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In the Wake of Kasten, Fourth Circuit Declares Intra-Company Complaints are Protected FLSA Activity
February 27, 2012
The anti-retaliation provision in Section 215(a)(3) of the Fair Labor Standards Act (“FLSA”) makes it unlawful for an employer to “discharge or in any manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or is about to testify in any such proceeding.” On March 22, 2011, the Supreme Court of the United States decided Kasten v. Saint-Gobain Performance Plastics Corp., 131 S. Ct. 1325 (2011), and continued its expansion of employee protections for workplace conduct, holding that Section 215(a)(3) of the FLSA bars retaliation based on oral as well as written complaints. In January 2012, the Fourth Circuit applied the reasoning from Kasten to broaden the scope of protected activity under the FLSA to include intra-company complaints. 

In Kasten, Kasten initiated an anti-retaliation suit under the FLSA against his former employer Saint-Gobain, claiming that he was fired because he had orally complained to company officials about their placement of time clocks in a location that prevented workers from receiving credit for the time they spent putting on and removing their work-related protective gear. The district court granted summary judgment in favor of Saint-Globain, concluding that Section 215(a)(3) of the FLSA did not cover oral complaints, and the Seventh Circuit affirmed the ruling.

In reversing the Seventh Circuit, the Supreme Court resolved a circuit split and held that oral complaints fall within the anti-retaliation provision of the FLSA provided the “complaint [is] sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection.” Kasten, 131 S. Ct. at 1335. Specifically, the Supreme Court concluded that it could not rely exclusively on the phrase “filed any complaint” from the statutory language, and observed that to hold otherwise would undermine the basic objectives of the FLSA and hinder those needing to enforce its provisions. Kasten has been interpreted to imply that the phrase “filed any complaint” includes intra-company complaints to an employer, based on its analysis that covered complaints are those sufficiently detailed for a “reasonable employer to understand.” However, the majority declined to address whether the anti-retaliation provision of the FLSA applies only to complaints filed with a court or government agency, leaving a circuit split on the issue.

The Fourth Circuit recently answered this question to say that it does. In Minor v. Bostwick Laboratories, Inc., Case No. 10-1258, 2012 U.S. App. LEXIS 1493 (4th Cir. January 27, 2012), Minor worked as a medical technologist for Bostwick Laboratories. Minor claimed that her employment was terminated after she met with the chief operating officer for Bostwick Laboratories to report that her supervisor was altering timesheets to remove overtime hours. Minor then sued Bostwick Laboratories for retaliation under the FLSA, among other claims.

Bostwick Laboratories moved to dismiss the complaint on the basis that an informal intra-company complaint regarding a potential FLSA violation is not protected activity. The district court agreed, and Minor appealed the dismissal of her FLSA retaliation claim. The sole question presented by the appeal, and the issue of first impression for the Fourth Circuit, was whether the complaint that Minor lodged within her company (as opposed to one filed with a court or government agency) could trigger the anti-retaliation protection of the FLSA. Joining the First, Third, Sixth, Seventh, Eighth, Ninth, Tenth and Eleventh Circuits, the Fourth Circuit reversed the dismissal, holding that the phrase “filed any complaint” includes internal company complaints. In finding the Kasten reasoning applicable to its analysis (though not controlling given the outcome of Kasten), the Fourth Circuit reasoned that protecting intra-company complaints was consistent with the curative purposes of the FLSA.

The FLSA covers overtime, minimum wage, child labor, equal pay and recordkeeping related to these issues. Accordingly, employee complaints related to any of these issues fall within the purview of the FLSA. As a result of Kasten and Minor, the law now makes clear that verbal complaints about these issues are just as important to investigate and resolve as written complaints, and internal company complaints trigger the anti-retaliatory protections of the FLSA. There are serious penalties for employers that punish employees for making such complaints. Retaliatory acts against an employee include not only termination and demotion, but also the denial of a raise, the transfer to a less desirable position, and other negative employment actions.

If an employee approaches an employer with an FLSA issue, or if an employee complains generally, an employer should take immediate action. First, the employer should plan the investigation by identifying any participants in the alleged conduct, gathering any materials that document or form the basis of the complaint, and thinking about what additional information will be needed to investigate the problem. The representatives conducting the investigation should then interview anyone with information about the alleged conduct. After the interviews are complete, the employer should evaluate the evidence to determine what actually happened and whether the complaint is valid. Whether or not the complaint warrants remedial action, the employer should keep the employee who complained in the loop and make them aware of the steps taken to solve the problem. The employer should also prepare an investigation report that documents the steps taken to investigate and remedy the complaint. After the investigation is complete, and regardless of the outcome, the employer should refrain from taking any negative employment action whatsoever against the employee who complained based on the complaint that was made.    

None of this means that an employer should not discharge, demote or otherwise discipline an employee where warranted even if the employee has made a complaint; employers still have to run their business. It only counsels that employers need to be careful when disciplining an employee who has made even an informal complaint to make sure that: 1) the original complaint was investigated and 2) the reason for the discipline is well-documented.
Labor & Employment Law