Cheeks Fairness Hearings (2026): How FLSA Settlements Get Approved (or Rejected) in the Second Circuit

Every wage-and-hour case filed in the Eastern District of New York in Brooklyn or Central Islip, or in the Southern District in Manhattan or White Plains, ends the same way if it settles: the parties write a joint letter to the judge explaining why the deal is fair, and the judge decides whether to sign the dismissal. That is a Cheeks review. The rule comes from a single Second Circuit decision now eleven years old.

This article states what Cheeks held, what the Second Circuit has decided since, which settlement terms the court itself has named as reasons for rejection, the three routes that avoid the review, and the New York Labor Law overlay that decides where the case is filed in the first place.

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What a Cheeks Fairness Hearing Actually Is

A Cheeks review is the court’s examination of a private FLSA settlement before the case is dismissed with prejudice by stipulation under Federal Rule of Civil Procedure 41(a)(1)(A)(ii). The rule provides that “[s]ubject to Rules 23(e), 23.1(c), 23.2, and 66 and any applicable federal statute, the plaintiff may dismiss an action without a court order by filing … a stipulation of dismissal signed by all parties who have appeared.” The Second Circuit held in Cheeks that the FLSA is an “applicable federal statute” within that clause; therefore, the stipulation does not take effect on its own.

The word “hearing” overstates what usually happens. The district court in Cheeks itself directed the parties to “file a copy of the settlement agreement on the public docket” and to “show cause why the proposed settlement reflects a reasonable compromise of disputed issues rather than a mere waiver of statutory rights brought about by an employer’s overreaching,” with “affidavits or other documentary evidence explaining why the proposed settlement is fair and reasonable.” Most reviews are decided on that kind of paper submission. The judge either approves the agreement and signs the dismissal or declines and sends the parties back.

There is no statute that says an FLSA settlement must be approved. The Second Circuit said so: “The FLSA is silent as to Rule 41.” The requirement is the court’s reading of the rule’s “applicable federal statute” exception in light of the FLSA’s purpose.

The case itself: Cheeks v. Freeport Pancake House

Dorian Cheeks worked for Freeport Pancake House, Inc. and W.P.S. Industries, Inc. as a restaurant server and manager. In August 2012 he sued in the Eastern District of New York, the federal court for Long Island, for overtime wages, liquidated damages and attorney’s fees under the FLSA and the New York Labor Law, and alleged that he was demoted and then fired for complaining about the overtime violations. After an initial conference and a period of discovery, the parties settled privately and, on December 27, 2013, filed a joint stipulation of dismissal with prejudice under Rule 41(a)(1)(A)(ii).

Judge Joanna Seybert declined to accept it. Rather than disclose the terms, the parties asked the court to certify the question under 28 U.S.C. § 1292(b), which it did on February 20, 2014. The Second Circuit heard argument on November 14, 2014, solicited the views of the Department of Labor because both parties argued for reversal, received the Department’s letter brief on March 27, 2015, and decided the appeal on August 7, 2015, in an opinion by Judge Pooler joined by Judges Parker and Wesley.

The holding is one sentence: “Rule 41(a)(1)(A)(ii) stipulated dismissals settling FLSA claims with prejudice require the approval of the district court or the DOL to take effect.” The court grounded it in two Supreme Court decisions. In Brooklyn Savings Bank v. O’Neil, 324 U.S. 697 (1945), a night watchman signed a release of his FLSA rights in exchange for a check for $423.16 and then sued for liquidated damages; the Supreme Court refused to enforce the release, citing “the unequal bargaining power as between employer and employee.” In D.A. Schulte, Inc. v. Gangi, 328 U.S. 108 (1946), the Court barred private settlements of disputes over whether the employer is covered by the FLSA at all. The Second Circuit adopted the approach of Lynn’s Food Stores, Inc. v. United States Department of Labor, 679 F.2d 1350 (11th Cir. 1982), under which a settlement of a bona fide FLSA dispute is enforceable only if the Department of Labor or a court first determines that it “is a fair and reasonable resolution of a bona fide dispute over FLSA provisions,” and declined to follow Picerni v. Bilingual Seit & Preschool Inc., 925 F. Supp. 2d 368 (E.D.N.Y. 2013), which had concluded that the FLSA is not a Rule 41-exempted statute.

