SAN FRANCISCO (CN) - A federal judge may upend a settlement between supplier Fastenal and three disgruntled employees, saying she could find no evidence the deal is "fair and reasonable."
Kristopher Deane, Michael Romano and Lisa Johnson sued Fastenal - which employs more than 10,000 at 2,600 locations nationwide - in 2010, claiming the company intentionally misclassifies its employees as exempt to avoid paying overtime.
After U.S. District Judge Yvonne Gonzalez Rogers conditionally certified the suit as a class action in 2011 - and decertified it in 2012 - the parties agreed to release future claims in exchange for an undisclosed sum and a confidentiality provision.
But in a tentative ruling Friday, Rogers said the small amount of information the parties provided to her about the settlement terms made it impossible for her to approve them.
"The parties' assertions that the amounts here are fair and reasonable cannot be assessed based upon the scant evidence information provided," Rogers wrote. "Notwithstanding that a settlement routinely involves compromise, the court cannot determine the basis upon which the settlement amounts were determined or how they compare to the maximum recovery plaintiffs might have obtained if the action proceeded on its merits. The parties provide no estimates of overtime hours or lost meal and rest breaks and no calculation or analysis explaining how the settlement payments compare. In short, the parties have not provided sufficient information and explanation of the settlement amount for the court to make the decision required."
Additionally, the judge took exception to the confidentiality clause, claiming "numerous courts have found that such a provision in a settlement of FLSA claims runs counter to the purposes of the statute" - contravening legislative intent and the Department of Labor's efforts to notify employees of their FLSA rights.
"The parties make no effort to justify their confidentiality provision here or explain why it should overcome the presumption against such confidentiality so frequently stated in FLSA decisions," Rogers wrote.
She also took exception to what she termed "such a broad release" of future claims against Fastenal, saying the settlement amount doesn't compensate plaintiffs enough to give up their right to sue the company later.
Rogers welcomed both sides to clarify their positions at a hearing slated for Monday.
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