The Class Certification Process

Under the Fair Labor Standards Act (“FLSA”), individuals may bring suit “on behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. §216(b). Neither the statute itself nor the Ninth Circuit have defined the term “similarly situated,” Luque v. AT&T Corp., 2010 WL 4807088 (N.D.Cal. Nov. 19, 2010) at *3, citing Lewis v. Wells Fargo & Co., 669 F.Supp.2d 1124, 1127 (N.D.Cal. 2009). Courts in the Ninth Circuit take a two-step approach to determine whether plaintiffs are “similarly situated.” Id.

The Court’s first step is to make an initial, conditional determination of whether the plaintiffs are similarly situated, “deciding whether a collective action should be certified for the purpose of sending notice to potential class members.” Luque, supra, at *3, quoting Lewis, supra, at 1127. The initial notice stage determination utilizes a lenient standard that typically results in certification. Wynn v. National Broad Co., Inc., 234 F.Supp.2d 1067, 1082 (C.D.Cal. 2002). While the initial inquiry is not a mere formality, plaintiffs seeking conditional certification need only provide “substantial allegations, supported by declarations or discovery.” Luque, supra, at *3, citing Kress v. PriceWaterhouseCoopers, LLP, 263 F.R.D. 623, 627 (E.D.Cal. 2009). Indeed, “Courts need not even consider evidence provided by defendants at this stage.” Luque, supra, at *3 (emphasis in original), quoting Kress, supra, at 628.

Later in the litigation the Court makes a second determination using a stricter standard, usually prompted by a defendant’s motion for decertification once the parties have completed discovery. Lewis, supra, at 1128. At that point, district courts in the Ninth Circuit must make a factual determination as to the “propriety and scope of the class,” considering “(1) the disparate and factual employment settings of the individual plaintiffs; (2) the various defenses available to the defendants with respect to the individual plaintiffs; and (3) fairness and procedural concerns.” Luque, supra, at *3, quoting Leuthold v. Destination America, Inc., 224 F.R.D. 462, 467 (N.D.Cal. 2004).

In cases where employees allege that an employer has misclassified its workers such that the overtime and minimum wage requirements of the FLSA do not apply, some courts in the Ninth Circuit have required plaintiffs to show that the prospective collective class members share “substantially similar” (but not identical) job duties. See Kress, supra, at *5; Lewis, supra, at *8-9; Misra v. Decision One Mortg. Co, 2008 WL 7242774 at *7 (C.D.Cal. June 23, 2008). This burden is not high and a “fact intensive inquiry is not required.” Stanfield v. First NLC Fin. Servs., LLC, 2006 WL 3190527 at *4 (N.D.Cal., Nov. 1, 2006). To satisfy this standard, a plaintiff need only offer “some evidence” of similarity of job duties between members of the class.  Kress, supra, at *7. Any non-material differences are of no consequence. Stanfield, supra, at *3.

Courts in the Northern District of California routinely grant conditional certification of FLSA collective actions. Similarly, other district courts throughout the Ninth Circuit also commonly grant conditional certification, and often certify classes where the defendant has allegedly misclassified its workers as independent contractors.

29 U.S.C. §207(a)(1) of the FLSA requires that employers pay employees an “overtime” wage of one and one-half time their regular rate of pay for hours worked in excess of forty each week. 29 U.S.C. §206 of the FLSA requires an employer to pay its employees a minimum wage for all hours worked. Under the FLSA, “ ‘employee’ means any individual employed by an employer.” 29 U.S.C. §203(e)(1).

An “employer” “includes any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. §203(d). The definition of an employer “is given an expansive interpretation to effectuate the FLSA’s broad remedial purposes.” Lambert v. Ackerly, 180 F.3d 997, 1011-1012 (9^th Cir. 1999). The determination of whether an employer-employee relationship exists (as opposed to an independent contractor relationship) depends upon “the circumstances of the whole activity,” and the “touchstone is economic reality.” Boucher v. Shaw, 572 F.2d 1087, 1091 (9^th Cir. 2009). “Where an individual exercises control over the nature and structure of the employment relationship, or economic control over the relationship,” that individual is an employer and is subject to liability under the FLSA. Id.

Contractual language that labels individuals as “independent contractors” is not conclusive. Perryman v. Dorman 2010 WL 4682580 at *2 (D.Ariz. Nov. 10, 2010); see also Thibault v. Bellsouth Telecommunications, Inc. 612 F.3d 843, 845-846 (5^th Cir. 2010) (“The contractual designation of the worker as an independent contractor is not necessarily controlling.”). Rather, “economic realities determine employment status for the remedial purposes of the FLSA.” Real v. Driscoll Strawberry Associates Inc., 603 F.2d 748, 755 (9^th Cir. 1979). Courts look to a number of factors to determine whether a person is an employee entitled to the protection of the FLSA: (1) the degree of the alleged employer’s right to control the manner in which the work is to be performed; (2) the alleged employee’s opportunity for profit or loss depending upon his managerial skill; (3) the alleged employee’s investment in equipment or materials required for his task, or his employment of helpers; (4) whether the service rendered requires a special skill; (5) the degree of permanence of the working relationship; and (6) whether the service rendered is an integral part of the alleged employer’s business. Id. at 754. 

Employees are required to provide substantial allegations, supported by declarations or discovery, that the putative class members were together victims of a single decision, policy, or plan. Luque, supra, at *4 citing Kress, supra, at 629. “All that need be shown by the plaintiff is that some identifiable factual or legal nexus binds together the various claims of the class members in a way that hearing the claims together promotes judicial efficiency and comports with the broad remedial policies underlying the FLSA.” Russell v. Wells Fargo & Co., 2008 WL 4104212 at *3 (N.D.Cal. Sept. 3, 2008) (citations omitted).