Legal Alerts

Fifth Circuit Eliminates “Conditional Certification” Process in FLSA Cases

Houston, Texas (January 28, 2021) - On January 12, 2021, the United States Court of Appeals for the Fifth Circuit articulated a new framework for collective actions under the Fair Labor Standards Act (FLSA), eliminating the current “conditional certification” process. In a significant departure from the existing structure, the Fifth Circuit held in Swales v. KLLM Transp. Servs., L.L.C., No. 19-60847 (5th Cir. 2021), that “a district court must rigorously scrutinize the realm of ‘similarly situated’ workers, and must do so from the outset of the case, not after a lenient, step-one ‘conditional certification.’”

FLSA Collective Actions May Be Filed on Behalf of “Similarly Situated” Employees

The FLSA establishes a minimum hourly wage, maximum work hours, and overtime compensation for hours worked beyond 40 hours per week. A claim may be brought by “any one or more employees for and on behalf of himself or themselves and other employees similarly situated.” But the statute does not define the phrase “similarly situated.”

Additionally, the FLSA requires an employee wishing to become a party plaintiff to “give[] his consent in writing” and file the consent in the court in which the lawsuit is pending. Because of this opt-in requirement, trial courts are tasked with providing notice to members of the putative class.

The Conditional Certification Framework

Courts around the country have almost universally adopted the two-step class certification process laid out in a 1987 New Jersey district court opinion in Lusardi v. Xerox Corporation. This two-step process determines “on an ad hoc case-by-case basis” (1) who should receive notice of the potential collective action, and then (2) who should be allowed to proceed to trial.

Under the Lusardi framework, plaintiffs first seek “conditional certification” of the putative class. At that stage, trial courts typically base their decisions on the pleadings and affidavits of the parties. Little more than “substantial allegations that the putative [collective] members were together the victims of a single decision, policy, or plan” is needed to achieve conditional certification. Opt-in notices are often sent at this time.

Then, at the conclusion of discovery, the trial court makes a final determination of whether the class members are sufficiently similarly situated, often in response to a motion to decertify the class, utilizing a stricter standard than at the “conditional certification” stage. If the putative class is not sufficiently similarly situated, the court dismisses the opt-in plaintiffs.

The New Class Certification Framework

For the first time, the Fifth Circuit was given an opportunity to determine whether to apply Lusardi, and unequivocally rejected it, stating that “Lusardi frustrates, rather than facilitates, the notice process.” The Fifth Circuit went on to state that while two-stage certification “may be common practice[,] practice is not necessarily precedent. And nothing in the FLSA, nor in Supreme Court precedent interpreting it, requires or recommends (or even authorizes) any ‘certification’ process.”

The Fifth Circuit held that courts should identify at the outset of the case what facts and legal considerations will be material in determining whether a group of employees is “similarly situated.” This includes determining what may appear to be a question on the merits of the case, but is actually a threshold issue, such as whether the putative class members are subject to a valid arbitration agreement or, as was the case in Swales, whether the putative class members were independent contractors or employees.

After making this determination, the court may authorize preliminary discovery necessary to answer any threshold questions. And, only at that point, after a rigorous examination of the putative class, may the court issue notice to potential opt-in plaintiffs.

Takeaway

The Swales decision will provide employers more certainty earlier in the case about the extent of a potential class. While some discovery may be needed for a court to make a decision at this early stage, employers will no longer have to wait until the end of discovery and a motion to decertify a class to determine with certainty which and how many employees will receive notice.

For more information on this decision, contact the author or editor of this alert. Visit our Labor & Employment Practice page to find more alerts in this area of the law.

Author:

Shane L. Kotlarsky, Partner

Editor:

Jade McKenzie, Associate

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