000 settlement. Flores’s damages calculations estimated a possible recovery ranging from $0 to $50,317.57, including unpaid back pay and tips, wage-notice and wage-statement damages, and liquidated damages. The parties identified litigation risks, including the defendants’ position that a tip credit deducted from Flores’s wages was proper.

Court’s Analysis

The court explained that FLSA claims cannot be privately settled with prejudice without approval from the court or the Department of Labor. The court therefore reviewed whether the agreement was fair and reasonable, considering factors such as the possible recovery, the burdens and expenses of litigation, litigation risks, arm’s-length bargaining, and possible fraud or collusion.

The court found the $15,000 payment to be a reasonable compromise of disputed issues. It also found the requested $4,866.66 in attorneys’ fees and $400 in costs reasonable. The attorneys’ billing records used a $400 hourly rate, counsel reported spending about 24 hours on the case, and the resulting lodestar—the reasonable hourly rate multiplied by the reasonable hours worked—was $9,600. The requested fees and costs totaled $5,266.66, producing a multiplier of approximately 0.55 compared with the lodestar.

The court found no objectionable confidentiality provision and concluded that the release covered only claims related to the case. But paragraph 16 contained a no-rehire provision making Flores ineligible to hold positions with Mighty Quinn’s or its related entities and preventing her from applying for future employment there. The court described such provisions as highly restrictive and in strong tension with the FLSA’s remedial purposes.

Ruling

Judge Edgardo Ramos denied without prejudice the request for settlement approval. The court instructed the parties by May 28, 2021, to indicate their consent to removing the no-rehire provision, submit an alternative settlement agreement for approval, or provide a status update. The opinion did not state that the court approved the settlement itself.