Kentucky Class and Collective Action Update

By Jay Inman

Most HR professionals have some sense of the potential impact of class and collective actions, whether from personal experience, networking with HR colleagues, or popular media. However, these specialized proceedings rarely appear in HR trainings, so many questions remain. This article provides an overview of how these proceedings really matter for HR professionals, with an emphasis on Kentucky updates. 

Defining Class and Collective Actions

To begin, let’s define these proceedings in basic terms, noting some important differences. For HR professionals, the goal is to understand the proceedings generally, with enough knowledge to be ready if your employer faces such proceedings. 

You may encounter class actions under federal or state law and across a range of subject areas, from discrimination and wage and hour claims, to product liability claims, and more. Class actions enable groups of individuals to join together and bring legal claims as a group, if they have enough commonality in their interests and injuries. Typically, several individuals will be the “named plaintiffs,” meaning that they will actually be named in the caption of the lawsuit, and they will seek to represent a class of other individuals, who fit a specific definition, but will not be named in the caption. The named plaintiffs seek to compile enough evidence to ask the court to “certify” their class, which means that the court agrees they have met all the various tests and they may proceed to represent the class. For class actions, certification is often hotly contested, and even if a class is certified, the defendant/s may still seek later to modify or decertify the class based on additional evidence. If the court grants certification, all individuals who fit the definition proposed automatically become members of the class, unless they choose to opt out. 

In contrast, you will encounter collective actions for a smaller subset of claims, these brought under the Fair Labor Standards Act (FLSA). While collective actions also enable groups of individuals to team up and pursue claims with sufficient commonality, important distinctions exist. In terms of mechanics, collective actions require everyone who seeks to be part of the lawsuit to “opt in” – that is, fill out a specific form consenting to join the lawsuit – rather than automatically be part of the group. Additionally, for collective actions, often there is a “conditional certification” process earlier in the case, where certification is simpler for the named plaintiff/s to achieve because less evidence must be shown. Similar to class actions, defendants often move to modify and/or decertify the collective based on additional evidence. 

Class and Collective Actions and HR Professionals

Class and collective actions should matter a great deal to HR professionals because such proceedings often bring high-stakes financial implications that can put HR decisions, such as payroll classifications, to the ultimate test. Moreover, if your employer faces a class and/or collective action, you will almost certainly be asked to play a significant and challenging role pulling information and documents at a large scale to assist in defense of the action. 

Any HR professional who has experienced the stress of a lawsuit against their employer relating in some way to HR practice understands that, when the sun shines brightly on their decisions, the sun will illuminate the good, the bad, and the ugly – hopefully little of the latter two, but sometimes mistakes happen amidst the best intentions. Now imagine the claims at issue concern 100 or even 1,000 employees. If a single-plaintiff lawsuit puts $100,000 at issue, simple multiplication makes the potential exposure climb to $10,000,000 for 100 employees and $100,000,000 for 1,000 employees. And imagine the key issue turns on whether you properly determined when employees should receive overtime over the course of several years. The end result becomes potential bet-the-company litigation over a single determination you made, individually or as a team, in HR. Even when the litigation does not involve an HR decision, however, such as a product liability matter, you will likely remain in the center of the action because you know who remains an employee, how to contact everyone, what personnel files contain, and more. Because HR professionals sit at the center of so many important personnel determinations, this is part of the contemporary HR leadership job, and professionals will need to be active participants in the litigation defense, plus take care of themselves when under heavy stress. 

In any class and/or collective action matter, HR professionals will need to be flexible, nimble, and responsive in providing information and/or documents to the defense team and participating with the team, as needed. To give a practical example, one of the most common varieties of class and collection action lawsuits in Kentucky right now involves pizza delivery drivers suing pizza franchises for alleged failure to pay overtime properly premised all or in part on alleged mandatory off-the-clock work. As a result of these allegations, already busy and multitasking HR professionals add to their schedules a need to pull records of all drivers’ actual hours during their various shifts for several years (up to three under FLSA, up to five under the Kentucky Wage and Hour Act). The records may be incomplete, or they may not show everything that either the plaintiffs’ team or the defense team, or both, need to make calculations. Imagine if the drivers also allege they were denied meal and rest breaks as a pattern and practice of employment, and the HR professionals needed to pull any records they had of compliance with those requirements. For the franchise-employer, important evidence might be located, such as all drivers’ signed timecards verifying their reported hours to be true and correct. The evidence might be unfortunate instead, documenting problems just as alleged by the drivers. If you imagine how such claims might apply to your workplace (whether true or not) and the legwork you would need to do, you see how class and collective actions quickly become a major part of day-to-day HR affairs during their pendency. 

Class and Collective Actions in Kentucky

In the past decade, Kentucky has been increasingly targeted by plaintiffs’ law firms across the nation for class and collective actions. It is often the case that a national plaintiffs’ firm specializing in such proceedings will partner with a local Kentucky plaintiffs’ attorney to bring the large-scale claims, utilizing the national firm’s resources and staffing and the local attorney’s boots-on-the-ground familiarity with Kentucky law and jurisdictions. As a result, HR professionals should understand that there is a real possibility that they may face class and/or collective actions in the days, months, and years to come. 

To share some specifics, in 2021, in Kentucky federal courts, plaintiffs filed 29 lawsuits under FLSA alone, and of those, 15 included class and/or collective action claims. Another nine were filed against the same entity, with curious labeling of each plaintiff as bringing claims “individually,” which suggests there to have been a class and collective action waiver barring litigation as a group. If we include those nine as originally intended to be brought together, then the numbers show 24 out of 29 lawsuits under FLSA in Kentucky in 2021 involved intended class and/or collective action allegations. Broadening the search beyond FLSA would yield many more class and/or collective actions in the federal courts, for instance in common areas such as ERISA and discrimination. Additionally, Kentucky state court has seen numerous class and/or collective actions against employers as well, further building the frequency and breadth of who may encounter such proceedings. 

Whether located in Kentucky, or just supporting a business that operates partly in Kentucky, HR professionals must continue to be aware of the lengthy statutes of limitation that may apply and retain records carefully. Both the Kentucky Wage and Hour Act and the Kentucky Civil Rights Act have five-year statutes of limitations, for example. If a reviewing court determines a contractual right to be at issue, the necessary retention period could be significantly longer, as the statute of limitations for contract claims in Kentucky is 10 years (for contracts executed after July 15, 2014). Regarding decisions like these, HR professionals should remain in close touch with their employer’s legal counsel of choice. 

Finally, HR professionals may have read about an important decision issued by the Fifth Circuit Court of Appeals in Texas regarding collective action procedure, providing for more discovery in advance of any conditional certification decision and a tougher standard for such certification. To date, after several decisions, Kentucky federal courts have declined to make the change and instead have continued the prior mechanics, with the less-burdensome standard for conditional certification. This will remain an issue to watch, as courts across the nation, including in Kentucky, wrestle with whether and, if so, how to adopt the Fifth Circuit’s sea change in procedure. 

Class and collective actions should matter significantly to HR professionals. While we always hope for the best and realize that some professionals will go their whole careers without being impacted by such proceedings, reality increasingly shows many HR professionals will not be so fortunate. Being aware and ready will position you well for the future.