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Hear No Evil: U.S. Supreme Court Protects Internal Oral Wage Complaints from Retaliation

Now more than ever, employers find themselves facing retaliation suits from their employees. 2010 marked the first year in the history of the Equal Employment Opportunity Commission (“EEOC”) that race discrimination claims were not the most prevalent category of alleged employment law violations. Instead, retaliation charges topped the EEOC’s list.

Federal law offers broad protection to employees against retaliation. Several federal statutes contain anti-retaliation provisions, including the Fair Labor Standards Act (“FLSA”), the Family and Medical Leave Act, the Labor Management Relations Act, the Age Discrimination in Employment Act, and Title VII of the Civil Rights Act of 1964. Furthermore, the U.S. Supreme Court has recently extended Title VII protection to “third-party” retaliation claims, i.e., those in which an employer allegedly retaliated against one employee because another engaged in protected activity. And in a recent decision, the U.S. Supreme Court continued to expand the borders of what constitutes protected conduct under the Fair Labor Standards Act’s anti-retaliation provision.

In Kasten v. Saint-Gobain Performance Plastics Corp., No. 09-834, the U.S. Supreme Court considered whether the FLSA’s anti-retaliation provision protected employees who made internal oral complaints to their employers regarding FLSA violations, or only those who filed written complaints. After a lengthy analysis of the term “filed”, the Court concluded that the FLSA protected employees who made internal oral complaints from retaliation by their employers.

The Court’s decisions bode ill for employers for a several reasons. First, by protecting employees who make internal oral complaints, it burdens employers with determining whether an employee comment is a complaint or just an employee blowing off steam. Second, the Court ruled that the FLSA protected internal oral complaints, not just complaints to government agencies. Third, and perhaps most importantly, it makes many more employment decisions “gray” – meaning that more cases will be litigable (and litigated) than before. This will be true whether employers are actually guilty of retaliation, or not. It is now even easier for employees to allege and prove retaliation.

As bad as this new precedent is for employers, it should not change ultimate decision making by employers in most cases. For instance, even before Kasten, few employers would have consciously decided to retaliate against an employee because the employee made internal oral complaints. Some employers might have done this, but in many cases they would face charges, guilty or not, just based on timing. For example, Joe gets fired three weeks after he files an internal oral complaint about perceived overtime violations. Regardless of whether the two events are related, or not, a charge has always been possible. Now a charge is much more likely.

What will change for employers, now, is their processes before ultimate decisions are made. There are some common sense steps employers can take to protect themselves from retaliation claims:

  • Be aware of the timing of ultimate employment decisions. Some courts say that timing alone will not prove an employee’s case, but bad timing will influence a court’s decision.
  • Document an employee’s performance reviews and disciplinary history. An employer with a legitimate, non-discriminatory reason for a decision has a powerful defense to a retaliation claim. Employers should make sure they have evidence of their reasons. This is a best management practice, anyway. These new cases just make it more important.
  • Be consistent. If an employer only disciplines an employee or criticizes his performance after he files an EEOC charge, or internally reports an FLSA violation, a retaliation claim is much more likely, whether there is a good reason for the change, or not.
  • Evaluate the decision before finalizing it. Employers should ask themselves whether they would make an employment decision even if the employee had not engaged in protected activity.

Train. Everyone knows that discrimination is illegal. Prior to making discipline decisions, almost everyone knows to vet whether the discipline subject engaged in any protected activity. If they engaged in protected activity, that doesn’t protect them from adverse action, but it should make employers double-check before pulling the trigger on any adverse action. Employers now need to be even more vigilant about making sure everyone is as alert to retaliation red-flags as they are to discrimination red-flags. After Kasten, internal oral complaints about wage and hour issues must now be considered red-flags.

FLSA’s Anti-Retaliation Provision Protects Oral, Not Just Written, Complaints

On March 22, 2011, in a highly anticipated decision, the Supreme Court held, in Kasten v. Saint-Gobain Performance Plastics Corp, No. 09-834, that the Fair Labor Standards Act, which establishes minimum wage, overtime pay, recordkeeping, and child labor standards, shields employees from retaliation for written as well as oral complaints regarding violations of the Act.  Prior to this decision, Circuit Courts had been split over whether oral complaints constituted protected activity.  While the Court’s ruling in this case paves the way for more retaliatory claims to be filed, it also provides a level of clarity to a previously unresolved area of the law.  Going forward, employers, as discussed below, must be keenly aware of all forms of wage and hour complaints made by employees and review their current policies to avoid liability. 

DEFINITION OF “FILING A COMPLAINT” CLARIFIED

The FLSA forbids employers “to discharge or in any other manner discriminate against any employee because such employee has filed any complaint . . .”  29. U.S.C. § 215(a)(3).  In Saint-Gobain, an employee alleged that he was fired because he orally complained to company officials about the company’s placement of timeclocks in a location that prevented employees from receiving credit for the time they spent putting on and taking off their work clothes, contrary to FLSA requirements.  The District Court concluded that the FLSA’s anti-retaliation provision does not cover oral complaints of a violation of the Act and granted Saint-Gobain summary judgment; the Seventh Circuit affirmed.

In a 6-2 decision, Justice Breyer, writing for the majority, acknowledged that the term “filed any complaint,” when read in isolation, is subject to competing interpretations.  However, the Court concluded that when the entire provision is considered in conjunction with its purpose and context, the only permissible conclusion is that “filed” is meant to be interpreted broadly so as to include oral, i.e., “any,” complaints.  Although filings may normally connote writing, the Court commented that statutes, court decisions, and common usage employ the word “file” to refer to oral statements and pointed to several federal administrative agencies that allow the filing of oral complaints.  Further, the Court observed that any contrary conclusion would undermine the FLSA’s basic objective of protecting workers.  After setting forth its holding that oral complaints are indeed protected, the Court stated that any complaint must still be “sufficiently clear and detailed” enough for a reasonable employer to understand it.

INTERNAL COMPLAINTS VERSUS GOVERNMENT COMPLAINTS

Leaving the door slightly ajar for some confusion, the majority in Saint-Gobain declined to explicitly rule that the FLSA grants protection for complaints made to employers in addition to complaints made to the government.  That issue was remanded back to the lower court on the grounds that the company failed to raise it in a timely manner.  The opinion, though, suggests that the majority believes that the FLSA does protect internal complaints given the reasoning it used to define “filing” broadly – protection of employees – and because it noted that limiting the definition strictly to written complaints would discourage informal workplace grievance procedures.

Justice Scalia, author of the dissenting opinion (which was joined by Justice Thomas), wrote, on the other hand, that the FLSA does not cover complaints to employers at all, only those filed with a court or agency.

PRACTICAL CONSEQUENCES  FOR EMPLOYERS

The lesson for employers to take from the Saint-Gobain ruling is apparent: if an employee makes a complaint regarding a violation of the FLSA, a careful employer will treat it as protected.  The decision, moreover, underscores the importance of training managers properly, putting in place policies that appropriately handle FLSA complaints, and, generally, being in compliance with the FLSA.   A safe course of action would be to internally set up a formal system to investigate and review all FLSA complaints.  Additionally, an employer should determine whether any action taken by an employee is potentially protected by the FLSA before meting out related discipline.