Seventh Circuit Redefines FLSA Collective Action Standard

Why This Matters (Even If You’ve Never Read a Timesheet)

FLSA collective actions can grow fast because they operate like an opt-in group project: once notice goes out, more workers can join, and the case’s size (and settlement gravity) changes overnight. For years, many courts let that notice go out under a “modest factual showing” standardeasy for plaintiffs, frustrating for employers, and sometimes awkward for judges trying to stay neutral.

In 2025, the Seventh Circuit said: enough. To send notice, courts must now consider evidence from both sides and can authorize notice only when the named plaintiff raises at least a material factual dispute about whether the proposed group is “similarly situated.” In plain English: you need a real evidentiary fight before the court helps you recruit opt-ins.

Collective Action 101: Opt-In, Not Opt-Out

Section 216(b) of the FLSA lets employees sue on behalf of themselves and other “similarly situated” employeesbut only if those other employees opt in by filing written consent. The ADEA uses the same mechanism. That opt-in design makes notice central: without it, most potential plaintiffs never learn the lawsuit exists; with it, the case can balloon.

The Supreme Court has said district courts may facilitate notice so workers can make informed decisions, but it did not spell out the standard or timing for deciding who should get notice. That gap is why federal courts created different frameworksand why the Seventh Circuit stepped in.

The Old Default: Lusardi’s Two-Step “Conditional Certification” Routine

Most district courts historically followed a two-step approach traced to Lusardi v. Xerox Corp.:

• Step 1 (notice stage): plaintiffs sought “conditional certification” and notice with a “modest factual showing” of similarityoften with little weighing of defense evidence.
• Step 2 (after discovery): employers moved to “decertify,” arguing the opt-ins weren’t actually similarly situated.

Critics argued the first step was too lenient and too hard to rebut. Once notice issued, the case expanded, costs rose, and settlement pressure intensifiedsometimes before the court ever decided whether the group belonged together.

The Seventh Circuit’s Rewrite: Richards v. Eli Lilly and the “Material Factual Dispute” Test

On August 5, 2025, the Seventh Circuit issued Richards v. Eli Lilly & Co. and announced a “uniform, workable framework” for notice in FLSA and ADEA collective actions. The court held that district courts must consider both parties’ evidence and may issue notice when the named plaintiff raises at least a material factual dispute as to whether the proposed collective is similarly situated.

What does the plaintiff have to show?

The plaintiff must produce some evidence suggesting the named plaintiff and the proposed opt-ins were victims of a common unlawful employment practice or policy. The evidence “need not be definitive,” but defendants must be allowed to submit rebuttal evidence. Courts then decide whether competing evidence creates a material factual disputeoften through affidavits and counter-affidavits.

Why not Lusardi? Why not go even stricter?

The Seventh Circuit criticized the Lusardi “modest” approach as overly permissive and inconsistent with judicial neutrality, because it can pressure settlement and invite notice to people who ultimately can’t or shouldn’t join. At the same time, the court rejected adopting the Fifth Circuit’s preponderance-style approach from Swales and the Sixth Circuit’s “strong likelihood” standard from Clark, reasoning that higher burdens can be unworkable when key evidence is held by workers who are not yet parties.

Flexibility is the point

Notice is not automatic even if the plaintiff clears the “material dispute” threshold. District courts still exercise discretion to balance timely, accurate notice with neutrality. And if evidence needed to resolve similarity is likely in the hands of not-yet-noticed plaintiffs, the court may still use a two-step approachissue notice now, decide similarity more finally later.

A Judge’s Menu Under Richards: More Than “Yes” or “No”

One underrated part of the decision is the options it gives district courts. Richards doesn’t require judges to pick a single rigid process. Instead, once the parties tee up the similarity dispute, courts can choose what makes sense for the case’s posture:

• Order limited, targeted pre-notice discovery on the issues that actually matter to similarity (think: job duties, timekeeping settings, pay practices), rather than opening discovery floodgates.
• Narrow the proposed collective definition to align with the evidence (role, location, time period, policy).
• Deny notice without prejudice if the plaintiff’s evidence is too thin for now, but leave the door open if stronger proof emerges.
• Issue notice if the record shows a genuine, material dispute about similarity and notice can be sent in a neutral, accurate way.

That flexibility matters because “similarly situated” disputes aren’t all built the same. Some are resolvable early from employer records; others require hearing from the workers themselvespeople who can’t speak in the litigation until they’re given notice and opt in. Richards tries to balance those realities without turning every case into a full-blown merits trial before notice.

The Three Guardrails: Hoffmann-La Roche’s Core Principles

Richards grounds its framework in the Supreme Court’s Hoffmann-La Roche v. Sperling decision, emphasizing three guardrails for court involvement in notice:

1. Timely and accurate notice (late or confusing notice defeats enforcement).
2. Judicial neutrality (notice must not look like court-sponsored solicitation or an endorsement on the merits).
3. Discretion (district courts can tailor procedure to the case rather than follow a rigid script).

Practically, this means the judge’s role is case-managementnot sales. The notice should read like a neutral heads-up, not a “you may already be a winner” postcard.

How Richards Compares to Other Circuits

The Seventh Circuit now occupies a middle lane in a nationwide patchwork:

• Many courts: still use some version of Lusardi’s two-step, modest-showing approach.
• Fifth Circuit (Swales): pushes courts to resolve similarity issues before notice, effectively requiring heavier early proof.
• Sixth Circuit (Clark): requires a “strong likelihood” that the proposed group is similarly situated.
• Seventh Circuit (Richards): requires evidence creating a material factual dispute, allows rebuttal evidence, and gives judges flexibility to structure the process.