Two things the opinion did not decide matter as much as what it did. Footnote 2: the court left “for another day the question of whether parties may settle such cases without court approval or DOL supervision by entering into a Rule 41(a)(1)(A) stipulation without prejudice.” Footnote 3: the court expressed “no opinion as to whether a bona fide dispute exists here, or what the district court must consider in deciding whether to approve the putative settlement.” The full opinion is on Justia.

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Why FLSA Settlements Need Judicial Approval

The Second Circuit called the FLSA “a uniquely protective statute” whose “primary remedial purpose” is “to prevent abuses by unscrupulous employers, and remedy the disparate bargaining power between employers and employees.” The court answered the objection that most FLSA cases are too small for a second round of litigation by pointing to the settlements district courts had rejected, and to employees who accepted offers because they trusted the employer, were homeless, or were “unemployed and desperate for any money they can find.”

There are two ways a release of a private FLSA claim takes effect.

1. Department of Labor supervision under 29 U.S.C. § 216(c). The statute authorizes the Secretary “to supervise the payment of the unpaid minimum wages or the unpaid overtime compensation owing to any employee,” and provides that “the agreement of any employee to accept such payment shall upon payment in full constitute a waiver by such employee of any right he may have … to such unpaid minimum wages or unpaid overtime compensation and an additional equal amount as liquidated damages.” That route belongs to agency audits.
2. Judicial approval of a settlement filed in the federal action. That is the Cheeks route.

A release that went through neither door is the release in Brooklyn Savings: the employee kept the check and sued for what the release did not cover, and the Supreme Court let the claim proceed. Under Cheeks, the stipulated dismissal itself does not take effect without approval; therefore, the case is still open.

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The Wolinsky Framework

Cheeks laid down the rule and, in footnote 3, said nothing about how a judge should apply it. The case name most district courts attach to the review is Wolinsky v. Scholastic Inc., 900 F. Supp. 2d 332 (S.D.N.Y. 2012). Cheeks does not cite Wolinsky. Fisher v. SD Protection Inc., 948 F.3d 593 (2d Cir. 2020), does, and describes the Wolinsky factors as including “(1) the plaintiff’s range of possible recovery; (2) the extent to which the settlement will enable the parties to avoid anticipated burdens and expenses in establishing their respective claims and defenses; (3) the seriousness of the litigation risks faced by the parties; (4) whether the settlement agreement is the product of arm’s-length bargaining between experienced counsel; and (5) the possibility of fraud or collusion.” Fisher adds that “if attorneys’ fees and costs are provided for in the settlement, district courts will also evaluate the reasonableness of the fees and costs,” citing Cheeks and 29 U.S.C. § 216(b).

In practice a motion must answer four questions. Each is below, with the Second Circuit authority that governs it.

1. Is there a bona fide dispute

Brooklyn Savings and Gangi, as Cheeks reads them, leave open “whether employees can enforce private settlements of FLSA claims where there is a bona fide dispute as to liability, i.e., the number of hours worked or the amount of compensation due.” Lynn’s Food answers yes, with approval. The motion therefore has to describe the dispute: whether the employee was exempt, whether the off-the-clock hours occurred, whether the tip credit was properly taken, and what each side risks at trial.

A bare statement that “the parties have agreed to resolve this matter” describes no dispute. Judges want the math.

2. Is the amount fair against the possible recovery

Fisher shows how a court does the arithmetic. The district court there calculated the plaintiff’s unpaid overtime at $585, liquidated damages at $585, and $5,000 each for the New York wage-notice and wage-statement violations, for a maximum possible recovery of $11,170 “were he to prevail in every respect.” The settlement was $25,000. The Second Circuit directed that on remand the court “take into account that an award of $11,170 would give Fisher complete recovery,” because “the most critical factor in determining the reasonableness of a fee award is the degree of success obtained.”

