5th Circuit opts out of two-step vetting rules for collective actions

Ever been bitten by a class action under the Fair Labor Standards Act (FLSA)? That’s what happens when lots of employees sue your company all at once for failing to pay minimum wages or overtime. It often occurs when people classified as independent contractors claim they’re employees or those treated as exempt from the FLSA claim to be nonexempt from coverage (and eligible for overtime pay). A win for the workers can entangle a company in litigation for years or spell a huge verdict. On January 12, the federal court of appeals gave relief to Texas employers.

The way it was

Here was the drill under the FLSA for more than 80 years. A worker claims she was denied minimum wage or overtime. Let’s say she was classified as an independent contractor but asserts she is really an employee. Thus, she claims she was wrongfully denied minimum wage and/or overtime.

The worker sues in federal court and says others similarly situated to her have been victimized, too. She submits sworn statements from some of the others claiming they’re working in the same circumstances as she is, and her lawsuit alleges as much.

This is important: At this juncture and based only on the claimant’s meager evidence and allegations, the court sends out written notices to all workers at the company who might be similarly situated, announcing they can join the lawsuit. It’s called an “opt-in procedure.” As a result, hundreds upon hundreds of other workers at the company can be part of the lawsuit essentially at its inception. The effect is the lawyers for the worker get the court to perform their task in looking for clients.