What Is the Difference Between Opting In and Opting Out of a Class Action Lawsuit?

Class action lawsuits offer a powerful option for groups of individuals to collectively pursue legal action against a defendant, usually a large corporation or institution. 

When a product, service, or company harms many people in a similar way, a class action allows those individuals (called "class members") to band together in a single legal case rather than filing separate lawsuits.

But not every potential class member has to—or should—participate. Depending on the type of class action, you may be required to take affirmative steps to “opt in” or, alternatively, you may automatically be included unless you “opt out.”

This distinction between opting in and opting out is one of the most important decisions you may face in connection with a class action. It can affect your legal rights, your potential compensation, and your ability to file an individual lawsuit. 

If you’re unsure if a class action lawsuit is right for you, you can contact Morgan & Morgan, America’s largest personal injury law firm, to learn more about your options with a free case evaluation.

Class Actions: The Basics

Before diving into the opt-in vs. opt-out discussion, it’s helpful to understand how class action lawsuits work.

In a class action, one or more individuals (the "lead plaintiffs" or "class representatives") file a lawsuit on behalf of a larger group of people who have experienced similar harm. This group becomes the "class."

Class actions are often used in cases involving:

• Defective products
• Consumer fraud
• Securities violations
• Employment discrimination or wage theft
• Data breaches
• Environmental harm

Once a class is certified by the court, other individuals who qualify as members of the class are notified, either directly or via public notice. That’s where opting in and opting out come into play.

Opting Out: You’re Automatically Included Unless You Say No

In most consumer class actions in the United States, potential class members are automatically included unless they affirmatively opt out of the lawsuit. This means that if you meet the eligibility criteria and do nothing, you're considered part of the class.

What It Means to Opt Out

Opting out means you are choosing not to participate in the class action lawsuit. You’re telling the court, “I don’t want to be a part of this class.”

You might choose to opt out if:

• You want to retain your right to sue individually for a potentially larger award.
• You believe the class settlement is too small or unfair.
• You have suffered more severe or unique harm than the average class member.
• You want more control over your legal strategy.

By opting out, you preserve your right to bring your own lawsuit against the defendant. But you also give up your right to any compensation that may come from the class action settlement or judgment.

How to Opt Out

To opt out, you generally must submit a written request by a specific deadline. The notice you receive will include instructions on how to do this. If you miss the deadline, you’re usually locked into the class and can’t sue separately later.

Opting In: You Must Take Action to Join

In some cases, such as wage and hour disputes under the Fair Labor Standards Act (FLSA), class members must affirmatively opt in to the lawsuit in order to be included. That means if you do nothing, you are not part of the lawsuit and are not eligible for any compensation from it.

What It Means to Opt In

Opting in means you are taking active steps to participate in the class action. This may involve filling out and signing a consent form or joining a lawsuit already filed by other plaintiffs.

This opt-in model is more common in collective actions (a related but slightly different mechanism from class actions), such as in cases involving:

• Unpaid wages
• Misclassification of employees
• Overtime violations

If you don't opt in, you retain the right to file your own lawsuit, but you won’t benefit from any collective settlement or ruling.

How to Opt In

If a lawsuit is filed as a collective action, potential plaintiffs are typically sent a notice explaining:

• The nature of the lawsuit
• Who is eligible to join
• How to opt in
• The deadline for doing so

Failing to respond by the deadline usually means you won’t be able to benefit from any recovery.

Opt-In vs. Opt-Out: Key Differences Explained

The key distinction between opt-in and opt-out procedures lies in the default status and what you must do to either join or leave the case.

In opt-out class actions, you are automatically included unless you take action to remove yourself. These are most commonly used in consumer-related claims, securities violations, and defective product cases. If you do nothing, you are part of the lawsuit and will receive any settlement or judgment awarded to the class, though that may mean giving up your right to sue individually.

In contrast, opt-in actions require affirmative action from you to participate. These are more commonly seen in employment-related cases governed by federal labor laws, particularly the FLSA. You are not part of the lawsuit unless you explicitly join, and you won’t receive compensation from the collective settlement if you don’t opt in.

Another major difference lies in the legal rights you retain. In an opt-out case, failing to opt out usually waives your right to file an individual lawsuit later. In an opt-in case, doing nothing preserves your individual legal rights, but you forfeit the opportunity to share in any group recovery.

The notification process also differs slightly. In opt-out cases, the notice will advise you that you're included and explain how to opt out if you choose. In opt-in cases, the notice serves as an invitation to join and outlines how to opt in before the deadline.

Finally, the legal strategy and participation level vary. Staying in a class action means giving up some control over how the case is litigated. Opting out allows you to pursue your own case with a lawyer of your choosing. Similarly, opting in means aligning yourself with the group’s effort, while remaining outside allows you to pursue your own path.

Why the Distinction Matters

The difference between opting in and opting out isn’t just procedural—it’s strategic and personal. Your choice can determine:

• Whether you receive compensation
• How much compensation you might receive
• Whether you can sue separately for additional damages
• Your involvement in litigation decisions
   

Here’s why it matters:

1. Timing and Control

If you opt out of a class action, you control your own case timeline. You and your attorney decide whether to settle, go to trial, or appeal. In a class action, you’re bound by the lead plaintiff’s decisions and the court’s rulings.

2. Potential Compensation

In a class action with thousands (or even millions) of members, the final payout per person can be small. Opting out may be worth it if your individual damages are large and distinguishable.

On the flip side, opting in to a smaller collective action can help ensure your claim is part of a more focused, worker-led effort that gets real results.

3. Legal Costs

If you’re part of a class, the attorneys’ fees come out of the total recovery and are approved by the court. If you file your own lawsuit after opting out, you’ll likely need to hire an attorney on a contingency-fee basis or pay up front.

4. Risk Tolerance

Class actions tend to settle, like when the evidence of wrongdoing is strong and the class is large. Individual lawsuits can lead to larger verdicts, but they also carry greater risk and a longer timeline.

How to Decide: Should You Opt In or Opt Out?

Every case is different, and the right choice depends on your circumstances. Here are key questions to ask:

Do I have unique damages or a stronger case?

If you’ve suffered injuries or losses far more severe than the average class member, it may be worth opting out and filing your own claim.

Am I satisfied with the class settlement?

If the proposed class settlement feels inadequate, you may choose to opt out and pursue a better result on your own.

Do I want to avoid legal involvement?

If you prefer not to be involved in legal proceedings at all, you might remain in a class action and accept whatever settlement is reached, or do nothing in an opt-in case and stay out entirely.

Is this my only chance to recover compensation?

Failing to opt in to an FLSA case or forgetting to opt out of a consumer class action could limit or eliminate your ability to recover damages in the future.

How Morgan & Morgan Can Help

The decision to opt in or opt out of a class action lawsuit isn’t just a formality—it can significantly impact your legal rights and financial recovery.

In most consumer class actions, you’re automatically included unless you opt out. In most employment-related collective actions, you must take action to opt in.

Before making your decision, it’s important to understand the type of case, the size of the settlement, your individual circumstances, and your legal goals.

At Morgan & Morgan, we’ve represented thousands of people in both class and individual lawsuits. Our attorneys can help you understand whether you’re eligible for a class action, what your rights are, and whether you should opt in or opt out

With more than 35 years of experience and over $25 billion recovered for our clients, we’re uniquely positioned to guide you through the complexities of class actions. And we never charge by the hour; we work on a contingency-fee basis, which means you don’t pay us unless we win for you.

If you’re unsure what to do, don’t make a rushed decision on your own. Contact Morgan & Morgan today for a free, no-obligation case evaluation. We can help you make the best choice for your future.