The motion should therefore state the plaintiff’s maximum possible recovery on every claim, the amount the employee will receive net of fees and costs, and why the difference is justified by the litigation risk. Fisher’s footnote 12 adds that where a settlement dismisses both FLSA and state-law claims, “a district court must take into account at least the existence of the state law claims in assessing the reasonableness of the settlement, which turns in part on the total potential recovery.” No percentage of the maximum is stated in any Second Circuit opinion as the line between approved and rejected.

3. Are the attorney’s fees reasonable

This is the point the earlier version of this article had backwards. Fisher does not hold that a court must scrutinize and reduce agreed fees. It holds the opposite in two respects.

First, there is no 33 percent cap. The district court in Fisher had reduced counsel’s fee to $8,250, “equivalent to 33% of the total settlement,” after holding that “[a]s a matter of policy, 33% of the total settlement amount or less is generally the maximum fee percentage which is typical and approved in FLSA cases.” The Second Circuit held that the court “erred as a matter of law in concluding that the maximum fee percentage that counsel may be awarded in an FLSA suit is generally limited to 33% of the total settlement amount,” that “[n]either the text nor the purpose of the FLSA … supports imposing a proportionality limit on recoverable attorneys’ fees,” and that “there is no explicit limit on attorneys’ fees in FLSA actions and district courts should not, in effect and practice, implement such a limit.” The percentage “cannot be the determinative factor.”

Second, the court may not rewrite the deal. “If a district court concludes pursuant to Cheeks that a proposed settlement is unreasonable in whole or in part, the court cannot simply rewrite the agreement; it must reject the agreement or give the parties an opportunity to revise it.” The court “may suggest, as it does in an order of additur or remittitur, an amount of attorneys’ fees and costs it would find reasonable,” but “it exceeds its authority when it simply rewrites the agreement by imposing terms on the parties to which they did not agree.” The court’s options are to accept the settlement, reject it and see whether a different one can be reached, or proceed with litigation.

What Fisher does require is documentation. The opinion repeats the circuit’s rule that fee applications “should normally be disallowed unless accompanied by contemporaneous time records indicating, for each attorney, the date, the hours expended, and the nature of the work done,” and it found the district court’s cost figure clearly erroneous because the receipts in the record added up to $4,733.60, not $1,695. Fisher also notes, in a footnote collecting cases, that district courts have routinely approved fees of about one-third of the recovery; the error is treating that practice as a ceiling.

4. Does the agreement contain terms in tension with the FLSA’s purpose

This is where most settlements break. The terms the Second Circuit itself named in Cheeks, as reasons district courts had rejected settlements, are in the next section.

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The Settlement Clauses Federal Courts in New York Routinely Reject

Cheeks names four. It describes the agreement rejected in Lopez v. Nights of Cabiria, LLC, 96 F. Supp. 3d 170 (S.D.N.Y. 2015), as containing “(1) ‘a battery of highly restrictive confidentiality provisions … in strong tension with the remedial purposes of the FLSA;’ (2) an overbroad release that would ‘waive practically any possible claim against the defendants, including unknown claims and claims that have no relationship whatsoever to wage and hour issues;’ and (3) a provision that would set the fee for plaintiff’s attorney at ‘between 40 and 43.6 percent of the total settlement payment’ without adequate documentation to support such a fee award.” It then describes Guareno v. Vincent Perito, Inc. (S.D.N.Y. September 26, 2014), where the settlement “contained a pledge by plaintiff’s attorney not to ‘represent any person bringing similar claims against Defendants,’” a provision that “raises the specter of defendants settling FLSA claims with plaintiffs, perhaps at a premium, in order to avoid a collective action or individual lawsuits from other employees.”

Clause	What the Second Circuit said	What to do instead
Confidentiality provisions	”a battery of highly restrictive confidentiality provisions … in strong tension with the remedial purposes of the FLSA” (Cheeks, describing Nights of Cabiria)	Omit them. The court in Cheeks directed the agreement itself onto the public docket.
General release of “any and all claims”	an overbroad release that would “waive practically any possible claim against the defendants, including unknown claims and claims that have no relationship whatsoever to wage and hour issues” (Cheeks)	Limit the release to the wage-and-hour claims pleaded and the statutes they arise under.
Undocumented fee	a fee “between 40 and 43.6 percent of the total settlement payment” without adequate documentation (Cheeks); fee applications “should normally be disallowed unless accompanied by contemporaneous time records” (Fisher)	Attach the time records and the receipts. The percentage is not the test; the documentation is.
Counsel’s pledge not to represent similar claimants	”raises the specter of defendants settling FLSA claims with plaintiffs, perhaps at a premium, in order to avoid a collective action” (Cheeks, describing Guareno)	Omit it.

