The 2-step certification process utilized in Fair Labor Standards Act (FLSA) collective actions dates back to 1987 when the standard was articulated by the court in Lusardi v. Xerox Corp. 118 F.R.D. 351 (D.N.J. 1987). Commonly known as the Lusardi test, the Sixth Circuit rejected this 2-step process earlier this month in Clark v. A&L Home Care and Training Center, LLC, Nos. 22-3101/3102, 2023 WL 3559657 (6th Cir. May 19, 2023), requiring employees to now meet a higher bar before notice of the pending suit can be sent to potential class members.
Fair Labor Standards Act (“FLSA”) collective actions are multiple plaintiff lawsuits that are filed when there is an alleged violation of employees’ right to federal minimum wages or federal overtime pay. Generally, at least one named plaintiff will file the lawsuit on behalf of “similarly situated” other plaintiffs who seek to send notice out and solicit other employees to join them in their lawsuit against the employer. This joining together for purposes of a lawsuit is what is known as class certification. Most courts follow the Lusardi approach and divide the notice process and class certification process into two steps.
The first step, referred to as “conditional certification,” involves an initial court determination of whether the proposed “opt-in” plaintiffs had similar job duties and were subject to the same policies as the named plaintiffs. A named plaintiff’s burden at this step is minimal; thus, most collective actions are conditionally certified. If a collective action is conditionally certified, notice of the lawsuit is sent to other current and former employees of the company. These employees then choose whether they wish to be represented by the named plaintiffs in the lawsuit and be bound by its results. If they join the lawsuit, the employees are known as “opt-in” plaintiffs.
The second step requires another, more stringent, determination of whether the named plaintiffs and opt-in plaintiffs are indeed “similarly situated.” This secondary step occurs at the conclusion of discovery, often prompted by a motion to decertify by the defendant. If the named plaintiffs and opt-in plaintiffs are not “similarly situated,” then the named plaintiffs may bring the lawsuit only on their individual behalf, and not on behalf of the opt-in plaintiffs.
Until recently, the Sixth Circuit had yet to address the merits of the 2-step “certification” approach outlined by Lusardi. In Clark, the named plaintiffs, several former “home-health aides,” alleged that the defendant had paid them less than the correct overtime rate and under-reimbursed their vehicles expenses, thereby reducing their pay below the federal and state minimum wages. The named plaintiffs then moved for the district court to facilitate notice of their action to three groups of employees who had worked for the defendant.
The district court applied the Lusardi 2-step approach discussed above. However, after review, the Sixth Circuit rejected this approach and implemented a new “strong likelihood” standard. The court in Clark stated that “[w]hether other employees are similarly situated for the purpose of joining an FLSA suit typically depends on whether they performed the same tasks and were subject to the same policies—as to both timekeeping and compensation—as the original plaintiffs were.” The court then noted that if the burden on named plaintiffs is too high, district courts would have to make a similarity determination with no evidence. However, the court also noted that if the burden is too low, the notice will solicit meritless lawsuits. As a result, the court balanced the competing interests and held that named plaintiffs must show a “strong likelihood” that other employees are similarly situated to the named plaintiffs before the district court can facilitate notice of a FLSA collective action to potential class members.
Thus far, the Fifth and Sixth Circuits are the only circuits to reject the Lusardi 2-step approach, adopting a stricter approach that will shape the way FLSA claims are now litigated. Previously, employers had little chance of preventing notice of a FLSA collective action from going out to employees. Now, however, employers have a fighting chance. The new “strong likelihood” standard places a heavier burden on named plaintiffs, making it more difficult to demonstrate why notice of a collective action should be sent out. It remains to be seen if other circuits will adopt this same approach.