What This Changes in Real Life: Strategy Shifts at the Notice Stage

For employers

Expect earlier motion practice. Employers now have a clear opening to submit targeted rebuttal evidencejob descriptions, policy variations, declarations, and datashowing why the proposed group isn’t truly “similarly situated.” Done well, this can narrow the collective before notice goes out, reducing discovery cost and settlement leverage.

But don’t confuse “rebuttal” with “dump truck.” The most persuasive defense submissions tend to be focused on differences that matter to the alleged FLSA violation, not an everything-but-the-kitchen-sink pile of paper.

For plaintiffs

Bring receipts earlier. Plaintiffs should expect to show more than allegationsspecific facts tying workers together via common policies, centralized practices, uniform timekeeping rules, or a shared pay formula. A tighter collective definition can be an advantage, not a concession.

Prepare to meet rebuttal evidence head-on. Richards directs courts to consider the extent to which plaintiffs engage the employer’s opposing evidence, so ignoring it is a strategy only if your goal is to lose efficiently.

Concrete Examples: What “Similarly Situated” Looks Like After Richards

Off-the-clock work tied to a single timekeeping practice

Stronger collective: Workers submit affidavits describing the same auto-deduct lunch rule and the same manager practice of discouraging corrections. The alleged violation is linked to a common system and directive.

Likely narrowing: If evidence shows meaningful policy differences by department or a robust correction process that many employees used, a court may narrow the group or deny notice without prejudice.

Regular-rate overtime errors from a uniform bonus program

If nonexempt employees share the same nondiscretionary bonus formula but overtime calculations omitted it, similarity is easier to show because liability turns on the same payroll mechanics. If bonus criteria and discretion vary widely, similarity becomes harder.

Misclassification across multiple roles

Broad “assistant manager” collectives spanning many locations often struggle when duties and discretion differ materially. Under Richards, those differences can defeat a sweeping notice request unless plaintiffs can show truly uniform job realities.

Where the Supreme Court Landed (So Far): Cert Denied

Eli Lilly asked the U.S. Supreme Court to take the case and address the growing circuit split over collective-action notice standards. The Court denied certiorari on January 12, 2026, leaving Richards in place and the national split unresolved. For now, the “right” notice standard depends on where you file.

And the Court has also been fielding related fights about the scope of collective actionsespecially whether and when out-of-state opt-in plaintiffs can join when the employer isn’t “at home” in the forum. That broader debate is still evolving, which is lawyer-speak for “expect more motion practice, not less.”

Conclusion: Notice Is Now a Checkpoint, Not a Speed Bump

Richards v. Eli Lilly turns the notice stage into a genuine gatekeeping moment: plaintiffs must raise a material factual dispute about similarity, employers can rebut, and judges must weigh the evidence while staying neutral. If you’re operating in the Seventh Circuit, treat notice like an early merits-adjacent decisionand plan accordingly.

Field Notes: 5 Notice-Stage Lessons People Keep Learning the Hard Way (≈)

This section captures practical “repeat offenders” in notice-stage strategypatterns that show up across wage-and-hour litigation once courts start treating notice like a real decision point.

1) The best evidence is boring (and that’s a compliment)

Judges love unglamorous proof: written policies, standardized pay plans, timekeeping settings, onboarding materials, and payroll math. Under Richards, a theory built on “everyone everywhere did the same thing” is harder to sell without a common policy hook. But show a uniform systemlike an auto-deduct rule or a single bonus formulaand the case becomes less campfire story, more controllable litigation.

2) Overbroad collectives are like packing for a weekend trip… and bringing a couch

Huge collectives feel powerful until the employer responds with a catalog of meaningful differences: job titles, locations, supervisors, duties, pay plans, exemption analyses. When the standard is “material factual dispute,” those differences can become the entire battlefield. A narrower collective can improve credibility, simplify notice, and make the similarity question answerable without 200 mini-trials.

3) Declarations matter, but specificity is the secret sauce

Generic affidavits (“I worked overtime and didn’t get paid”) are like telling a doctor “I feel bad.” Useful, but not diagnostic. Strong declarations explain how the alleged violation worked: who instructed it, what the system did, how edits were handled, whether employees were discouraged from reporting time, and how consistent the practice was across a defined group.

4) Defendants should pick rebuttal evidence carefully (because too much can backfire)

Richards permits rebuttal evidence, but “everything, everywhere, all at once” can irritate courts and muddy the issues. Focus on differences that actually matter to liability: documented policy variations, a clear reporting mechanism for missed breaks, or proof that time corrections were common and straightforward. Targeted rebuttals look like credibility; overkill can look like obstruction.

5) Notice language is not your marketing emailkeep it neutral

Courts guarding neutrality will scrutinize notice drafts that sound like recruitment (“You may be owed thousands!”). The safest notices are plain-English and balanced: what the case alleges, what the court has not decided, what joining means, deadlines, and where to get independent advice. Think “informational bulletin,” not “limited-time offer.”

Bottom line: the Seventh Circuit’s approach rewards preparation and punishes sloppiness. The notice stage is now less “open the floodgates” and more “pass airport security.” Bring your evidence. Pack light. And please remove your shoesmetaphorically speaking.