Ok, bear with me for a second.
If your employees want to bring a class action against your company claiming that they should’ve been paid overtime, there are typically two ways to do so: Bring a claim under state law, or bring a claim under federal law (Fair Labor Standards Act).
There’s a big difference: Federal law collective actions are an “opt-in” group — meaning that individual employees need to affirmatively state that they want “in” on the lawsuit. (Many people don’t bother so those classes tend to be smaller.) State law class actions typically use an “opt-out” procedure (meaning that everyone is IN the class unless they affirmatively state they want “out”).
Recently, lawyers representing employees in these wage-and-hour actions have been bringing “hybrid actions” — asserting BOTH state and federal law claims in one lawsuit. The Second Circuit (which is the federal appeals court for Connecticut, New York & Vermont) had never blessed those actions.
Earlier this week, the Second Circuit in Shariar v. Smith & Wollensky Restaurant Group approved these actions were proper where the facts underlying both claims “form part of the same case or controversy.”
As keenly noted by the Wage & Hour Litigation Blog, if Defendants now want to object to prosecuting both federal and state claims in the same lawsuit, “the court’s decision clarifies the legal grounds for doing so. Going forward, defendants will need to demonstrate significant tension between the pursuit of federal and state wage claims in the same lawsuit in order to limit plaintiffs to FLSA claims in federal court.”
For employers, the court’s decision won’t have a significant impact on business. What it will have an impact on, though, is any wage-and-hour litigation that the company may face. This decision makes it easier for employees to bring their claims in federal court (where things might move a little more quickly) while still maintaining the perceived benefits of an opt-out class under state law.