Sixth Circuit Tightens Standards for Notices of Collective Action

By: Josh Swafford, Associate - Meridian Law

Whether you prefer to get your news from cable T.V. or TikTok, you have probably seen attorneys advertising potential class action lawsuits that may affect you. A recent holding from the Sixth Circuit Court of Appeals—the federal appellate court with jurisdiction over Tennessee, Kentucky, Ohio, and Michigan—may change collective and class action notification procedure concerning a significant area of litigation in America, the federal Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq. (the “FLSA”).

Background: What is the FLSA?

The FLSA is the federal law that governs minimum wage, overtime, and other areas of employment law. Notably, the FLSA permits multiple plaintiffs to bring a civil lawsuit against the same employer. When an employee brings a collective action lawsuit, they and their lawyers will be allowed to notify other employees who may have experienced a similar alleged harm as the original plaintiff. As a result of several issues that often arise from the sheer number of plaintiffs involved in these lawsuits, other courts around the country have begun to treat these lawsuits like class action lawsuits, permitting the original plaintiff to act in a representative capacity.

What is a class or collective action lawsuit?

A class action lawsuit is any lawsuit brought by a representative plaintiff on behalf of a “class” of other people who have suffered similar injuries, typically due to the same defendant’s actions (or inaction). A court will send notice of the lawsuit to all putative class members advising them of the lawsuit. You have probably received such a notice at some point in your life, often by way of a letter or email informing you of some defective product you purchased or some website that failed to protect your data. The distinguishing feature of a “class” action is that all class members are included in the class by default unless they choose to opt out.

Conversely, a “collective” action under the FLSA is a similar mechanism where a representative plaintiff employee brings a lawsuit on behalf of other “similarly situated” individuals, typically coworkers. However, the distinguishing feature of a “collective” action is that members are not included in the class unless they decide to opt in. Not every recipient of the notice will choose to opt in, but the greater the number of other employees who receive the notice, the greater the chances that more employees opt in, increasing the bargaining power of any single employee.

Earlier this year, in Clark v. A&L Homecare and Training Ctr., LLC, 68 F.4th 1003 (6th Cir. 2023), the Sixth Circuit departed from other federal circuits and abandoned a three-decade-old framework regarding how non-party employees receive notice of the lawsuit’s existence before they opt in. 

The Clark Decision

The Clark lawsuit arose in 2020 when a group of home health aides sued their employer in a collective action under the FLSA and Ohio law for failing to pay overtime and reimburse travel expenses correctly. The employees and employer disagreed over which other employees they should notify of the lawsuit, and each side appealed the district court’s decision.

The Sixth Circuit took Clark to address “the manner in which other employees come to learn about the existence of an FLSA suit itself.”[1] Traditionally, district courts have applied a two-step “certification” process. Under step one, courts first “conditionally certify” a group of potential plaintiff-employees to receive notice from the court, as long as the original plaintiff can make a “fairly lenient,” “modest” factual showing that the plaintiff-employees were similarly situated to the original plaintiffs.[2] In the second step, the court will then grant a “final certification” after taking a closer look at whether the members of the “certified group” are, in fact, sufficiently similarly situated to the original employees.

For many of these FSLA cases, the number of plaintiffs added through this conditional notice certification on the front end of the case will often determine the case’s strength and the parties’ willingness to settle. The Sixth Circuit observed that “the decision to send notice of an FLSA suit to other employees is often a dispositive one”—that is, a decision that is very decisive for the outcome of the case—because the sheer size of the “conditionally certified” group of plaintiffs can incentivize or “forc[e]” employers to settle, even though many of those plaintiffs may not be a part of the eventual lawsuit.[3] This is due, in no small part, to the administrative hassle on the front end of evaluating the claims of a large set of plaintiffs, and the fee-shifting provisions of the FLSA. An FLSA plaintiffs’ lawyer’s fees may dwarf the damages recovered by any client, and more clients means more time and more potential plaintiffs’ fees.

The Sixth Circuit panel deciding Clark recognized concerns over the ballooning costs of FLSA litigation and the coercive effect these procedures have on defendant employers. The Sixth Circuit noted that district courts nationwide have received “little guidance that one can call law” from the Supreme Court concerning what showing of similarity is necessary for a district court to give notice of the suit to prospective plaintiffs.[4] Based on the Supreme Court guidance that the courts have received, the Sixth Circuit considered the widespread practice of providing notice to employees who were not eligible to join the suit to be too close to soliciting employees to bring their lawsuits—an impermissible result.[5] In other words, the Sixth Circuit raised concerns that, under the traditional model, it is not uncommon for employees who are notified but ultimately do not join the lawsuit to be put on notice of other potential claims that they could bring against a defendant.

