The average settlement for collective actions under the Fair Labor Standards Act (FLSA) in federal court was $1,166,835 per case in 2023.
Understanding FLSA Settlements
The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in federal, state, and local governments. When employers fail to comply with these regulations, affected employees may bring collective actions to recover unpaid wages, overtime, and other damages. These cases often conclude with a settlement, which is an agreement to resolve the dispute outside of court.
Key FLSA Settlement Statistics from 2023
In 2023, a significant number of FLSA collective actions were settled in federal courts, providing a clear picture of the financial implications of non-compliance. These settlements involved a substantial sum of money, highlighting the risks employers face when failing to adhere to wage and hour laws.
Here's a breakdown of the 2023 FLSA collective action settlement metrics:
| Metric | Value |
|---|---|
| Number of Settlements | 423 |
| Total Settlement Value | $493,571,392 |
| Average Settlement Per Case | $1,166,835 |
| Largest Single Settlement | $65,500,000 |
These figures underscore the financial exposure associated with FLSA violations, particularly in large-scale collective actions where many employees are impacted.
Factors Influencing FLSA Settlement Amounts
Several critical factors can significantly influence the size of an FLSA settlement:
- Number of Affected Employees: The more employees involved in a collective action, the higher the potential total damages, leading to larger settlements.
- Duration and Extent of the Violation: The longer the period over which violations occurred and the greater the magnitude of unpaid wages or overtime, the larger the financial liability.
- Types of Damages: Settlements typically include back wages, and often liquidated damages (an additional amount equal to the back wages owed, unless the employer can prove good faith).
- Attorney Fees and Costs: A significant portion of any settlement often covers the plaintiffs' attorney fees and litigation costs, which can be substantial in complex collective actions.
- Nature of the Employer's Conduct: Willful violations or a history of non-compliance can increase the likelihood of higher damages and a less favorable settlement for the employer.
- Jurisdiction: Local court precedents and the specific judge overseeing the case can also play a role in settlement values.
Why These Averages Matter
Understanding the average FLSA settlement provides valuable insights for both employers and employees. For employers, it serves as a crucial benchmark for assessing potential financial risk and reinforces the importance of proactive compliance with wage and hour laws. Implementing robust timekeeping systems, conducting regular internal audits, and ensuring proper employee classification can mitigate these risks.
For employees, knowing these averages can help in understanding the potential value of their claims and the significance of pursuing legal action when their rights under the FLSA are violated. Resources like the U.S. Department of Labor's Wage and Hour Division provide comprehensive information on employee rights and employer obligations under the FLSA.
