A sharply divided panel of the U.S. Court of Appeals for the Second Circuit has held that parties to federal wage-and-hour disputes are not required to obtain judicial approval for resolving claims under the Fair Labor Standards Act.

The ruling, in Yu v. Hasaki Restaurants, involved settlements under Rule 68 of the Federal Rules of Civil Procedure, a risk-shifting tool designed to encourage settlements in civil litigation by allowing defendants to send plaintiffs an offer of judgment at any point prior to 14 days before trial. Under Rule 68, if a plaintiff accepts the offer, a clerk is generally directed to automatically enter judgment, without a judge having to sign off on the agreement.

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