The Sixth Circuit is not the only appellate circuit recently recognizing a need for a change. For instance, in the 2021 case Swales v. KLLM Transp. Servs., L.L.C., the Fifth Circuit also rejected the two-step conditional certification method but held that court-approved notice may be sent only to employees “who are actually similar to the named plaintiffs,” requiring a preponderance of the evidence—that is, more likely than not—showing of similarity.[6]

In Clark, the Sixth Circuit joined the Fifth in rejecting the traditional two-step approach but did not adopt the Fifth Circuit test or go as far as Swales did. Instead, Clark held that FLSA plaintiffs must now show a “strong likelihood” that other employees are similarly situated to the plaintiffs themselves before those other employees can receive notice of the collective action. The Sixth Circuit viewed this standard as a compromise because the “strong likelihood” standard is more stringent than the one required to create a genuine issue of fact but less stringent than a preponderance of the evidence standard. As a result, plaintiffs have a higher burden than before to satisfy the requirement to provide notice to prospective plaintiffs, but—opines Clark—the standard is still not prohibitively high. The Sixth Circuit’s new standard, like the Fifth Circuit’s, seeks to balance the need to notify potential plaintiffs without notifying too many. The Sixth Circuit further instructed district courts to “waste no time” in adjudicating motions on court-approved notice and even to initiate written discovery by court order to move the case along.[7]

Takeaways

With the Clark decision, the Sixth Circuit has instituted a significant change to how federal district courts in the circuit are to administer FLSA lawsuits. Questions remain as to what this will mean for the future of FLSA litigation. However, there are specific key takeaways.

First, at least for now, FLSA collective action litigation is more defendant-friendly in the Sixth Circuit. Plaintiffs must now satisfy a higher standard before sending notice to prospective opt-in plaintiffs. This means they will likely expend additional resources to prove that employees are similar to the initial plaintiffs before inviting potential plaintiffs to opt in. As a result of meeting this higher standard, fewer plaintiffs may be able to opt in. Additionally, this new standard may provide further protections for employers soliciting prospective plaintiffs, potentially resulting in fewer or smaller claims.

Second, Clark’s changes to FLSA procedure may change parties’ willingness to settle early versus litigation through discovery or trial. Historically, the size and scope of FLSA claims have often pressured defendant employers to settle early, regardless of the strength of their defenses. Now, in the Sixth Circuit (and any other circuits that may choose to follow suit), the class of potential plaintiffs will be smaller, as fewer plaintiffs overall will receive notice, and the plaintiffs will have more work in front of them sooner in the litigation to try to increase the size of the class.

Finally, there is now a significant split among the federal circuits—including, at minimum, the Sixth, Fifth, and all the circuits abiding by the traditional standard. A circuit split is a disagreement between two or more circuits presiding over different states. Circuit splits over the interpretation or application of federal law increase the likelihood of the Supreme Court stepping in to resolve discrepancies among the circuits, particularly with laws with the financial footprint of the FLSA. As a result, the Supreme Court may take a case in the next few years with the potential to alter FLSA litigation nationwide.

In short, the Clark case reveals that significant changes to FLSA collective action litigation have arrived—and more may be on the horizon. In Tennessee and other states in the Sixth Circuit, FLSA lawsuits will likely result in extended lawsuits and smaller payouts, potentially making the jurisdiction more defendant-friendly overall.  

We Can Help.

If you or your business are facing an FLSA lawsuit, the experienced team at Meridian Law can protect your rights and interests up to and through trial. Please do not hesitate to contact our team with questions at (615) 229-7499, by email at info@meridian.law, or through our contact form at www.meridian.law.

Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from Meridian Law, PLLC, or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.

[1] Clark v. A&L Homecare & Training Ctr., LLC, 68 F.4th 1003, 1007 (6th Cir. 2023).

[2] Id. at 1010.

[3] Id. at 1007.

[4] Id.

[5] Id. at 1010 (citing Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 174 (1989)).

[6] Id. at 1009–10  (citing Swales v. KLLM Transp. Servs., L.L.C., 985 F.3d 430, 434 (5th Cir. 2021)).

[7] Id. at 1011.