Recent Developments In Collective Action Certification Under The Fair Labor Standards Act.

• Author: Cascino, Christopher M.,Zinober, Peter W.
• Date: 01 November 2023

The Fair Labor Standards Act (FLSA) has long been the primary vehicle through which employees seek to recover alleged unpaid minimum wage and overtime. Written before the modern class action device was developed, the FLSA has a unique mechanism through which employees can join together in a single action to bring unpaid minimum wage and overtime claims on a collective basis. Courts have long interpreted this mechanism as giving them the ability to issue notice to individuals who might have such claims, not for the purpose of giving them the option of opting out of the suit, but rather to give them the option of affirmatively joining the suit.

For decades, courts almost universally agreed that this notice should issue based only on a "lenient" showing that a group of "similarly situated" individuals might want to bring similar claims. Applying this lenient standard, courts have sent notice of FLSA lawsuits at a rate that far exceeds the rate at which workplace class actions are certified. Nowhere is this felt more than in Florida, which has long been a hotbed of FLSA litigation.

Two recent decisions--one from the Fifth Circuit and one from the Sixth Circuit--have called into question the prevailing lenient standard for sending notice and giving individuals the option to opt-in to pending FLSA litigation. This article explores the development of the FLSA's unique collective action mechanism, the practical effects of the prevailing standard for certifying the actions, the reasons the Fifth and Sixth circuits gave for adopting new standards, and suggests ways practitioners in Florida, particularly on the defense side, can leverage these decisions in their own cases.

The Fair Labor Standards Act

The FLSA, enacted in 1938, established nationwide minimum wage and overtime obligations. At the time of its passage, the modern version of the rule that allows federal court class actions, Rule 23 of the Federal Rules of Civil Procedure, was still decades away. (1) While courts had long recognized "the practical necessity of providing a procedural device so that mere numbers would not disable large groups of individuals, united in interest, from enforcing their equitable rights," (2) there was a lot of "confusion and uncertainty" about whether and how federal courts could decide the claims of individuals who were not before the court. (3)

Congress tried to resolve this confusion and uncertainty in the original version of the FLSA by giving both "employees and their 'representatives' the right to bring actions to recover amounts due under the FLSA." (4) These "representatives" did not have to be employees themselves; indeed, many "representatives" who had no "personal interest in the outcome" of the litigation brought suit to recover wages for other individuals in the decade that followed passage of the FLSA. (5)

In response to what Congress believed was "excessive representative litigation," Congress amended the FLSA in 1947 in the Portal-to-Portal Act and eliminated the provision allowing for "representative" actions. (6) In its place, Congress introduced a new mechanism by which "similarly situated" employees could jointly prosecute claims against their employers. (7) In order to "limit[] private FLSA plaintiffs to employees who asserted claims in their own right and freeing employers of the burden of representative actions," Congress provided that only individuals who provide "consent in writing" can participate in such a joint action. (8)

These joint actions, which are governed by 29 U.S.C. [section]216(b), came to be called "collective actions" to distinguish them from "class actions," which were governed by Fed. R. Civ. P. 23. (9) "Probably the most significant difference" between collective actions and class actions is in the method by which one becomes part of the case and bound by the judgment. (10) To be part of or bound by a collective action, an individual must actually file a written consent with a court. (11) Rule 23 "take[s] the opposite approach," where individuals who meet the definition of any certified class are bound by the judgment unless they affirmatively opt-out of the case. (12)

A Spike in Fair Labor Standards Act Litigation and Development of the Lusardi Two-Step Process

For 50 years or so following passage of the Portal-to-Portal Act, FLSA litigation was, at least relative to today, uncommon. The 1990s "saw a substantial uptick in the number of FLSA claims filed," and the pace at which FLSA cases were filed increased dramatically starting around the turn of the 21st century. (13) In 2000, there were 1,935 FLSA cases filed in federal court. (14) By 2012, the number rose to 8,152 cases. (15)

Nowhere was this spike in FLSA cases more consequential than in Florida. From 2004 to 2009, for instance, 28.7% of all FLSA cases filed in federal court were filed in the Southern District of Florida. (16) In 2009, 20% of the cases pending in the Middle District of Florida were FLSA cases. (17)

That trend continues to the present day. In 2019, for example, the Southern District of Florida was home to the newest FLSA cases, with 812 filings, while the Middle District of Florida came in fourth with 517 new FLSA cases. (18)

With this uptick in FLSA cases, courts increasingly dealt with the question of how to manage multi-employee actions. The text of the FLSA itself gives little direction. The relevant text reads as follows:

An action to recover the liability prescribed in the preceding
                sentences may be maintained against any employer (including a public
                agency) in any Federal or State court of competent jurisdiction by any
                one or more employees for and in behalf of himself or themselves and
                other employees similarly situated. No employee shall be a party
                plaintiff to any such action unless he gives his consent in writing to
                become such a party and such consent is filed in the court in which
                such action is brought. (19)
                

As a result of a lack of detail in the statute's text, courts have been left to decide key questions, such as what does it mean to be similarly situated? When and how should the court decide whether individuals are similarly situated? What if multiple employees sue but are not similarly situated? (20)

In 1987, the U.S. District Court for the District of New Jersey tried to answer these questions in Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987). The court decided that the best way to manage FLSA actions is through a now-familiar two-stage certification process. At the first stage--called "conditional certification"--the court decides whether to send notice of or an invitation to join the lawsuit to current and former employees who fit within the definition of the proposed collective. (21) This decision "is made using a fairly lenient standard, and typically results in 'conditional certification' of a representative class." (22) Typically, this decision is also made "based only on the pleadings and any affidavits which have been submitted," (23) and courts do not even make "a preliminary assessment of the merits of the [underlying] claims" at this stage. (24)

After notice is sent, individuals decide whether to join the lawsuit. On average, between 15 and 30% of individuals who receive notice...