On July 24, 2012, the US Court of Appeals for the Fifth Circuit issued a decision in Martin v. Spring Break '83 Productions, L.L.C.. The key litigated issue was whether a union's settlement of individual members' FLSA claims was binding and enforceable even though it was not approved by a federal court or the DOL.

In Martin, the four plaintiffs were employed by Spring Break '83 Louisiana, L.L.C. as rigging and lighting technicians during the filming of a movie in Louisiana. The employees were represented by the International Alliance of Theatrical Stage Employees (IATSE).

Various IATSE-represented employees, including the plaintiffs, filed a union grievance claiming that they had not been paid for work they had performed. The IATSE and Spring Break Louisiana entered into a settlement agreement to resolve this dispute. The settlement specified that IATSE:

Under the settlement, the employer made payments to the grievants in return for the release of claims.

Before the settlement was signed, the four plaintiffs sued Spring Break Louisiana and several individuals they claimed were employers under the FLSA. The four plaintiffs claimed, among other issues, that their FLSA claims against Spring Break Louisiana were not released by the settlement.

The US District Court for the Eastern District of Louisiana granted summary judgment in favor of the employers. The plaintiffs appealed.

On July 24, 2012, the Fifth Circuit issued an decision in Martin, affirming the district court's grant of summary judgment, and holding that the plaintiffs, as IATSE members, were bound by the settlement.

The plaintiffs argued that the settlement was unenforceable because they have never agreed to its terms or signed it. The Fifth Circuit rejected this argument because the plain language of the settlement bound all IATSE members to its terms. Plaintiffs were IATSE members and they received and accepted full payment pursuant to the settlement. It has long been established that a settlement between an employer and a union need not be accepted and signed by each member of the bargaining unit to be enforceable.

The plaintiffs also argued that the settlement invalidly released their FLSA claims because individuals may not privately settle FLSA claims. The district court adopted the holding of Martinez v. Bohls Bearing Equipment Co., in which the US District Court for the Western District of Texas held that a private settlement of FLSA claims is permissible when there is a bona fide dispute about hours worked or compensation due. In Martinez, the employee and the employer disagreed over the amount of overtime pay that was owed. The employee accepted a check in settlement of the overtime claims. This was a valid release of the employee's claims and was enforceable in subsequent litigation.

Similarly, in Martin, there was a bona fide dispute regarding the hours worked by the employees, including the four plaintiffs. The IATSE investigated the dispute and said it was impossible to determine whether the employees had worked on those days. Therefore, the settlement was an enforceable resolution of FLSA claims based on a bona fide dispute, rather than a compromise of the plaintiffs' FLSA substantive rights.

Furthermore, under Fifth Circuit precedent, a private settlement of FLSA claims is valid where the employees receive everything they are entitled to under the FLSA at the time of the settlement. Under the settlement in Martin, the plaintiffs received the amounts "due and owing" under the FLSA for the disputed hours they allegedly worked and had not been paid for.

Finally, the Fifth Circuit distinguished the Supreme Court's decision in Barrentine v. Arkansas-Best Freight Systems, Inc., where the Court held that a union cannot waive individual FLSA substantive rights in the collective bargaining process. In Barrentine, the employees' grievances, which implicated their FLSA substantive rights, were submitted by a union to a joint grievance committee. The committee rejected the grievances without explanation in a final and binding decision under the collective bargaining agreement. In Martin, the IATSE did not waive or bargain away the plaintiffs' rights under the FLSA, which was the concern in Barrentine, but addressed them in the settlement. The plaintiffs then accepted and cashed the payments they received under that settlement.

The Fifth Circuit also affirmed summary judgment for the four individual defendants who were not employers under the economic realities test of the FLSA.

In the Fifth Circuit, an employer and a union may negotiate, without supervision, to settle a bona fide dispute under the FLSA for the union's members. The settlement must address the terms of the dispute and the employees' FLSA substantive rights.