5th Circuit tightens standards for certifying FLSA class actions

Ever been bitten by a class action under the Fair Labor Standards Act (FLSA)? It can happen when lots of employees sue your company all at once for failing to pay minimum wages or overtime. It often occurs when workers classified as independent contractors claim they are employees or those treated as exempt from the FLSA claim to be nonexempt from the coverage. A win for the workers can entangle a company in litigation for years or spell a huge verdict. Earlier this year, the U.S. 5th Circuit Court of Appeals (which covers Texas) gave relief to employers in the state.

The way it was

Here was the drill under the FLSA for more than 80 years: A worker claims she was classified as an independent contractor but asserts she is really an employee. Then, she alleges she was wrongfully denied minimum wage and/or overtime pay. She sues in federal court and states other similarly situated workers have likewise been victimized. She submits sworn statements from some of the others claiming they’re working in the same circumstances.

At this juncture and based only on the meager evidence and allegations, the court sends out written notices to all workers at the company who might be similarly situated, telling them they can join the lawsuit. The so-called “opt-in procedure” allows hundreds upon hundreds of other workers at the company to be part of the lawsuit essentially at its inception. The net effect is the court does the work for the employee’s lawyers in looking for clients.