NY Court Rejects FLSA Settlement That Contains a “No Rehire” Provision

We have negotiated many settlement agreements for claims brought under the New Jersey Law Against Discrimination (“LAD”), the Conscientious Employee Protection Act (“CEPA”), and various other New Jersey laws that have included a provision barring the settling employee from seeking future employment with the defendant employer.  Employers argue in favor of including these clauses in order to prevent future claims of retaliation in the event the employer does not agree to re-hire the employee.  Truth be told, most employees have no desire to work again for the offending employer, but these no re-hire provisions can become complicated when companies are sold and/or merged and the employee seeks future employment with the re-constituted employer.

A federal court in New York (see, Reyes v. Hip at Murray Street) recently refused to approve a proposed settlement for a lawsuit brought under the Fair Labor Standards Act because it contained such a no re-hire provision.  It will be interesting to see if there is more push back on these clauses in settlement agreements for a wider range of employment law claims.  Stay tuned!