Good news for employers: 5th Circuit changes approach to FLSA collective actions

The U.S. 5th Circuit Court of Appeals (which covers Mississippi, Louisiana, and Texas employers) recently assessed how rigorously and promptly a district court should probe whether potential members of a Fair Labor Standards Act (FLSA) collective action are “similarly situated” and thus entitled to court-approved notice of the case. In doing so, the court greatly changed the landscape for employers facing FLSA collective action litigation.

Collective actions vs. class actions

Ever wonder how “collective actions” differ from class actions and how the distinctions could affect you as an employer? In the recent opinion, the 5th succinctly described the surface-level differences:

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. But so-called “collective actions” under the [FLSA] proceed, well, differently, with district courts applying ad hoc tests of assorted rigor in assessing whether potential members are “similarly situated”—a phrase that . . . the FLSA leaves undefined. The precision of Rule 23 provides useful guidance for when and how to certify a class; the imprecision of § 216(b), not so much.

Previous approach