In concluding that the proper standard for certifying Fair Labor Standards Act (FLSA) collective actions is whether the plaintiffs are "similarly situated," the U.S. Court of Appeals for the Sixth Circuit ruled on March 2, 2016, that the Seventh Circuit's application of the stricter Federal Rule 23 class action standard to an FLSA collective action was inappropriate. According to the Sixth Circuit in Monroe v. FTS USA, LLC and UniTek USA, LLC, Congress did not import the Rule 23 predominance requirement into the FLSA, and doing so "would undermine the remedial purpose of FLSA collective actions."

Background

The plaintiffs in Monroe were all "similarly situated" cable technicians, installing cable for FTS and its cable company clients.  They shared similar job duties and were subject to the same compensation plan and company-wide timekeeping system.  Plaintiffs sought to bring an FLSA collective action for alleged unpaid overtime compensation that stemmed from the timekeeping system.

The district court authorized notice and granted conditional certification of the technician's FLSA collective action.  The notice defined the class as any and all technicians employed at any location across the country who were compensated on a piece-rate basis who did not receive overtime compensation for hours worked over 40 per week for the past three years.  A total of 293 technicians opted in to the collective action.

After discovery, the district court denied the company's motion to decertify the class and for summary judgment, finding that the class members were similarly situated.  At trial, a representative number of the technicians were called as witnesses to establish the plaintiffs' case and the jury returned a verdict on behalf of the entire collective opt-in class.

The Court of Appeals' Decision

The company appealed the verdict arguing, among other things, that the technicians should not have been certified as a class under 29 U.S.C. § 216(b).  The Sixth Circuit affirmed the district court's class certification, relying upon O'Brien v. Ed Donnelly Enterprises, Inc., 575 F.3d 567 (6th Cir. 2009).  There, as here, the Sixth Circuit concluded that an overly restrictive application of the FLSA's "similarly situated" standard is not warranted, as Congress passed the FLSA with "broad remedial intent" to address "unfair method[s] of competition in commerce" inconsistent with the standard of living necessary for "health, efficiency, and general well-being of workers."  Keller v. Miri Microsystems LLC, 781 F.3d 799,806 (6th Cir. 2015).

In O'Brien, the Sixth Circuit held that the stringent Rule 23 class certification analysis (which focuses on individualized questions for each potential plaintiff) was not applicable to FLSA collective actions because Congress did not import the more stringent criteria for FLSA collective actions as such a standard "undermines the remedial purpose of the collective action device."  In reaching this conclusion, the Sixth Circuit rejected the analysis of the Seventh Circuit in Espenscheid v. DirectSat USA, LLC, 705 F. 3d 770 (7th Cir. 2013).

In Espenscheid, the Seventh Circuit decertified an FLSA collective action for a class of workers bringing similar FLSA claims for another subsidiary of the Monroe defendants.  The Seventh Circuit, although recognizing the inherent differences between FLSA collective actions and Rule 23 class actions, as well as the conflict with settled Sixth Circuit law, ruled that "there isn't a good reason to have different standards for the certification of the two different types of action."  The Sixth Circuit specifically rejected this analysis, concluding that the Seventh Circuit's decertification in Espenscheid conflicts with Sixth Circuit precedent.

The Sixth Circuit concluded that certification in Monroe was proper as the plaintiffs were "similarly situated" for purposes of the broad application of the FLSA's opt-in features and congressional intent.  Both the factual and employment settings articulated by the technicians and the degree of fairness and procedural impact of certifying the case favored upholding the certification for which Espenscheid was unpersuasive.

Implications for Employers

Unless and until the U.S. Supreme Court definitively decides on this split between the circuits,¹ it will remain much easier for Sixth Circuit plaintiffs to keep their collective actions certified under the FLSA, as the courts will not apply the more stringent Rule 23 class certification standard, favoring instead the more liberal – and apparently broader and inclusive – standard articulated in O'Brien.  Such an application will allow courts to conclude that more workers are "similarly situated" based on their job duties, compensation and claims under the FLSA.