MEMPHIS — A confidentiality clause in Unilever’s proposed class action overtime settlement offer failed to gain court approval recently. Former Unilever Manufacturing Inc.’s factory workers claim the company failed to pay them overtime wages. Despite the parties agreeing to the confidentiality clause, based on the court’s ruling, both parties are obligated to disclose the settlement terms.
The Overtime Claim
Three former factory workers filed their lawsuit in April of this year. The rejected settlement was filed in June. The former workers seek to represent workers who worked off-the-clock without pay or overtime. Some of the duties they claim they performed off-the-clock include putting on and taking off work outfits and walking to and from the locker room for the clothing changes. Both parties claimed the settlement more than compensated the proposed class members, but the confidentiality clause prevents that information from being released.
The Tennessee federal judge ruled the settlement is presumed public and neither party made a strong enough case to overcome the presumption. The reason for the presumption is based on the intent behind the Fair Labor Standards Act (FLSA). According to the judge, the FLSA is intended to “advance employees’ awareness of their FLSA rights” and ensure the FLSA is implemented by all employers. Unilever argued against making the terms of the agreement public, claiming confidentiality encourages companies to settle and avoid drawn out litigation. The parties may now either file a new settlement without the confidentiality clause or go to trial.
Confidentiality and Settlements
One bargaining tool in settlement negotiations is the option of confidentiality. Companies prefer to keep settlements confidential so they can have more negotiation power if other lawsuits arise. If everyone knows what the company is willing to pay in a settlement, it might encourage individuals with weaker claims or just more individuals to bring lawsuits expecting similar results, which can be costly for the company. In some cases, confidentiality allows companies to offer lower settlement amounts than could be received if the case went to trial. But it is, as Unilever claims, an incentive to settle before a potentially costly and drawn out court battle, which is beneficial to both sides, even if the plaintiff receives less overall. Fortunately, all settlements have to receive court approval before they are finalized and the court bases its approval on the fairness of the offer. The Unilever ruling does not prevent confidentiality clauses in settlements, but it does prevent one in this case.
If you believe your employer is not compensating you for all of the hours you have worked and owes you overtime, call our knowledgeable team of overtime pay lawyers today at (855) 754-2795 or complete the Free Unpaid Overtime Case Review form. Our experienced legal team will evaluate your case. If we accept your case, we will represent you under our No Fee Promise. This means there are no legal fees or costs unless you receive a settlement. There are strict time deadlines for filing lawsuits, so it is important to contact an attorney immediately.