New Standard Established for FLSA Conditional Collective Certific

Not legal advice. This is general information about recent U.S. case law and litigation practice.

If you’ve ever watched an FLSA collective action take off, you know the moment a court authorizes notice can feel like someone hit the “Reply All”
button on a company-wide email. Suddenly there are dozens (sometimes hundreds) of opt-ins, discovery balloons, and settlement pressure rises faster
than overtime hours during the holidays.

In August 2025, the U.S. Court of Appeals for the Seventh Circuit rewrote the “how do we get to notice?” playbook. In
Richards v. Eli Lilly & Co., the court rejected the long-dominant, ultra-lenient two-step Lusardi
approach for sending notice in FLSA-style collectives. Instead, it adopted a more evidence-focused standard that requires plaintiffs to show
a material factual dispute about whether the proposed collective is similarly situatedwhile also giving employers a real chance
to rebut that showing before notice goes out.

Why FLSA “Collectives” Are Their Own Weird, Wonderful Creature

FLSA claims (overtime, minimum wage, off-the-clock work, misclassification, tip-credit disputes, and more) often proceed as
collective actions under 29 U.S.C. § 216(b). Unlike Rule 23 class actions, FLSA collectives are typically
opt-in: people join only if they affirmatively sign and file a consent to participate. That means the “notice” decision mattersa lot.
It’s the gate that determines whether the case stays a single-plaintiff dispute or turns into an all-hands meeting with exhibits.

Courts have long treated early notice as a case-management tool. But “case management” can accidentally become “case megaphone,” and that tension
is exactly what has fueled the recent wave of appellate decisions raising the bar for conditional collective certification (or, more precisely,
for issuing court-authorized notice).

The Old Default: The Lusardi Two-Step and the “Modest Factual Showing”

For decades, many courts used a two-step method often traced to Lusardi v. Xerox:

• Step One (“conditional certification” / notice stage): plaintiffs make a modest factual showing that other workers are
  similarly situated. Employers’ rebuttal evidence is often limited or ignored.
• Step Two (decertification after discovery): the court takes a harder look once more evidence is developed.

The problem, critics say, is that Step One can be so easy it’s basically “show up, say ‘policy,’ and try not to laugh.” Once notice is issued,
costs and exposure climb, and employers may feel pressured to settle regardless of the meritsbecause litigating a large collective is expensive
even when you’re right.

The Circuit Crack-Up: Fifth and Sixth Circuits Started the Remodeling

Fifth Circuit: Swales and “Rigorously Enforce Similarity” Early

In Swales v. KLLM Transport Services, the Fifth Circuit rejected Lusardi’s two-step framework and instructed district courts
to rigorously police the “similarly situated” requirement early in the case, tailoring discovery to the similarity question before notice goes out.

Sixth Circuit: Clark and the “Strong Likelihood” Standard

In Clark v. A&L Homecare, the Sixth Circuit also rejected Lusardi and required plaintiffs to show a
“strong likelihood” that other employees are similarly situatedanalogizing the inquiry to the probability component of a preliminary
injunction analysis.

Translation: plaintiffs in those circuits can’t rely on thin pleadings and a couple of cookie-cutter declarations. Courts are expected to look
harder, sooner.

The New Seventh Circuit Standard: Richards v. Eli Lilly’s “Material Factual Dispute” Test

The Seventh Circuit took a “middle path.” It rejected Lusardi’s leniency, but it also declined to copy-paste the Fifth or Sixth Circuit approaches.
Instead, it created a flexible, evidence-based framework:

• Threshold showing required: to secure notice, plaintiffs must show there is a material factual dispute about whether
  the proposed collective is similarly situated.
• “Some evidence” of a common unlawful policy or practice: allegations alone aren’t enough.
• Rebuttal evidence matters: employers must be allowed to submit rebuttal evidence, and courts must consider it.
• Notice is not automatic: even if a material dispute exists, the court has discretion to deny, limit, defer, or allow narrowly tailored
  pre-notice discovery.

