Collective Action (FLSA Opt-In)

A mechanism under the FLSA allowing similarly situated employees to join a lawsuit by affirmatively opting in, as opposed to the opt-out structure of Rule 23 class actions. The opt-in structure typically produces smaller class sizes than Rule 23 actions, which directly affects aggregate damages and the funding economics. Funders assess the opt-in rate projections and how certification strategy will shape the recoverable pool.

Because opt-in participation rates are historically far lower than the size of the eligible pool, funders discount projected collective size heavily relative to the total notice list — a collective that could theoretically reach thousands of employees often nets a much smaller funded claimant pool once opt-in behavior is accounted for. Funders track certification counsel's historical opt-in rates on comparable matters as a leading indicator of how a given collective will actually convert.