Non-disparagement clauses, no-rehire clauses, employee indemnification and employer fee-shifting are standard severance terms. No Second Circuit opinion read for this article addresses them. Whether a particular district judge accepts one is decided motion by motion, so a party who wants such a term should expect to justify it in the letter rather than assume it passes.

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The Three Legitimate Ways to Bypass Cheeks Review

Three routes take a wage case outside the Cheeks review. Each rests on a rule or an opinion, and each has a limit.

1. Rule 68 Offer of Judgment

Rule 68(a) provides that “[a]t least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.”

In Mei Xing Yu v. Hasaki Restaurant, Inc., 944 F.3d 395 (2d Cir. 2019), decided December 6, 2019, the Second Circuit held, “[u]pon review of the text of the Act and judicial precedents interpreting the Act,” that “judicial approval is not required of Rule 68(a) offers of judgment settling FLSA claims,” and remanded “with instructions to direct the Clerk of the Court to enter the judgment as stipulated in the accepted Rule 68(a) offer.” Judge Calabresi dissented. Fisher, a year later, described Yu as “declining to extend Cheeks’s judicial approval requirement to Rule 68(a) context.”

Three features of the rule govern how the offer is used. Under Rule 68(b), “[a]n unaccepted offer is considered withdrawn, but it does not preclude a later offer,” and “[e]vidence of an unaccepted offer is not admissible except in a proceeding to determine costs.” Under Rule 68(d), “[i]f the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.” The acceptance window is the fourteen days in Rule 68(a), and a counteroffer is a negotiation, not an acceptance.

Yu decided that approval is not required. It did not decide which terms may be written into the “specified terms” of an offer, and no fetched opinion does; a party who puts a confidentiality clause or a general release inside a Rule 68 offer is relying on the rule’s text, not on a holding that the term survives.

The opinion is on Justia.

2. File the wage claim in state court under NYLL only

Cheeks construes Rule 41 of the Federal Rules of Civil Procedure and the FLSA. A case pleaded only under the New York Labor Law in Supreme Court, Nassau or Suffolk County, involves neither; therefore, there is no Cheeks review.

The state remedies stand on their own. Under Labor Law § 198(3), “an action to recover upon a liability imposed by this article must be commenced within six years”; the FLSA period under 29 U.S.C. § 255(a) is two years, or three “arising out of a willful violation.” Under Labor Law § 198(1-a), a prevailing employee recovers “the full amount of any underpayment, all reasonable attorney’s fees, prejudgment interest … and, unless the employer proves a good faith basis to believe that its underpayment of wages was in compliance with the law, an additional amount as liquidated damages equal to one hundred percent of the total amount of the wages found to be due,” rising to three hundred percent for a willful violation of Labor Law § 194. Under § 198(1-b), an employee not given the hiring notice required by Labor Law § 195(1) recovers “fifty dollars for each work day that the violations occurred or continue to occur, but not to exceed a total of five thousand dollars”; under § 198(1-d), an employee not given the wage statements required by § 195(3) recovers “two hundred fifty dollars for each work day,” to the same $5,000 cap, each “together with costs and reasonable attorney’s fees.”

The FLSA, under 29 U.S.C. § 216(b), gives the unpaid minimum wages or overtime “and … an additional equal amount as liquidated damages,” plus “a reasonable attorney’s fee to be paid by the defendant, and costs of the action.” Fisher notes that “a plaintiff cannot recover liquidated damages under both the FLSA and NYLL” for the same conduct.

Two cautions. First, a New York Labor Law case that the employer removes to federal court is not addressed by any fetched decision; Fisher’s footnote 12 expressly declined to decide “whether the settlement of state law claims paired with FLSA claims requires judicial approval.” Second, plaintiffs who want a federal forum sometimes plead the FLSA claim for that reason and accept the review as the price. That is a case-by-case choice.

