On August 5, 2025, in Richards v. Eli Lilly & Co., No. 24-2574, 2025 WL 2218500 (7th Cir. Aug. 5, 2025), the United States Court of Appeals for the Seventh Circuit abandoned the “modest showing” approach to notice for proposed collective actions under the Fair Labor Standards Act. The Court embraced a more flexible and fact-specific framework that enables defendant-employers facing proposed collective actions the chance to litigate whether the collective is “similarly situated” prior to notice being issued.
Here, Monica Richards applied for a promotion to become a district sales manager with Eli Lilly & Co. Richards was given the role on an interim basis for six months, before she allegedly was passed over for a “much younger employee with less sales experience.” Richards sued Eli Lilly and Lilly USA, LLC, and brought claims under the Age Discrimination in Employment Act and the Massachusetts Anti-Discrimination Law. Richards alleged that her experience was part of a pattern of age discrimination against older employees at Eli Lilly and moved to propose a collective action.
The district court applied the traditional test established in Lusardi v. Xerox Corp., 118 F.R.D. 351, 361 (D.N.J. 1987), which provides that a plaintiff seeking notice to a proposed collective must “make a modest factual showing sufficient to demonstrate that they and potential plaintiffs together were victims of a common policy or plan that violated the law.” Under that standard, a plaintiff’s burden is minimal, and historically, courts have declined to “weigh evidence” or “consider opposing evidence presented by a defendant.” Once a plaintiff makes this showing, then, under Lusardi¸ “the court issues notice to prospective plaintiffs, who may then opt in to the collective action.” Only after the opt-in is complete do defendants have the opportunity to challenge whether the collective is similarly situated. The Richards district court therefore declined to consider defendants’ evidence regarding the dissimilarity of the proposed collective.
Over the past few years, however, federal courts across the country have rejected the Lusardi test. In 2021, the United States Court of Appeals for the Fifth Circuit held that notice may be issued only if, at the outset, plaintiffs can demonstrate that the notice recipients are similarly situated. See Swales v. KLLM Transp. Servs., LLC, 985 F.3d 430, 434 (5th Cir. 2021). In 2023, the Sixth Circuit held that notice may be issued only where plaintiffs can demonstrate a “strong likelihood” that the proposed collective is similarly situated. See Clark v. A&L Homecare & Training Ctr., LLC, 68 F.4th 1003, 1011 (6th Cir. 2023).
The district court certified an interlocutory appeal after Eli Lilly issued the notice. The Seventh Circuit held that “to secure notice, a plaintiff must first make a threshold showing that there is a material factual dispute as to whether the proposed collective is similarly situated.” “[A] plaintiff must produce some evidence suggesting that they and the members of the proposed collective are victims of a common unlawful employment practice or policy. A plaintiff’s evidence of similarity need not be definitive, but defendants must be permitted to submit rebuttal evidence and, in assessing whether a material dispute exists, courts must consider the extent to which plaintiffs engage with opposing evidence.” If a plaintiff establishes the existence of a material dispute as to similarity, then “the decision to issue [opt-in] notice will depend on [the district court’s] assessment of the factual dispute before it.”
The Court reasoned that “a lower standard would permit notice based on little more than allegations,” while a higher standard would leave plaintiffs “unable to make the required showing without access to evidence held by individuals who are not yet parties to the case.” The Court also reasoned that this is more flexible than the Lusardi test and empowers district courts to tailor their approach to notice issuance based on the facts before it.
The Court concluded by cautioning district courts to ensure that pre-notice discovery remains narrowly tailored to the question of whether the prospective collective of employees is similarly situated and to avoid an early adjudication of the merits. That said, the 7th Circuit made clear that courts are not prohibited from considering merits issues altogether, as they may often overlap with factual issues about similarity.
This ruling will be helpful for employers facing proposed collective actions, as it raises the evidentiary threshold for plaintiffs seeking to certify a proposed collective. Additionally, under the old “modest showing” test, defendant-employers would not have had the opportunity to submit rebuttal evidence on whether the proposed collective is truly “similarly situated.” The embrace of a flexible test allows courts and parties to tailor the issuance of notice for a proposed collective to the individual facts and circumstances of the case.