Insight

Major Change to FLSA Procedure

The Sixth Circuit will determine if a major procedural change is warranted for employees seeking unpaid wages.

Procedural Changes for Unpaid Employees
GM

Greg Mansell

May 25, 2022 09:00 AM

Current Conditional Certification Standard

The Fair Labor Standards Act (FLSA) allows individuals to bring a collective action on behalf of other “similarly situated” individuals for claims of unpaid minimum wages or unpaid overtime. A collective action is different from a class action for two major reasons: (1) the statute of limitations continues to run after the action is filed; and (2) individuals must affirmatively opt-in to action by filing a consent. Similarly situated individuals typically learn of their right to opt-in through the receipt of court-ordered-notice. How and when a court may order such notice to be sent is up for decision in the Sixth Circuit this summer.

Until recent, Federal Courts throughout the country have followed a universal two-step process for certifying collective actions under FLSA. The first step, referred to as “conditional certification,” typically takes place at the beginning of the case and requires plaintiffs to make a “modest” showing that they are similarly situated to other potential class members. To secure conditional certification of their collective action, plaintiffs may rely on pleadings and supplementary materials such as declarations and other supporting documents. The standard is fairly lenient, and courts typically conditionally certify a representative class because the court has only minimal evidence before it. Conditional certification allows plaintiffs to send opt-in notices to other potential class members. As a result, the potential class members receive notice of their right to join the action fairly early on. It is this standard that will come before the Sixth Circuit.

The second step, referred to as “decertification stage” or “final certification,” occurs after discovery is complete. The evidentiary burden is much higher at the second stage because all discovery has been complete.

The Fifth Circuit Breaks Tradition in 2021

In early 2021, the U.S. Court of Appeals for the Fifth Circuit issued a landmark decision in Swales v. KLLM Transport Services, L.L.C. The Fifth Circuit rejected the two-step process that was originally adopted in 1987. The Swales Court found that “‘certification,’ much less ‘conditional certification,’ appears nowhere in FLSA.” As such, the Court determined it was not bound by the two-step process. According to Judge Willet, the two-step approach “frustrates, rather than facilitates, the notice process” because it distracts district courts from the ultimate issue—whether plaintiffs are similarly situated to potential class members. It reasoned that the lenient first step standard runs the risk of using notice as a case-management tool to using notice as a claims-solicitation tool. Now, district courts in the Fifth Circuit, must “rigorously scrutinize,” considering all the evidence, whether workers are “similarly situated.”

The Sixth Circuit Accepts Opportunity to Decide the Issue

In Holder v. A&L Home Care & Training Center, Home Health Aides filed a collective action in the Southern District of Ohio alleging that Defendant failed to pay overtime compensation. The District Court partially granted conditional certification under the two-step process. However, the District Court also asked the Sixth Circuit Court of Appeals to review the applicability of the two-step process in light of Swales. The Sixth Circuit accepted the opportunity to review the applicability of the two-step process.

What are the Implications for Employees?

  1. Less Recovery/Damages for Employees.

    The FLSA has a two-year statute of limitations (three-years for willful violations). This means that a plaintiff can only recover unpaid overtime or other wages for the two years prior to filing or joining a lawsuit. If the Sixth Circuit decides a more rigorous standard is required, it will require the parties to engage in discovery before filing for certification. This will result in potential class members receiving notice of their right to join the action at a much later date. Some individuals who would have had claims for unpaid wages will lose their claims. Others will have the amount of damages available for recovery decline significantly due to the extra time it will take before receiving the opportunity to join the lawsuit.

  2. The Purpose of the FLSA will be Frustrated.

    The FLSA is a broadly remedial and humanitarian statute designed to correct labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers. The Sixth Circuit has recently stated that “[t]he provisions of the statute are ‘remedial and humanitarian in purpose,’ and ‘must not be interpreted or applied in a narrow, grudging manner.’" To interpret the statute as the Fifth Circuit did in Swales would be antagonistic to the remedial and humanitarian purpose of the statute.

  3. Availability of Representation May Decrease.
    If the court were to adopt a method similar to Swales, fewer attorneys will be able to take on employee cases resulting from FLSA violations. This is for a multitude of reasons. 1) The cost of litigating such cases is high, especially for low-income plaintiffs who may not have substantial damages to cover the cost of litigation. By allowing for collective actions, plaintiffs are able to lower their individual costs by pooling their resources. Without conditional certification, individual plaintiffs are more likely to have to individually litigate their claims, which results in higher attorney and court fees. Many plaintiffs cannot afford to pay for representation in such cases unless it is on a contingency fee basis, and, as such, many attorneys cannot afford to take cases on an independent basis due to the limited damages of an individual, low-wage or salary employee.

