Class actions and collective actions are both representative lawsuits in which a small number of individuals bring claims on behalf of not just themselves, but also similarly situated individuals who were also wronged by the defendant (often a company). While these two types of lawsuits are similar, there are some very important differences.
In a class action, the plaintiff sues claiming that the harm he or she experienced is not unique and that there are many others who also suffered that same harm. If the court agrees, notice of the class action will then go out to the class of similarly situated class members advising them of their status as a class member in the class action. These members are by default included in the class, unless they take an affirmative step to opt out of the class.
In a collective action, which is a type of lawsuit provided by the federal employment law the Fair Labor Standards Act (“FLSA”), a representative plaintiff (or plaintiffs) similarly sues claiming that the harm he or she experienced is not unique and that there are many others who also suffered that same harm. Similarly, if the court agrees, notice of the collective action will then go out to the “putative” collective members advising them of the lawsuit. The big difference in a collective action, however, is that putative collective members only become part of the collective action when they send in paperwork to join the collective action lawsuit. Without doing so, putative collective members are not bound by any judgment, but also cannot collect any proceeds from a settlement or judgment.
Due to these procedural differences, there are different levels of judicial scrutiny. In a class action settlement, all class members who do not affirmatively opt out of the class are bound by the settlement – meaning they waive their right to bring an individual claim for the claims covered by the settlement unless they opt out. Because of the fact that individuals who have taken no action will have their claims potentially compromised by a settlement, courts usually a two-step settlement approval process (preliminary approval and final approval) to ensure the settlement is fair and reasonable to class members.
Collective action settlements typically do not have these same procedural concerns because those who do not submit opt-in forms to participate in the settlement do not waive their individual rights to bring claims covered by the settlement. Therefore, courts typically only require a one-step approval process in collective action to ensure that the settlement is fair and reasonable. As such, collective action settlements are typically approved much faster than class action settlements.
The attorneys at PKG are experienced in litigating and settling both class and collective action settlement. In total, the attorneys at PKG have represented the interests of tens of thousands of putative employees and consumers.