Sixth Circuit Adopts New Test for FLSA Collective Actions

Labor & Employment

A panel of judges from the United States Court of Appeals for the Sixth Circuit recently established a new standard for certifying collective actions brought pursuant to the Fair Labor Standards Act (FLSA). The Sixth Circuit’s decision in Clark/Holder v. A&L Homecare and Training Center, LLC will have major consequences for wage and hour litigation in federal district courts in Ohio, Michigan, Kentucky, and Tennessee.

The FLSA allows employees to bring suit for alleged federal overtime and minimum wage violations. Employees can bring such claims on their own behalf, or on behalf of both themselves and other similarly situated employees. Since the 1989 Supreme Court ruling in Hoffman-La Roche v. Sperling, courts have had the power to facilitate notice to such “potential plaintiffs.” The Court in Clark/Holder addressed the question of which employees are similar enough that they can be considered “potential plaintiffs” required to receive notice of and opt into an FLSA collective action.

District courts have long used a nearly universal two-part certification process for FLSA collective actions. Under this framework, courts have required only that plaintiffs make a “modest factual showing” that there are similar potential plaintiffs before conditionally certifying a collective action and providing notice to all such potential plaintiffs. Then, after discovery on the merits, courts make a final determination as to whether the plaintiffs are in fact substantially similar. This process has typically favored plaintiffs, with courts conditionally certifying collective actions and allowing notice to be sent to potential plaintiffs designated as such by a plaintiff before employers are able to present evidence as to the lack of similarity between those potential plaintiffs.

In Clark/Holder, the Sixth Circuit for the first time rejected this standard and adopted a new one. The Court held that plaintiffs seeking certification of a collective action must now show a “strong likelihood” that the potential plaintiffs who will receive notice of the suit are similarly situated to the named plaintiff. In so holding, the Court specifically analogized to the showing of substantial likelihood of success on the merits required to obtain a preliminary injunction. Now, a named plaintiff must show it is strongly likely that members of a putative collective action are “in fact similarly situated” to the named plaintiff before a court will certify the collective action and provide notice to such other potential plaintiffs.

The Court’s ruling specified that, in making a determination as to whether to issue notice to potential plaintiffs, district courts should consider the impact of the different defenses to which potential members of a collective action may be subject. Examples cited by the Court included that some potential plaintiffs may have signed arbitration agreements barring them from joining a collective action and that the claims of some may be barred by statutes of limitation.  

This decision is a significant departure from the previously well-established plaintiff-friendly conditional certification process. Plaintiffs pursuing FLSA collective action claims in the Sixth Circuit now will face a heavier burden to show similarity to other potential plaintiffs before notice of the suit may be provided to them. In another change, parties may now also be permitted to engage in certain limited discovery prior to the court ruling as to whether a plaintiff has met the “strong likelihood” standard.

Whether and how other courts in other jurisdictions around the country adopt and interpret (or perhaps reject) this “strong likelihood” standard remains to be seen. Furthermore, with courts now divided on the issue, the question of what a plaintiff must show to demonstrate similarity to members of a putative collective action may eventually end up on the Supreme Court docket. If you have questions about this new standard for certification of collective actions in the Sixth Circuit or regarding wage and hour compliance or litigation in general, please reach out to one of Calfee’s Labor and Employment attorneys.

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