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“Similarly Situated:” Lenient Standards for FLSA Collective Actions Pose Risk to Employers

April 10, 2017
Brooke Razor
Posted in: Labor & Employment

The Fair Labor Standards Act (“FLSA”) provides that “[a]n action…may be maintained against any employer…in any…court of competent jurisdiction by any one or more employees for and in behalf of themselves and other employees similarly situated.”  29 U.S. Code § 216(b) (emphasis added).  The question surrounding the meaning of the phrase “similarly situated” as used in the FLSA has long been debated in federal courts, and involves different considerations than the process for certification of class actions under Federal Rule of Civil Procedure 23.

Courts are generally in agreement that the collective action process occurs in two phases: first, conditional certification is granted upon the plaintiffs’ motion soon after the litigation has commenced.  In this initial phase, courts in the Third Circuit are split between requiring a “modest factual showing” and requiring a “substantial allegation.”  Under the stricter “modest factual showing” standard, plaintiffs are required to “make a basic or modest factual showing that the proposed recipients of opt-in notices are similarly situated to the named Plaintiff.”  Wright v. Lehigh Valley Hosp., 2010 U.S. Dist. LEXIS 86915 (E.D. Pa. Aug. 24, 2010).  Under the more relaxed “substantial allegation” standard, plaintiffs are required to show “nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan.”  Lenahan v. Sears, Roebuck & Co., 2006 U.S. Dist. LEXIS 60307 (D.N.J. July 24, 2006).  However, despite this split, courts have made clear that both standards are extremely lenient at this phase.  See e.g. Titchenell v. Apria Healthcare, Inc., 2011 U.S. Dist. LEXIS 129475 (E.D. Pa. Nov. 8, 2011).

After conditional certification is granted, notice is disseminated to the conditionally certified class, and full discovery commences.  At the conclusion of discovery, plaintiffs are required to move for final certification of the collective action.  In this second phase of certification, courts look to a variety of factors, including the “factual and employment settings of the individual[] plaintiffs, the different defenses to which plaintiffs may be subject on an individual basis, [and] the degree of fairness and procedural impact of certifying the action as a collective action.”  O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 584-85 (6th Cir. 2009).  The standard at this stage is more difficult for plaintiffs to meet, but remains fairly relaxed relative to the potential risk of liability and exposure presented to defendants facing large-scale collective action suits.

The standards for certification are of major significance to employers, particularly those with a large volume of non-exempt employees.  Damages in FLSA collective actions can include unpaid wages, liquidated damages, and attorneys’ fees and costs.  The potential damages in such actions provide an incentive to employers to stay current and compliant with the obligations of the FLSA, so as to avoid collective action suits.