3. Rule 41(a)(1)(A)(i) voluntary dismissal without prejudice plus a private side agreement

Cheeks addressed dismissals with prejudice and, in footnote 2, left open the stipulation without prejudice. The Second Circuit returned to the question in Samake v. Thunder Lube, Inc., 24 F.4th 804 (2d Cir. 2022), decided January 27, 2022. The plaintiff there filed a unilateral notice of dismissal without prejudice under Rule 41(a)(1)(A)(i). The court held “that the FLSA limits the automatic operation of Rule 41(a)(1)(A)(i), which concerns unilateral dismissals, as well as (ii), which concerns stipulated dismissals,” and that “the district court properly retained jurisdiction to inquire whether the parties had reached a settlement necessitating Cheeks review.” The court also held that the district court reasonably treated the plaintiff’s later request to continue litigating as a withdrawal of the notice.

Here is what that means. A notice of dismissal without prejudice does not close the file by itself in an FLSA case; the court keeps jurisdiction to ask whether money changed hands. If the answer is no, there is nothing to review. If the answer is yes, the parties are back in a Cheeks review with an agreement they did not draft for one. Picerni, the Eastern District decision that would have let parties “take their chances that their settlement will not be effective,” is the reasoning Cheeks declined to adopt.

For most cases, Rule 68 and a state-court filing are the cleaner routes. A Rule 41(a)(1)(A)(i) notice works where it is what it says: a dismissal with no settlement consideration behind it.

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Strategy for New York Workers (Plaintiffs)

For the worker, Cheeks review is a protection in federal court and irrelevant in state court. The choice is which court, and whether to plead the FLSA claim at all.

Reasons to file in federal court with both the FLSA and the Labor Law:

• The employer is multistate or holds assets outside New York.
• The case is large enough that a judge’s review of the settlement, including the fee allocation, is worth the time.
• The employee wants the court to read the release. Cheeks names restrictive confidentiality and an overbroad release as the terms that have led district courts to reject settlements.

Reasons to file in state court under the Labor Law only:

• The parties and the work are in New York.
• The six-year period in Labor Law § 198(3) reaches wages the FLSA’s two- or three-year period in 29 U.S.C. § 255(a) does not.
• The notice and wage-statement damages in Labor Law § 198(1-b) and (1-d), up to $5,000 each, are state claims.
• The settlement can be confidential, because no court reviews it.

A serious wage case usually involves both statutes. Where to file is a tactical call. The firm’s wage-and-hour practice page sets out the substantive law, and the employment-discrimination hub covers the retaliation, hostile-work-environment and wrongful-termination claims that often run alongside a wage claim. Cheeks himself pleaded one: he alleged he was demoted and fired for complaining about overtime, and Labor Law § 215 and § 740 are the statutes that claim is brought under today.

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Strategy for Long Island Employers (Defendants)

For the employer, the review cuts both ways. A settlement the court approves ends the FLSA claim; a settlement it does not approve leaves the case open. Most of the language employers prefer is the language Cheeks names.

1. Audit before the complaint. Exempt classifications, tip-credit and spread-of-hours practices, and the timekeeping system are where FLSA exposure is found, and the Wage and Hour Division publishes the standards an audit is measured against.
2. Use Rule 68 with its text in front of you. Under Rule 68(b) the unaccepted offer is withdrawn and inadmissible “except in a proceeding to determine costs”; under Rule 68(d) the plaintiff who does worse at trial pays post-offer costs. Under Yu, the accepted offer needs no approval.
3. Do not over-paper the agreement. A wage-only release with no confidentiality clause and a documented fee is the agreement Cheeks describes as approvable; a general release with confidentiality, non-disparagement, no-rehire and indemnification is the agreement it describes as rejected.
4. Send the fee records with the motion. Fisher’s rule is contemporaneous time records and receipts; the judge cannot rewrite the split, but can reject the deal until the numbers are shown.

