New York federal Judge denies preliminary approval of FLSA settlement due to proposed publicity provision and attorneys' fees and costs requests. By Gerald L. Maatman, Jr., Rebecca S. Bjork, and George J. Schaller Duane Morris Takeaways: On October 28, 2026, in Cervantes, et al. v. Careathome Medical Practice, P.C., d/b/a Vesta Healthcare, et al., 26 Civ. 570, 2026 U.S. Dist. LEXIS 247415 (S.D.N.Y. Oct. 28, 2026), Judge Arun Subramanian of the U.S. District Court for the Southern District of New York denied preliminary approval of a Fair Labor Standards Act ("FLSA") proposed settlement and requests for attorneys' fees and costs related to an action brought pursuant to the California Labor Code and FLSA. For companies faced with FLSA litigation, they should be aware of the standards courts employ in approving FLSA settlements. Notably, courts assess the value of the settlement compared with similar settlements approved in the circuit, courts rarely allow "publicity" provisions that deny plaintiffs from making truthful statements about the lawsuit, and courts require documentation when approving attorneys' fees and costs requests. Background And Proposed Settlement Plaintiff Jocelyn Cervantes brought this putative collective action against Careathome Medical Practice, P.C., d/b/a Vesta Healthcare and Careathome Medical Practice (CA), P.C. (collectively "Defendants") alleging that Defendants violated the FLSA and California Labor Code. Cervantes asserts that she, and the putative collective, were not compensation for 15-20 minutes of "unpaid work before the start of each shift." Id. at 3, fn. 1. Defendants provides at home health care services nationwide. The parties agreed to a proposed settlement agreement regarding the FLSA claims. Under the proposed settlement agreement, the key terms included a "release by opt-in plaintiffs of any claims" against Defendants in exchange for a pro rata payment from a total settlement fund of $100,700. Of that $100,700 proposed total settlement, "7,500 will be paid to named plaintiff Jocelyn Cervantes as a service award, $14,299 will go toward costs the settlement administrator incurs... and $35,728.80 will be paid to Cervantes' counsel for costs and attorneys' fees, leaving a net settlement fund of $43,172.20." Id. at 1. The proposed settlement agreement also contained "a 'publicity' provision whereby plaintiffs' counsel and named plaintiff 'agree that they shall not, directly or indirectly, whether verbally, in writing or otherwise, issue any press releases, make any statements to the media, advertise in any media, or make any other public statements regarding the existence of nature of this Agreement or its terms and conditions.'" Id. at 5. The parties moved for approval of the settlement agreement. The Court's Decision The Court denied the parties motion for approval of the settlement agreement finding the "publicity" provision inappropriate and finding the attorneys' fees and costs had no supporting documentation and was "unreasonably high." Id. at 5-6. First, the Court explained the proposed settlement amount compared to the possible range of recovery was "comparable to other settlements approved in this circuit." Id. at 4. Plaintiff estimated that the maximum amount recoverable based on the claims alleged is "approximately $630,860" based on damages for 218 potential plaintiffs. Id. at 3, fn. 1. Defendants agreed to a settlement in the total gross amount of "$100,700, representing approximately 16% of the maximum possible recovery." Id. at 3. The Court found the proposed settlement amount was "fair and reasonable in light of the risks and expenses of continued litigation, both sides were represented by experienced counsel, and there [was] no evidence of fraud or collusion between the parties." Id. at 4. The Court also noted that even if Cervantes prevailed at trial that "defendants' serious financial problems suggest that a judgment could be difficult or impossible to collect in full." Id. at 5. Second, the Court determined the "publicity" provision ran afoul of the "well-settled principle" that "an FLSA plaintiff ordinarily cannot - as a matter of public policy - be prohibited from making truthful public statements concerning his lawsuit, its settlement, or the underlying facts." Id. It explained this case was not "the very rare case... where confidentiality terms in a settlement agreement would be appropriate" and therefore rejected the provision. Id. at 6. Finally, the Court rejected Plaintiff's attorneys' fees and costs requests as unreasonable. In rejecting Plaintiff's costs request, the Court stated the motion "contains no explanation or documentation for the costs plaintiff's counsel seeks to recoup" and that it could not "adjudicate or approve" reasonableness of costs where "counsel made no effort to explain or document." Id. at 6-7. As to Plaintiff's attorneys' fees request, the Court initially reasoned "the proposed fee is unreasonably high" where Plaintiff's fee request represented "a whopping 77.67% as a percentage of the fund less costs and service awards." Id. at 7. The Court also determined Plaintiff's counsel "failed to submit adequate documentation supporting the request for fees." Id. Counsel submitted billing records "documenting 18.4 hours of work performed through May 19, 2026" and after that date only attested to "performing 'substantial additional work,'" without providing supporting documentation on specific tasks performed. Id. at 8. The Court held that Plaintiff's "conclusory, after-the-fact 'estimate' of total hours worked, untethered from any specific dates or tasks," did not meet the documentation required and gave no factual basis to assess reasonableness. Id. The Court found that the proposed settlement agreement did not meet FLSA approval requirements and denied Plaintiffs' request for attorneys' fees and costs. Id. at 9. However, the Court explained the parties may either (i) "submit a revised settlement, request for conditional certification as an FLSA collective, and proposed attorneys' fees for preliminary approval under Fed. R. Civ. P. 41(a)"; or (ii) if they do not go "the conditional certification route, they may also pursue an offer of judgment under Fed. R. Civ. P. 68(a)." Id. Implications For Companies Cervantes illustrates standards that courts routinely follow in assessing FLSA settlement agreements and attorneys' fees and costs requests. Here, the Court could not assess reasonable attorneys' fees and costs without proper documentation and the proposed "publicity" provision was deemed inappropriate. Companies faced with FLSA actions, and negotiating settlement agreements, should be mindful of the reasonableness standard courts use when construing such settlement agreements.

Intention Healthcare, affiliated with Essen Health Care, has acquired Vesta Healthcare's technology and key assets to enhance its home-based care platform. This acquisition aims to improve patient outcomes and independence by integrating Vesta's caregiver-connected virtual care model. The expansion will impact multiple markets, including New York, New Jersey, Massachusetts, Pennsylvania, Ohio, Nebraska, and Texas, reinforcing the home as a central care setting.