The court emphasized guiding principles like judicial neutrality, accurate and timely notice, and preventing procedural abuseconcerns it found
Lusardi’s one-sided “virtually unrebuttable” first step did not adequately address.

What Counts as “Some Evidence” (and What Usually Won’t)

Under Richards, the early record matters. Courts are now more likely to look at whether the evidence actually supports a
common policy that ties the group together. In practical terms, the following often helps:

Evidence plaintiffs may use effectively

• Written policies (timekeeping rules, auto-deduct meal breaks, rounding practices, tip-pool rules).
• Payroll and time data showing patterns consistent with a common practice (e.g., consistent “clock-out edits”).
• Targeted declarations from multiple locations/roles showing the same alleged practicenot just “I feel underpaid” vibes.
• Manager training materials or communications that indicate a centralized approach.

Evidence that tends to struggle

• One affidavit that reads like it was generated by a legal vending machine.
• Overbroad collective definitions that lump together jobs with different pay systems, supervisors, or exemption defenses.
• “Common policy” by slogan (e.g., “companywide culture of underpaying”) without concrete support.

The biggest shift is that defendants can now answer with more than “we deny everything.” Under Richards, rebuttal evidenceaffidavits,
job descriptions, pay practice variations, arbitration agreements, and datacan meaningfully influence whether notice is issued and how broad it is.

Specific Examples: How Richards Could Change Real Cases

Example 1: Auto-deduct meal breaks (classic “policy” case)

If the employer uses an automatic 30-minute deduction and plaintiffs show evidence that managers routinely discourage reporting missed meals,
that can create a genuine similarity dispute. But if the employer rebuts with evidence of consistent acknowledgments, easy correction mechanisms,
and varied manager practices across locations, a court might narrow the proposed collective or require targeted pre-notice discovery rather than
blasting notice to everyone with a badge.

Example 2: Misclassification (exempt vs. non-exempt)

Misclassification claims often rise or fall on whether job duties are truly uniform. Plaintiffs may point to standardized job descriptions and training.
Employers may counter with role differences, discretion levels, and individualized exemption defenses.

Separatelybut relevant to how courts think about proofthe Supreme Court has emphasized that ordinary civil burdens (like
preponderance of the evidence) apply in FLSA exemption disputes, rejecting attempts to impose heightened proof standards.
While that case addressed exemptions rather than notice, it reflects a broader judicial comfort with evidence-driven standards in FLSA litigation.

Example 3: Off-the-clock work (the “it depends” category)

Off-the-clock cases can be tricky because similarity depends on whether the practice is centrally driven (e.g., a time-edit policy or productivity quotas)
or varies by supervisor/site. Under Richards, plaintiffs will likely need more than “we all sometimes worked late.” Employers, in turn, can submit evidence
showing varied supervision, different workload expectations, and individualized timekeeping compliancefacts that may push a court to limit the group or
deny notice entirely.

Why This Matters: Settlement Pressure, Neutrality, and Litigation Cost

Courts and commentators have increasingly acknowledged a reality everyone whispers about and then bills for: once notice is issued, the economics of the
case change. Discovery grows. Risk grows. And employers may settle to avoid the cost of fightingeven if they think they’d win.

Richards explicitly aimed to prevent notice from becoming a one-sided accelerator that undermines judicial neutrality. The new standard is designed to
“pressure-test” similarity earlier, with both sides participating in the evidentiary picture.

Don’t Miss the Side Quest: Personal Jurisdiction Is Also Shrinking Nationwide Collectives

Even if a plaintiff clears the notice standard, another trend is narrowing the scope of FLSA collectives: courts applying
Bristol-Myers Squibb-style personal jurisdiction principles to opt-in plaintiffs.

For example, the Ninth Circuit’s Harrington v. Cracker Barrel decision addressed the need to evaluate personal jurisdiction
for prospective opt-ins, affecting how “nationwide” a collective can realistically be outside an employer’s home forum.