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Recent Second Circuit Developments (What Has Changed Since 2015)

Date	Decision	Holding	Practical effect
August 7, 2015	Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199	Rule 41(a)(1)(A)(ii) stipulated dismissals settling FLSA claims with prejudice require district court or DOL approval to take effect	The baseline rule
December 6, 2019	Mei Xing Yu v. Hasaki Restaurant, Inc., 944 F.3d 395	Judicial approval is not required of Rule 68(a) offers of judgment settling FLSA claims	The most-used route around the review
February 4, 2020	Fisher v. SD Protection Inc., 948 F.3d 593	A court that finds a settlement unreasonable must reject it or allow revision, not rewrite the allocation; no 33 percent fee cap; no proportionality limit	The court reviews, suggests, and rejects; it does not redistribute
January 27, 2022	Samake v. Thunder Lube, Inc., 24 F.4th 804	The FLSA limits the automatic operation of Rule 41(a)(1)(A)(i) as well as (ii); the district court retains jurisdiction to inquire whether a settlement needs Cheeks review	A notice of dismissal without prejudice does not end the inquiry

The Department of Labor’s FLSA page is the reference for the underlying substantive law. The opinions are on Justia: Cheeks, Yu, Fisher and Samake.

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Related Reading

• New York’s Trapped at Work Act: What Employees Need to Know About 2026 Changes: stay-or-pay promissory notes and training-repayment clauses, effective December 19, 2026.
• New York Pay Transparency Law: 2026 Compliance Guide for Employers and Employee Rights: Labor Law § 194-b salary-range disclosure.
• New York Employment Law Changes 2026: What Workers and Employers Need to Know About EEOC Developments: the 2026 overview, including the $17.00 minimum wage under Labor Law § 652(1-a) for New York City, Long Island and Westchester from January 1, 2026.

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Conclusion

Cheeks is the procedural spine of FLSA settlement practice in New York. Eleven years in, the rules are short. A stipulated dismissal with prejudice needs the court’s or the Department’s approval. The court reads the release, the confidentiality clause and the fee documentation, and Cheeks names each of those as a reason settlements have been rejected. Under Fisher, the court may reject the deal or suggest what it would approve, but it may not rewrite the split or impose a percentage cap on fees. Under Yu, an accepted Rule 68(a) offer needs no approval. Under Samake, a notice of dismissal without prejudice does not end the court’s power to ask whether there was a settlement.

The worst outcome on either side is a release that never took effect. Draft to what the Second Circuit has named, show the numbers, and the review is a letter and an order.

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Get help with a Long Island or NYC wage-and-hour matter

The Law Office of Jason Tenenbaum, P.C. handles FLSA and New York Labor Law claims on both sides, representing workers who have been underpaid and employers responding to a wage-and-hour complaint, in the Eastern District, the Southern District, and Supreme Court, Nassau and Suffolk Counties. If you are facing a wage claim and want an assessment of whether Cheeks applies, whether Rule 68 is a viable path, and what the numbers look like in your case, call (516) 750-0595 or use the contact form to set up a free consultation.

Related practice areas:

• Long Island Wage and Hour Attorney: FLSA, Labor Law Articles 6 and 19, Wage Theft Prevention Act, overtime, misclassification, tip-credit disputes
• Employment Discrimination Hub: Title VII, NYSHRL, NYCHRL, ADA, ADEA, FMLA
• Long Island Employer Retaliation Attorney: when a wage complaint triggers retaliation
• Long Island Wrongful Termination Attorney: wage-driven terminations and constructive discharge
• FAQ
• Legal Encyclopedia

External authority resources:

• U.S. Department of Labor, Fair Labor Standards Act: federal FLSA guidance
• DOL Wage and Hour Division, State Minimum Wage Laws: the state-by-state table; New York’s downstate rate is $17.00 on and after January 1, 2026 under Labor Law § 652(1-a)
• New York DOL, Wage and Hour Laws and Wage Theft Prevention Act: notice and wage-statement framework
• Second Circuit Court of Appeals: official opinions

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This article was last reviewed in September 2026. New York wage-and-hour law, Second Circuit precedent, and Department of Labor regulations change; verify current rules before relying on them. Nothing in this article constitutes legal advice. The Law Office of Jason Tenenbaum, P.C. is licensed in New York State only.