Conclusion

Despite the ruling in Swales having occurred in January 2021, no other Court of Appeals has adopted the Fifth Circuit’s approach. Many Federal Courts have specifically declined to abandon the two-step procedure. Whether the Sixth Circuit uses this opportunity to formally endorse the two-step procedure or to adopt a more rigorous standard similar to Swales is yet to be seen. What is certain, however, is that employment lawyers are going to be following the proceedings closely.

Greg Mansell is the managing partner at Mansell Law, an employment law firm with offices in Columbus, OH and New York, NY. Mr. Mansell’s practice is primarily focused on collective and class action litigation for unpaid overtime and minimum wages.

Related Articles

Announcing the 2022 Best Lawyers: The Employment Law Issue


by Best Lawyers

Featuring the top legal talent from The Best Lawyers in America, Best Lawyers: Ones to Watch in America and “Lawyer of the Year” recipients for Labor and Employment Law, Workers’ Compensation Law, ERISA Law and Ethics and Professional Responsibility Law.

Best Lawyers Employment Law Publication

One Reason Why Uber Is Fighting to Classify Drivers as Contractors


by Stephen Hasner

How Workers' Compensation Is Setting Up a Legal Battle

 Why Uber Wants Drivers as Contractors

Trending Articles

How Palworld Is Testing the Limits of Nintendo’s Legal Power


by Gregory Sirico

Many are calling the new game Palworld “Pokémon GO with guns,” noting the games striking similarities. Experts speculate how Nintendo could take legal action.

Animated figures with guns stand on top of creatures

Announcing the 2023 The Best Lawyers in America Honorees


by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

The U.S. Best Lawyers Voting Season Is Open


by Best Lawyers

The voting season for the 31st edition of The Best Lawyers in America® and the 5th edition of Best Lawyers: Ones to Watch® in America is officially underway, and we are offering some helpful advice to this year’s voters.

Golden figures of people standing on blue surface connected by white lines

How To Find A Pro Bono Lawyer


by Best Lawyers

Best Lawyers dives into the vital role pro bono lawyers play in ensuring access to justice for all and the transformative impact they have on communities.

Hands joined around a table with phone, paper, pen and glasses

Announcing the 2022 Best Lawyers® in the United States


by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

What the Courts Say About Recording in the Classroom


by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?

2021 Best Lawyers: The Global Issue


by Best Lawyers

The 2021 Global Issue features top legal talent from the most recent editions of Best Lawyers and Best Lawyers: Ones to Watch worldwide.

2021 Best Lawyers: The Global Issue

Best Lawyers: Ones to Watch in America for 2023


by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

The Upcycle Conundrum


by Karen Kreider Gaunt

Laudable or litigious? What you need to know about potential copyright and trademark infringement when repurposing products.

Repurposed Products and Copyright Infringemen

The Best Lawyers in Australia™ 2024 Launch


by Best Lawyers

Best Lawyers is excited to announce The Best Lawyers in Australia™ for 2023, including the top lawyers and law firms from Australia.

Australian Parliament beside water at sunset

Best Lawyers Voting Is Now Open


by Best Lawyers

Voting has begun in several countries across the globe, including the United States, the United Kingdom and Europe. Below we offer dates, details and answers to voting-related questions to assist with the voting process.

Hands holding smartphone with five stars above phone

Inflation Escalation


by Ashley S. Wagner

Inflation and rising costs are at the forefront of everyone’s mind as we enter 2023. The current volatile market makes it more important than ever to understand the rent escalation clauses in current and future commercial lease agreements.

Suited figure in front of rising market and inflated balloon

Wage and Overtime Laws for Truck Drivers


by Greg Mansell

For truck drivers nationwide, underpayment and overtime violations are just the beginning of a long list of problems. Below we explore the wages you are entitled to but may not be receiving.

Truck Driver Wage and Overtime Laws in the US

A Celebration of Excellence: The Best Lawyers in Canada 2024 Awards


by Best Lawyers

As we embark on the 18th edition of The Best Lawyers in Canada™, we are excited to highlight excellence and top legal talent across the country.

Abstract image of red and white Canada flag in triangles

Announcing The Best Lawyers in South Africa™ 2024


by Best Lawyers

Best Lawyers is excited to announce the landmark 15th edition of The Best Lawyers in South Africa™ for 2024, including the exclusive "Law Firm of the Year" awards.

Sky view of South Africa town and waterways

Presenting the 2024 Best Lawyers Family Law Legal Guide


by Best Lawyers

The 2024 Best Lawyers Family Law Legal Guide is now live and includes recognitions for all Best Lawyers family law awards. Read below and explore the legal guide.

Man entering home and hugging two children in doorway