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In a Big Win for Employees, the Sixth Circuit Provides Additional Guidance on the FLSA’s Collective Action Rules

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On May 19, 2023, the Sixth Circuit issued its long-awaited decision in Clark/Holder v. A&L Homecare and Training Center, LLC. Biller & Kimble co-authored an amicus brief in the case on behalf of the Ohio Associate for Justice (formerly, the Ohio Trial Lawyers Association).

The Sixth Circuit clarified some rules and created a brand-new standard for courts to use when deciding whether employees can use the Fair Labor Standards Act to bring their claims together. Although it remains to be seen how courts will apply the new rules, we view the decision as a major win for employees.

This case is big news for wage and hour lawyers like us. Here are some of the big takeaways:

  1. The Sixth Circuit rejected the employer-friendly “Swales” standard from the Fifth Circuit.

A&L Homecare argued that the Sixth Circuit should adopt a new legal standard from a Fifth Circuit case called Swales v. KLLM Transport Services L.L.C. Swales makes it more difficult for employees to join together in a single lawsuit under the Fair Labor Standards Act. The gist of Swales is that employees have to engage in substantial discovery (the evidence-gathering stage of a lawsuit) before they can ask a court to send notice of an FLSA case to employees suing for unpaid wages. The Sixth Circuit rejected the Swales standard.

On the other hand, the employees in Holder argued that the long-standing “lenient” legal standard should apply to collective actions. The Sixth Circuit rejected this standard too.

Instead, the Sixth Circuit came up with a brand-new legal standard of its own for analyzing whether courts should authorize sending notice of lawsuits to employees who might be able to join a case for unpaid wages. The Sixth Circuit adopted a “strong likelihood” standard, borrowed from preliminary injunction proceedings. Under the new “strong likelihood” standard, employees need only show that there is a “strong likelihood” that the employees are similarly situated to the workers who filed the lawsuit in the first place. In other cases, the Sixth Circuit has explained that “similarly situated” is a broad phrase, and even when employees or their claims have some meaningful differences, it is still appropriate to adjudicate their claims together if it would be a more efficient use of court resources.

In our view, this changes almost nothing in FLSA cases. In most FLSA cases that challenge an across-the-board pay practice, this standard will be easy to meet. Although we are sure employers are going to make much of the “change,” we anticipate that courts will conduct virtually the same analysis that they always have.

For example, in a case involving pizza delivery drivers challenging an employer’s reimbursement policy, it will be obvious from the start of the case that there is a “strong likelihood” that other employees are similarly situated. After all, pizza companies are not individually negotiating different reimbursement policies for each pizza driver.

Or, likewise, when someone alleges that a restaurant manager is illegally taking money from a tip pool, it will be evident from even one server’s sworn statement that there is a “strong likelihood” that there are other, similarly situated employees.

  1. The Sixth Circuit rejects employers using arbitration agreements to prevent notice going to workers in FLSA lawsuits.

The recent trend in employment law is for employers to force their workers to sign away their right to proceed in court through “arbitration agreements.” Employers mostly use these agreements to avoid class actions, and, in fact, many of the agreements that we’ve looked at say that if a court decides the “class action waiver” is invalid, the whole agreement is thrown out. In other words, the whole point of the agreement is to stop class actions; making it more profitable for the company to break the law than comply.

In lawsuits for unpaid wages, lawyers for employers argue that (1) workers might have signed an arbitration agreement and (2) none of those workers should be notified about the lawsuit. The Fifth and Seventh Circuits have bought this argument. In those Circuits, employers are allowed say that workers signed these agreements—without the workers even having a chance to dispute what the employer is saying—to avoid notice going to similarly situated workers.

The Sixth Circuit soundly rejected this approach, saying “We therefore respectfully disagree that district courts can or should determine, ‘by a preponderance of the evidence,’ whether absent employees have agreed to arbitrate their claims.” At most, it seems that the possible existence of an arbitration agreement might be a “factor” when considering whether employees are similarly situated. But if the employer alleges that all or most of the employees signed one, guess what? They are similarly situated.

Because the Sixth Circuit foreclosed determining whether the workers agreed to arbitration as part of the FLSA notice process, this “defense” is unlikely to ever override finding that employees are similarly situated. After all, that standard focuses on whether employees can point to a single illegal pay practice, not whether there might be some varied defenses to some worker’s claims.

We consider this a big win and one we’ve been advocating for in other cases.

  1. Two of the three judges encouraged courts to equitably toll the statute of limitations in FLSA cases.

One of the problems in FLSA cases is that the statute of limitations for unpaid wage claims does not stop running until someone “opts in” to the lawsuit. Those are some fancy words to mean that workers have tight time limits to file claims for unpaid wages, and the clock doesn’t stop just because a fellow employee filed a lawsuit. This is a serious issue because employers’ lawyers can easily delay a court from sending notice to employees through their usual stall-tactics.

Two of the Sixth Circuit panel judges wrote in concurrences and specifically said that courts should freely grant “equitable tolling” in FLSA cases. Equitable tolling allows the court stop the time limit for filing claims from running out.

So long as courts follow these instructions, it will be a major benefit to workers.

  1. The Sixth Circuit instructed courts to decide quickly FLSA motions to send notice.

Relatedly, the Sixth Circuit instructed courts to move quickly to decide FLSA motions to send notice. The Sixth Circuit even told courts that they may need to move things along with additional orders compelling discovery. More great news!

As noted above, delay is a big issue in wage lawsuits. Although it remains to be seen if courts will follow the Sixth Circuit’s instructions to rule on FLSA notice motions expeditiously, if courts do, it will greatly help workers.

  1. The Sixth Circuit held that “conditional certification” is the wrong term. (*Personal vindication!)

Now, we get to the final “win” in the Holder decision. This one is mostly just for fun.

We at Biller & Kimble have long argued that a phrase typically used in FLSA cases—“conditional certification”—is the wrong phrase to use. Instead, the proper form of a motion is simply a “motion to send notice” or something similar. This is a technical issue and one that we picked up on because of our deep expertise in bringing wage and hour lawsuits. We don’t take anything for granted or do something because “everyone else does it that way.”

So, we have brought up this issue in a number of courts. At least twice, judges have expressly disagreed with us, more-or-less saying “guys, we’ve always called it conditional certification, what are you talking about?”

The Sixth Circuit completely vindicated our view on this question. It held “we reject [the] characterization of the notice determination as a ‘certification,’ conditional or otherwise.” It is nice to be vindicated on this point!

We look forward to bringing our wage cases in the Sixth Circuit under this newly clarified standard. We think it will greatly benefit employees who file claims for unpaid minimum wage and overtime pay.

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ADVERTISING ONLY: The information on this blog is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Past results obtained by Biller & Kimble, LLC are no guarantee of future results. Each case or matter is different and must be judged on its own merits.