Takeaways

• The Seventh Circuit found the traditional two-step approach in collective actions too lenient, but more recent frameworks too restrictive.
• The panel rejected a rigid test in favor of giving courts flexibility to decide in each case whether they have the evidence they need to make the determination.
• In a significant departure from the traditional approach, courts must give employers the opportunity to rebut plaintiffs’ evidence that potential opt-ins are similarly situated.

The U.S. Court of Appeals for the Seventh Circuit has provided a new framework for district courts to apply when deciding whether to issue notice to potential plaintiffs of a pending collective action under the Fair Labor Standards Act (FLSA) and other statutes that share the FLSA’s collective action framework. Richards v. Eli Lilly & Co. and Lilly USA, LLC, No. 24-2574 (Aug. 5, 2025). Rejecting the long-standing approach used by most courts, the Seventh Circuit panel adopted a flexible standard that gives courts discretion to fashion an approach based on the particular case.

The Seventh Circuit has jurisdiction over Illinois, Indiana, and Wisconsin.

Reconsidering Lusardi

When deciding whether to approve notice to potential plaintiffs, most federal courts, including those in the Seventh Circuit, have used the traditional two-stage framework introduced in Lusardi v. Xerox Corp., 99 F.R.D. 89 (D.N.J. 1983), an Age Discrimination in Employment Act (ADEA) case. Under Lusardi (and variations on this framework developed in some jurisdictions), courts conditionally certify a collective action based on a modest showing by plaintiffs that the collective’s potential members are similarly situated. Typically, the first step involves only an analysis of the plaintiff’s allegations. This low bar means courts grant conditional certification and authorize notice in the large majority of FLSA cases.

In recent years, however, reliance on Lusardi has eroded. The Fifth Circuit in Swales v. KLLM Transport Services, LLC expressly rejected the lenient two-step standard. (See Fifth Circuit Rejects Two-Step Approach for Certifying FLSA Collective Actions.) In Clark v. A&L Home Care and Training Center, LLC, the Sixth Circuit abandoned the standard. (See Sixth Circuit Adopts New Standard to Decide Whether to Send Notice to Potential FLSA Opt-Ins.) Most recently, a Ninth Circuit panel preserved its two-stage process. (See Ninth Circuit Hands Employers Split Decision on Key Procedural Aspects of FLSA Collective Actions.)

Richards Decision

The district court applied Lusardi to decide whether to issue notice of a proposed ADEA collective action to potential opt-in plaintiffs. (The ADEA shares the FLSA’s collective action framework.) It concluded the plaintiff satisfied the required first-stage showing that the proposed collective was similarly situated. The court refused to consider evidence presented by the employer to refute the plaintiff’s showing. It issued notice of the collective action to all employees who were 40 and older and were denied promotions for which they were qualified during the relevant period.

The Seventh Circuit reversed. It joined the Fifth and Sixth Circuits in rejecting Lusardi. The appeals court held the lenient standard often results in overbroad notice and an inflated potential collective that includes individuals who are not similarly situated. It explained that this places significant pressure on the employer to settle and invites further litigation by employees who may not be able to join the collective but are now on notice of potential violations.

However, the appeals court found that the more rigorous standards adopted in the Fifth and Sixth Circuits were too restrictive and could lead to delay and inefficiency.

Rebutting “Similarly Situated”

The Seventh Circuit adopted a middle-ground approach. When requesting court-authorized notice, it said, a plaintiff must present some evidence that members of the proposed collective are similarly situated — that is, they have been subject to “a common unlawful employment practice or policy.” Under Lusardi, the inquiry typically ended there.

Under the Seventh Circuit’s new framework, employers are given an opportunity to present evidence to rebut the plaintiff’s similarly situated showing before the court issues notice. This is an important departure from Lusardi, which has given employers little opportunity to meaningfully oppose conditional certification.

A Flexible Approach

The Seventh Circuit also gives courts the flexibility to consider how much pre-notice discovery is necessary, in any given case, to determine whether a collective is similarly situated and warranted certification. “The watchword here is flexibility,” the panel explained.

For example, it may be readily apparent in an off-the-clock case prior to sending notice that a practice of requiring off-the-clock work was limited to a specific worksite or group of workers. The appeals court saw no benefit to a standard that would require courts to order pre-notice discovery when it is obvious that additional discovery would not help to resolve the similarly situated question. If the court thinks that it has sufficient evidence already to make a “similarly situated” determination by a preponderance of the evidence, the panel said, it may bypass the two-stage process, take limited discovery first, and then decide whether to grant notice and to which potential opt-in plaintiffs.

But in other cases, it may be impossible to establish which employees allegedly were subjected to off-the-clock work without identifying and obtaining testimony from opt-in plaintiffs. If the court determines potential plaintiffs may have evidence to resolve that factual dispute, it can use the two-step approach and issue notice, making a final “similarly situated” determination after discovery is complete.

Takeaway

In the Seventh Circuit, courts have flexibility to manage collective actions without a rigid two-step rubric. Other circuits, for now at least, continue to proceed under Lusardi. Still other jurisdictions have embraced their own heightened standards. Employers operating in multiple jurisdictions should be aware of the different frameworks that courts use in deciding whether to authorize notice.