Combine that jurisdiction trend with Richards’ heightened, evidence-based notice standard, and you get a world where broad, coast-to-coast collectives
are harder to launch casuallyespecially in circuits leaning toward stricter gatekeeping.

Practical Takeaways for Plaintiffs and Employers

For plaintiffs (and their counsel)

• Build an evidence file early: declarations, documents, and data that show a common practicenot just similar job titles.
• Define the collective carefully: overly broad definitions invite rebuttal evidence and narrowing.
• Expect rebuttal: Richards assumes the employer will submit competing evidence; plan to engage with it.

For employers (and their counsel)

• Investigate fast: the “first weeks” matter more when rebuttal evidence is considered pre-notice.
• Show variation: differences in duties, supervision, pay plans, and compliance can undermine “similarly situated” claims.
• Use data thoughtfully: time edits, meal break records, policy acknowledgments, and location-by-location differences can be powerful.

The new reality is that notice motions in the Seventh Circuit can look less like a quick administrative step and more like a mini-litigation event
still flexible, but no longer a one-way door.

What’s Next: A Circuit Split Ripe for Supreme Court Attention

With different circuits using different standards (lenient Lusardi variants, “strong likelihood,” “rigorous” similarity enforcement, and now the Seventh
Circuit’s “material factual dispute” approach), the landscape is fractured. There has already been active Supreme Court-related activity surrounding
these issues, including a cert petition tied to Richards.

Whether the Supreme Court ultimately harmonizes the standards remains to be seen. But for now, the practical message is clear:
the era of nearly automatic conditional collective certification is fadingat least in some circuits.

Field Notes: of “Real-World” Experience With Conditional Collective Certification Fights

In the real world, the conditional collective certification stage has never felt “conditional.” It has felt like a launch button. When notice went out under
the old, lenient playbook, the case often changed shape overnight: HR was pulled in, managers were interviewed, payroll teams were asked to explain systems
they didn’t design, and someone inevitably discovered a spreadsheet named “FINAL_final_v7_REALLYFINAL.xlsx.”

Plaintiffs’ teams often treated early notice like oxygen: get it out fast, get opt-ins fast, and build momentum. Employers often treated it like wildfire:
contain it fast, or the rest of the litigation will be spent in damage control mode. That tug-of-war created predictable behaviors. Plaintiffs favored broad
group definitions (“everyone with a pulse and a timecard”), while employers tried to show “actually, these jobs aren’t the same at all,” sometimes using
everything from job descriptions to scheduling software screenshots to prove that a single policy wasn’t really a single policy.

What changed in the circuits moving away from Lusardi is not just the legal testit’s the day-to-day chessboard. In practice, when courts allow rebuttal
evidence, employers stop holding their strongest facts for “later.” They bring receipts early: affidavits from supervisors, policy acknowledgments, training
materials, and timekeeping data that shows employees were paid differently across sites or had different duties. On the other side, plaintiffs learn quickly
that two or three carefully chosen declarations from different locations (plus a document that looks like it came from headquarters, not a hunch) can matter
more than twenty identical statements that read like they were copied and pasted with the names swapped.

One of the most common “experience lessons” is that similarity lives in the details. A meal-break auto-deduct case feels collectiveuntil you discover that
one facility had a strict “no working through lunch” rule, another had chronic understaffing, and a third had a manager who corrected time punches the way
some people correct grammar on the internet: aggressively and without being asked. Or a misclassification case looks uniformuntil job duties turn out to
be wildly different depending on territory, client mix, and how much discretion the worker actually had.

Another lesson is that the first skirmish sets the tone. When early notice is automatic, both sides brace for a long war. When early notice is evidence-based,
both sides invest in early investigation and cleaner arguments. That can be healthier for the system: fewer “everyone everywhere” notices, more targeted
collectives, and (ideally) less pressure to settle purely because the lawsuit became enormous. Richards’ approach fits that lived reality. It treats notice as
a toolnot a sirenand asks courts to look at the actual evidence before inviting the whole neighborhood to join the party.