For years, litigation under the Fair Labor Standards Act has grown exponentially. In 2018 there were 8,824 FLSA lawsuits filed, in contrast with only 3,496 in 2008. A leading factor driving this trend is the near automatic ease with which many courts have “conditionally certified” FLSA collective actions and authorized distribution of court-approved notice to potential claimants. This in turn could have the potential to morph relatively nominal value lawsuits into multi-million-dollar litigation practically overnight.

However, in January 2021, the U.S. Court of Appeals for the Fifth Circuit toughened the standard for conditional certification. More recently, the U.S. Court of Appeals for the Sixth Circuit did likewise, although it adopted a different standard from that of the Fifth Circuit.

The history of conditional certification

Nearly 36 years ago, a federal court in New Jersey established a two-step procedure for “conditionally certifying” a collective action in Lusardi v. Xerox Corp. Under that standard, a court may facilitate notice to other potential plaintiffs upon a modest factual showing that they are “similarly situated” to the original plaintiff. Then the collective action proceeds through discovery relating to the merits of the case (in other words, whether the employer actually violated the FLSA).

Once that merits-based discovery is complete, assuming the case has not settled in the meantime, the employer can file a motion asking the court to “decertify” the action by showing that the individuals who joined the lawsuit are not actually similarly situated to the plaintiff(s). In the years that followed, most district courts across the country adopted this two-step approach.

The Fifth Circuit leads the charge against Lusardi

In January 2021, after years of challenges by defendants to this two-step procedure, the Fifth Circuit became the first federal appellate court to reject Lusardi. In Swales v. KLLM Transport Services, LLC, the court held that district courts have a duty to “consider all of the available evidence” before authorizing notice to potential members of a collective action. In its opinion, the Fifth Circuit abandoned the longstanding notion that a district court should disregard merits-based evidence related to the parties’ claims and defenses when considering the issuance of notice. According to the court, “addressing these issues from the outset aids the district court in deciding whether notice is necessary.” After considering all the evidence, including merits-based evidence, district courts within the Fifth Circuit may conclude, before the issuance of notice, that the plaintiff and the putative class members are not similarly situated and that no notice will be issued, or they may determine that the employees are similarly situated, and notice will issue. Notably, the Fifth Circuit observed that the FLSA “says nothing about ‘conditional certification.’”

The Sixth Circuit sides with the Fifth, but with differences

Earlier this month, the Sixth Circuit joined the Fifth Circuit in rejecting Lusardi, but at the same time, chose not to adopt the Fifth Circuit’s alternative approach outlined in Swales. Essentially, the Sixth Circuit chose to split the difference between the rigorous standard set forth in Swales and the lenient Lusardi standard.

The plaintiffs in Clark v. A&L Homecare and Training Center, LLC, were former home-health aides who brought suit alleging violations of the FLSA. The district court conditionally certified the collective action following the Lusardi two-step approach but certified the matter for interlocutory appeal.

The Sixth Circuit adopted a “strong likelihood” standard that requires district courts to determine whether a plaintiff can show that there are other workers who should receive notice of the putative collective action. This standard requires a showing greater than necessary to create a genuine issue of fact (the summary judgment standard) but less than necessary to show a preponderance of the evidence (the trial standard for civil cases). The Sixth Circuit likened the “strong likelihood” standard to that required for a preliminary injunction because of its similarity to collective actions, stating, “Both decisions are provisional . . . yet both decisions have immediate consequences for the parties.”

The Sixth Circuit did, however, acknowledge the FLSA’s two-year statute of limitations and cautioned courts to act expeditiously in making their determinations as to whether to order that notice be sent to similarly situated individuals. It also encouraged lower courts to promptly initiate discovery relevant to the motion for conditional certification, including, if necessary, by “court order.”

Implications for employers

A&L Homecare and Swales should be welcome news to employers defending putative collective actions under the FLSA. Although both adopt stricter standards for expanding collective actions, those standards are not identical. Adoption of a more demanding standard for conditional certification helps to level the playing field between employers and employees in collective actions. As the Sixth Circuit noted in A&L Homecare, granting FLSA notice often determines whether a case will settle when “the issuance of notice can easily expand the plaintiffs’ ranks a hundredfold.”

It remains to be seen whether other courts will abandon Lusardi. However, given the split in the circuits created by these two decisions, it is possible that this issue may eventually make its way to the U.S. Supreme Court.

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