Watershed Sixth Circuit Opinion Eliminates Certification Process from FLSA Actions in Favor of a Strong Likelihood Standard

By Katie Zorc, Esq. and Patrick Kasson, Esq.

On May 19, 2023, the United States Court of Appeals for the Sixth Circuit, which governs Ohio, Michigan, Kentucky and Tennessee, issued a watershed opinion set to drastically change the number and nature of lawsuits brought pursuant to the Fair Labor Standards Act (FLSA).

Clark v. A&L Homecare & Training Ctr., LLC, did this by changing the process by which representative employee/plaintiffs obtain authority from the court to issue notices to other potential plaintiffs.

The FLSA allows a current or former employee to serve as a representative plaintiff and initiate a collective action against their employer in federal court for recovery of lost wages following minimum-wage and overtime violations. However, even before proving their claims, this representative plaintiff could pose a much larger threat by triggering a process where the court orders that the parties notify all “similarly situated” employees of the action.  These similarly situated employees could then become plaintiffs seeking their own monetary recovery from the employer. 29 U.S.C. § 216(b).

Before last week, the threshold for when these additional, potential plaintiffs were notified was “fairly lenient.” Borrowing terms from Civil Rule 23 class actions, prior courts held that upon a “modest factual showing” that a group of employees were similarly situated, the district court would grant conditional certification and facilitate notice to all employees the plaintiff wished — and the flood gates would be opened. A complete (and often, expensive) discovery phase would occur. Once discovery was completed, the court would then revisit the issue comparing all of these plaintiffs’ employment situations to determine whether their positions were indeed similar.  If so, the court would issue a final certification and the case would proceed to trial with the entire collective. If not, the court would decertify, and break the claims into separate matters, as necessary.

But often by then, the damage was done. The addition of these new, potential plaintiffs could escalate a small wage dispute into multi-million dollar litigation. The employer would be forced to assemble two or three years’ worth of employment records and hand it over to opposing counsel to facilitate the notices. The group of plaintiffs would grow and become expectant. Current employees upon notice could become cynical.  Attorneys’ fees would climb exponentially in the thousands, all while the threat of a million-dollar award hung in the air.  It was therefore no surprise that even the most confident, law-abiding employers found themselves shaking their heads and sitting down at the settlement table to avoid these risks.

This two-step process had existed for over 30 years. Some rumblings in the neighboring Fifth Circuit set the stage for questioning this status quo, and then came Clark.

The Clark court made it clear that there would be no more conditional nor final certification, nor any certification at all. Instead, going forward plaintiffs must show a “strong likelihood” that they were “similarly situated” to the representative plaintiff to join an action. Clark further defined this as a standard “greater than the one necessary to create a genuine issue of fact, but less than the one necessary to show a preponderance.”

Notices are still permitted, but the standard is now much higher, as before sending these notices a representative plaintiff must demonstrate this “strong likelihood” of similarity as opposed to the prior “modest showing.” The critical fight to determining the size of the collective is therefore moved to the front of litigation, as opposed to after an extensive discovery process.

And with that, we are left with a new landscape. Time will tell how this impacts FLSA actions in the states governed by this ruling. Certainly, existing settlements will be upheld. Potentially, collectives already conditionally certified will be revisited, and the respective courts will determine how (and when) to apply this new ruling. But new filings will be subject to the new standard.

There has been a shift in the law, and employers in our state and the entire nation should be taking notice.

If you would like a full copy of the Clark opinion, or if you have any questions regarding employment, contact Reminger’s Employment Law Practices Defense Practice Group.