Key Takeaways: The Fourth Circuit held that employees that settled and released their individual claims after the District Court decertified the class and collective actions had waived their claims and, thus, lacked standing to bring an appeal. This decision was made despite the language of the settlement agreement attempting to carve out a right to appeal – emphasizing the importance of well-crafted release language in wage and hour cases. On June 2, 2026, the U.S. Court of Appeals for the Fourth Circuit issued a unanimous decision addressing the question of whether an employee who settled his individual wage and hour claims with his employer has standing to challenge a district court’s decertification of a class and collective action which occurred prior to that settlement. The Court answered in the negative. In Mebane v. GKN Driveline North America, Inc., 4th Cir., No. 25-02191, a three-judge panel in the Fourth Circuit unanimously dismissed an appeal filed by former auto parts workers holding that they lacked standing to bring the appeal. Mebane and another auto worker, Angela Worsham, had sued their employer, GKN, in 2018, alleging that GKN violated both the Fair Labor Standards Act (the “FLSA”) and the North Carolina Wage and Hour Act (the “NCWHA”) by rounding work time and automatically deducting meal breaks. A North Carolina district court initially certified two Rule 23 classes and a FLSA collective, but later decertified them after determining that the alleged claims were too individualized in nature and would require highly specific inquiries into employees’ rounded minutes and meal breaks, as well as GKN’s knowledge of whether employees were working during the automatically deducted period. Following decertification, Mebane and Worsham were permitted to move forward with their individualized wage claims. Each settled their claims with GKN in November 2024, with Mebane settling for $27,000, and Worsham settling for $3,000. Despite having resolved his individual claim against GKN, Mebane filed an appeal, arguing that the North Carolina district court abused its discretion in its decision to decertify the classes and the collective action. In response, GKN argued that Mebane lacked standing to appeal the district court’s decertification order because he had voluntarily settled his wage claims under the FLSA and the NCWHA. The Fourth Circuit agreed. In issuing its opinion, the Fourth Circuit panel found that Mebane lacked standing to appeal the decertification order because he had executed a settlement agreement with GKN wherein he generally waived all remaining claims in his lawsuit. Though his settlement agreement purported to preserve the right to appeal a decertification order by carving out an exception within the waiver, the Fourth Circuit held that this reservation was not enough. Because the waiver included Mebane’s claims under the FLSA and the NCWHA, which were the claims underlying the collective action and the Rule 23 classes, the Fourth Circuit held that Mebane had no remaining interest in his substantive claims to allow him standing to file his appeal. This is consistent with the Fourth Circuit’s previous decision in Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88, 98 (4th Cir. 2011), where it held that it lacked jurisdiction under Article III to decide the issue of whether a district court had abused its discretion in denying request for class certification where the putative class representative had voluntarily dismissed his claims.  The Fourth Circuit’s decision in Mebane is a significant procedural win for employers defending wage-and-hour class and collective actions. The decision clarifies that plaintiffs lose standing to appeal adverse certification rulings in wage and hour cases if they have voluntarily resolved their individual claims, even if they attempt to preserve appellate rights in the settlement agreement. For employers, Mebane reinforces the value of decertification and finality strategies in wage-and-hour class and collective litigation. Employers resolving individual claims after decertification should carefully evaluate release and reservation language, but the decision provides helpful authority that a plaintiff cannot manufacture appellate standing by contract once the underlying individual claims are gone. For questions on how this decision impacts your business, contact your Polsinelli attorney.

Key Highlights DOL Clarifies Bonus Treatment Under the FLSA: In Opinion Letter FLSA2026-2 (Jan. 5, 2026), the Department of Labor confirmed that certain performance-based bonuses must be included in the “regular rate of pay” when calculating overtime. Advance Promises Eliminate Discretion: Bonuses are not considered “discretionary” if the employer communicates the criteria and amounts in advance. Once promised, the employer has “abandoned” discretion under the FLSA. Impact on Overtime Calculations: Because the safety and performance bonuses at issue were non-discretionary, they must be included in the regular rate for any workweek in which they are earned—requiring employers to review bonus programs to ensure proper overtime compliance. On January 5, 2026, the U.S. Department of Labor’s  Wage and Hour Division (the “DOL”) issued Opinion Letter FLSA2026-2 addressing the question of whether an employer must include certain bonus payments in the “regular rate of pay” when calculating an employee’s overtime pay under the Fair Labor Standards Act (“FLSA”). Background: The Employer’s Safety and Performance Bonus Plan The DOL’s letter responds to an inquiry from an employee who worked in the waste management industry inquiring whether certain performance-based bonuses were considered “discretionary bonuses” that could be excluded from the “regular rate” for purposes of calculating overtime for   hourly, non-exempt employee drivers of the employer. Specifically, the employer provided certain performance-based bonuses pursuant to a “Safety, Job Duties, and Performance” bonus plan designed to reward an employee’s punctuality, attendance, consistency in completing daily safety tasks, driving safety, compliance with traffic laws, proper attire, and performance efficiency. The amounts of the bonus, as well as the criteria to earn such bonuses, were communicated to the employees as part of a bonus plan prior to any employee meeting the performance requirements. What Qualifies as a “Discretionary” Bonus Under the FLSA? The DOL concluded that the bonus payments were not discretionary. In its letter, the DOL explained that, to be considered an excludable discretionary bonus under the FLSA, the payment must satisfy three conditions: (1) the fact and amount of the payment must be determined at the sole discretion of the employer; (2) the employer’s determination must occur at or near the end of the period when the employee’s work was performed; and (3) the payment must not be made pursuant to any prior contract, agreement, or promise that causes the employee to expect such payments regularly. 29 U.S.C. § 207(e)(3). The DOL reasoned that while the employer technically had initial discretion in deciding whether it would offer the bonus program, and on what terms, it had communicated the criteria for receiving the bonus to its employees well in advance of their performing work. As a result, the fact and amount of the bonus payments were not made at the “sole discretion of the employer at or near the end of the period” in which the work was performed. This is consistent with the FLSA’s regulations, which provide: “If the employer promises in advance to pay a bonus, he has abandoned his discretion with regard to it.” 29 C.F.R. § 778.211(b). DOL’s Conclusion: Bonuses Must Be Included in the Regular Rate Because the bonuses at issue were not discretionary, the DOL concluded that the employer must include the bonus payments in the regular rate of pay in any workweek for which they are earned when calculating overtime for the drivers. Employer Takeaways and Compliance Considerations Employers providing performance-related bonuses should keep the three factors outlined by the DOL in mind and should review their policies and practices to ensure all such bonuses are properly classified as either discretionary or non-discretionary so that the regular rate is properly calculated when paying overtime. For questions and assistance regarding the inclusion of bonus payments or other issues involving the FLSA or wage-and-hour laws, please contact your Polsinelli attorney.