The Sixth Circuit has adopted a new approach for determining whether notice to “potential plaintiffs” can be sent out in collective actions brought under the Fair Labor Standards Act (FLSA), now requiring a “strong likelihood” of similarity between the named plaintiffs and others they seek to include in the collective action. The ruling in Clark v. A&L Homecare and Training Center, LLC marks the continuing trend away from the lenient two-step collective action certification process.

Unique Procedures for Collective Actions

First, a bit of background on collective actions: Plaintiffs are empowered by 29 U.S.C. § 216(b) to bring FLSA claims on behalf of others who are “similarly situated,” which are commonly referred to as “collectives.” In collective actions, plaintiffs must affirmatively “opt in.” Contrast this with class actions, in which class members are not required to opt in or otherwise generally participate in order to share in any award or settlement.

The current prevailing procedure followed around the country for collective actions is the Lusardi approach. In Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987), the U.S. District Court for the District of New Jersey outlined a two-step procedure. Step one: Plaintiffs file a motion for conditional certification of the collective(s), to which the court applies a lenient standard based on a modest showing that others are similarly situated to the named plaintiffs. If the court conditionally certifies, notice of the collective action is sent out to the potential plaintiffs to give them opportunity to opt in. Step two: After discovery, the employer files a motion to decertify the conditional collective(s), and the court reassesses “similarly situated” under a more rigorous standard with the benefit of a developed factual record.

In between steps one and two, a flood of plaintiffs may opt in to the action and extensive discovery may be conducted, placing significant pressure on employers to settle given the daunting expense of litigation and multitude of plaintiffs seeking damages. As the Sixth Circuit acknowledged, given these pressures, many collective actions settle before ever reaching step two, when the record may show that the plaintiffs were not actually similar and should not be a collective.

The Sixth Circuit Raises the Standard

Clark v. A&L Homecare involves claims brought by former home health aides for alleged failure to pay the correct overtime rate and vehicle expense reimbursements rate, consequently reducing their pay below minimum wage. The trial court conditionally certified two collectives of “similarly situated” former employees under the lenient Lusardi approach. The Sixth Circuit granted the employer permission to file an interlocutory appeal to resolve the question of what level of similarity must be shown before notice to potential opt-in plaintiffs is sent out.

The former employees advocated for formal adoption the two-step Lusardi approach, while the employer argued for adoption of the Fifth Circuit’s more stringent approach recently developed in Swales v. KLLM Transport Servs. LLC, 985 F.3d 430 (5th Cir. 2021). Under the Swales approach, a trial has to find that others are actually “similarly situated” to the named plaintiffs by a preponderance of the evidence (for more detail, see our prior posting on Swales here). The Sixth Circuit rejected both suggestions, splitting the difference instead.

The Sixth Circuit rejected even the use of the term “certification” which has become ubiquitous in the arena of collective actions. The court reasoned that because of the fundamental differences between class actions (no requirement for class members to opt in, representative named plaintiff) and collective actions (plaintiffs required to opt in, hold the same status as named plaintiffs), use of the term and concept of “certification” (which is borrowed from class action procedure) for collective actions is not appropriate. The Sixth Circuit noted that courts using the two-step conditional certification method tend to incorrectly treat conditionally certified collectives more like classes. In reality, step one is for the sole purpose of deciding if notice should be sent to similarly situated individuals, and otherwise has “zero effect on the character of the underlying suit.”

In splitting the difference between the lenient Lusardi approach and the stringent Swales approach, the Sixth Circuit tried to strike a balance between the risk of sending notice to individuals who are not similarly situated (and therefore essentially solicitating them to bring their own lawsuits against the employer) and the difficulty of presenting evidence of similarity before discovery is conducted. The court reasoned that the “similarly situated” determination is analogous to preliminary injunctions decisions, in which the party seeking the injunction must show a strong likelihood of success on the merits (among other elements not applicable here).

Plaintiffs asserting collective claims must now show that there is a strong likelihood that the individuals they seek to include in the collective are similarly situated to themselves: a showing of something more than establishing a genuine issue of fact but something less than a preponderance of the evidence. The Sixth Circuit directs trial courts to consider evidence presented by the parties on whether plaintiffs may be subject to varying defenses and whether the merits of other-employee claims would be similar to the merits of the named plaintiffs’ claims.

Application of the New Strong Likelihood Standard: Questions Remain

The Sixth Circuit has now put lower and upper boundaries on the showing required to make a notice determination in FLSA collective actions. The court opines that the strong likelihood standard is familiar to district courts given that they apply it in preliminary injunction decisions. However, district courts may have difficulty applying the new standard within the boundaries established in a new context. The Sixth Circuit did not provide much guidance beyond the specific issues present in Clark.

Although not expressly outlined, it is implied that the strong likelihood standard is still a two-step process. The Sixth Circuit’s focus is the new standard’s application to deciding whether others are similarly situated enough to justify issuing notice to potential opt-in plaintiffs, i.e., “notice determination.” indicating that notice issuance is the only purpose of the determination. However, the court also describes the determination as “provisional,” implying that the district court will still need to make a final determination on “similarly situated” after the factual record is fully developed. Even if a district court determines that the plaintiffs are provisionally similarly situated, employers should still move to unwind that decision if discovery reveals that plaintiffs are not similarly situated. Much of the Clark opinion leaves these procedures unsaid. Further, the Sixth Circuit no longer wants to use the terms “certification” or “decertification,” and therefore parties will need to develop new ways of describing what they are seeking in the provisional and post-discovery steps.

More clarity from the Sixth Circuit on these aspects will likely be needed as district courts grapple with the new standard.

The Sixth Circuit is the second of the federal circuits to move away from the lenient Lusardi approach for issuing notice of collective actions to potential opt-in plaintiffs (the first being the Fifth Circuit in Swales in 2021). District courts in other circuits are also trending away from the lenient approach (see Mathews v. USA Today Sports Media Group, LLC, No. 1:22-cv-1407 (E.D. Va. Apr. 14, 2023), discussed in more detail here). Clark v. A&L Homecare provides a useful roadmap for employers in other circuits to argue that a more stringent standard should be applied before notice is issued to potential opt-in plaintiffs when defending against collective actions.