The Fifth Circuit has issued an opinion today that will dramatically change the process by which FLSA collective actions are certified. From the court’s opening paragraph:

“Group litigation takes various forms, with varying formality. Traditional class actions under Federal Rule of Civil Procedure 23, for example, proceed under well-established procedural safeguards to ensure that the named plaintiffs are appropriate class representatives. 1 But so-called “collective actions” under the Fair Labor Standards Act proceed, well, differently, with district courts applying ad hoc tests of assorted rigor in assessing whether potential members are “similarly situated”—a phrase that § 216(b) of the FLSA leaves undefined. 2 The precision of Rule 23 provides useful guidance for when and how to certify a class; the imprecision of § 216(b), not so much. This interlocutory appeal concerns the threshold dispute of any wage-claim collective: How rigorously, and how promptly, should a district court probe whether potential members are “similarly situated” and thus entitled to court-approved notice of a pending collective action? Our circuit has neither adopted nor rejected a definitive legal standard. Today we do both, hopefully providing a workable, gatekeeping framework for assessing, at the outset of litigation, before notice is sent to potential opt-ins, whether putative plaintiffs are similarly situated—not abstractly but actually.”

I have not fully digested the case yet, but on a first reading it appears that the court has rejected the test set out in Lusardi and strives to set up a bifurcated fact-finding process requiring a rigorous litigation of the threshold “similarly-situated” issue prior to allowing notice to go out to potential class members.

Such a process will undoubtedly be welcomed by employers who have not been a fan of the Lusardi two-step conditional certification approach. However, it may serve to severely harm employees who are potential collective action members because the limitations period for their claims will continue to run while the employer slow-rolls the initial certification process.

Read the opinion here: Swales et al v. KLLM Transport Services