Utah Judge Denies FLSA Settlement Over 'One-Step' Opt-In Procedure

SALT LAKE CITY (LN) — U.S. District Judge David Barlow on Friday denied a renewed motion to approve a $0.26 million FLSA settlement between Limble Solutions and former employees, ruling the proposed opt-in process was legally insufficient to bind non-parties.

Barlow ruled that the settlement agreement would resolve the dispute before any collective members had opted in, leaving no live collective action for the court to approve.

The plaintiffs, Stefan Touani and Nick Mazza, alleged Limble misclassified sales development representatives as exempt from overtime pay. The parties had previously submitted a first settlement motion in January, which Barlow also denied without prejudice after identifying similar procedural concerns.

Under the rejected agreement, Limble would deposit $0.26 million into a fund for 57 identified workers. Each worker would receive a check and could opt in by cashing or depositing it within 120 days.

Barlow wrote that the FLSA requires employees to give written consent to become party plaintiffs before their claims can be settled on their behalf.

"The problem with the parties’ proposed notice method is not that it could bind individuals against their will," Barlow wrote. "Instead, the issue is that the FLSA dispute ends once the Settlement Agreement is approved, so if no collective members have opted in at that time, there can be no FLSA collective action to settle."

The judge noted that approving a global settlement with only the named plaintiffs involved "undercuts [the] critical distinction [between Rule 23 class actions and FLSA collective actions]."

The parties argued their method was more efficient and cost-effective, but Barlow said procedural deficiencies under the statute prevented approval regardless of those advantages.

"The court notes that nothing in this order prevents the parties from adjusting the notice procedure and having prospective collective members opt in and file their consent with the court prior to releasing their claims," Barlow wrote.

The motion was denied without prejudice.