In January, the Fifth Circuit Court of Appeals ruled that the conditional certification step in collective actions brought under the Fair Labor Standards Act (FLSA) is not required. The ruling is significant because it expressly rejects the “near universal” practice employed by trial courts around the country and adopts an approach that will allow employers in Texas, Mississippi, and Louisiana to determine early on in FLSA lawsuits which of their employees will receive notice of litigation and be allowed to participate.

The Typical Conditional Certification Process

The FLSA allows employees to bring a collective action lawsuits against their employer for unpaid wages and overtime on behalf of themselves and “similarly situated” employees.  Most trial courts around the country follow a two-step process in such lawsuits.  First, they determine which employees are similarly situated to the plaintiff bringing the lawsuit for the purpose of inviting them to participate in the lawsuit.  This initial determination of who potentially belongs in a lawsuit and should receive notice is called “conditional certification,” and, generally, favors employees bringing the action. 

Then, after the parties have engaged in a significant amount of discovery, courts again consider who belongs in the collective action. At this second stage of the proceeding, called “decertification,” trial courts apply a more rigorous legal standard to determine whether potential class members are “similarly situated” and also consider evidence obtained during the discovery. 

As a practical matter, this two-sage approach creates a lot of uncertainty for employers as to which of their employees, if any, will ultimately be allowed to bring a collective action, which is determined only after months of discovery at the decertification stage.

The Swales Framework

In Swales, the Fifth Circuit Court of Appeals set out to clarify the “legal standard that district courts should use when deciding whether to send notice in an FLSA collective action.”  Expressly rejecting the two-stage process described above, the Fifth Circuit clarified that:

“Two-stage certification of § 216(b) collective actions may be common practice. But practice is not necessarily precedent. And nothing in the FLSA, nor in Supreme Court precedent interpreting it, requires or recommends (or even authorizes) any ‘certification’ process.”

Instead, the Fifth Circuit emphasized that districts courts “should identify, at the outset of the case, what facts and legal considerations will be material to determining whether a group of “employees” is “similarly situated” and then authorize preliminary discovery accordingly, as early as possible.  The Fifth Circuit emphasized the fact that district courts have broad litigation management discretion to determine who should be included in the group of potential plaintiffs to whom the notice of the lawsuit will be sent and can order whatever discovery is necessary in order to make that determination.

CONCLUSION:  Employers facing FLSA collective actions in Texas, Louisiana, and Mississippi no longer have to resign themselves to the fact that a plaintiff’s proposed pool of potential plaintiffs will most likely receive notice of the FLSA lawsuit.  Instead, employers can now vigorously challenge and probe through discovery, very early on in such actions, whether the potential group of employees identified by the plaintiff in his or her pleadings is “similarly situated” and should receive notice of the lawsuit.

Leiza Dolghih is a partner at Lewis Brisbois Bisgaard & Smith LLP in Dallas, Texas and a Co-Chair of the firm’s Trade Secrets and Non-Compete Disputes national practice. Her practice includes commercial, intellectual property and employment litigation. You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.