Lawyer Article

Published courtesy of Thompson Publishing. The following article will appear in Thompson Publishing legal publications in March 2008. It is republished here with permission.

"[A]s a matter of business judgment there can be only one course open to management when an employee persists in giving it the finger." Liberty Mutual Ins. Co. v. NLRB, 592 F.2d 595, 6060 (1st Cir. 1979) (Aldrich, J., concurring).

This observation embodies a typical reaction to employee complaints, but the conventional wisdom it reflects is no longer legally wise. The law bristles with protections of so-called whistleblowers—those hardy souls who defy their employers by reporting perceived problems, internally or externally; legislatures are fond of conferring rights and remedies for those who might be targets for retaliation, and the judiciary may fill in the blanks. As a result, the Fourth Circuit's recent decision in Darveau v. Detecon Inc. (No. 06-2092, Jan. 31, 2008) should come as no surprise.

Darveau was no longer employed by Detecon when he filed an action seeking unpaid overtime compensation under the Fair Labor Standards Act. Almost immediately thereafter, Detecon sued Darveau in state court alleging he had committed fraud by failure to reveal that a sales contract on which he had received bonus credit had, in fact, been terminated. Not to be outdone, Darveau amended his FLSA complaint by adding a retaliation count.

Since Section 15(a)(3) of the FLSA makes it unlawful to retaliate against an "employee," Detecon contended that its suit against Darveau, who was no longer on the company payroll, could not be deemed retaliatory. The trial court dismissed the retaliation claim, but the Fourth Circuit accepted that position and reversed, saying that Detecon's argument was “surprising” in light of Burlington Northern & Santa Fe Ry. Co. v. White, 548 U.S. 53, 126 S.Ct. 2405, 165 L.Ed.2d 345 (2006), which had rejected the same argument in the context of Title VII of the Civil Rights Act of 1964. The Fourth Circuit held that Title VII precedents are "authoritative" when construing other comparable federal statutes, and that the FLSA is "comparable" in that regard:

[W]e find no significant differences in either the language or intent of the two statutes regarding the type of adverse action their retaliation provisions prohibit. The FLSA and Title VII contain identical general definitions of "employee,"… Moreover, both statutes provide the same broad definition of a prohibited retaliatory act….

Although the two statutes seek to combat separate workplace problems, the purpose of their retaliation provisions is one and the same—namely, to secure their substantive protections "by preventing an employer from interfering (through retaliation) with an employee's efforts to secure or advance enforcement of the Act's basic guarantees."
(Darveau, slip op. at 11, quoting BNSF v. White, 548 U.S. at _____, 126 S.Ct. at 2412.)

Accordingly, the Fourth Circuit borrowed the Supreme Court’s White test: “[A] plaintiff asserting a retaliation claim under the FLSA need only allege that his employer retaliated against him by engaging in an action 'that would have been materially adverse to a reasonable employee' because the 'employer's actions…could well dissuade a reasonable worker from making or supporting a charge of discrimination.'" (Slip Op. at 12-13.)

In other words, retaliation doesn't just consist of material employment actions, such as discharge or denied promotion. In the wake of BNSF v. White, plaintiffs have alleged, and some courts have found, that retaliatory conduct may manifest itself in subtle ways, so long as they can reasonably be characterized as deterrents to employees’ efforts to seek legal protections for themselves or their colleagues. Filing a suit against the complainer, depriving him or her of work assignments, exile to a remote worksite, comments tending to demean or marginalize, negative evaluations, or any of a host of other actions or omissions which have no direct economic impact, all may be an invitation to litigation. Of course, an employer is given latitude to manage its workforce without judicial intervention, but the line between permissible supervision and unlawful retaliation can be fuzzy, and there is always the chance that a jury will disagree with the employer’s rationale or rationalizations. White has been cited in more than 1200 published or electronically-available decisions, although the opinion is less than two years old; the Supreme Court has granted certiorari in three retaliation cases for this term, and legal commentary on the subject is vast. And, by the way, Darveau also filed an age discrimination charge with the EEOC; it too contains a retaliation claim. (Darveau, Slip Op. at 13 n. 2.)

One further cautionary note: FLSA cases have no requirement of exhaustion of administrative remedies, so an employer needs to be particularly sensitive to employee complaints which implicate legal issues. Protection against retaliation needs no discrimination charge as a trigger; once the employer is on notice, the law steps in to shield the complainant. The employer may believe that the complaining employee is just "persisting in giving it the finger," but that perception may well need to be defended in court, with potentially expensive consequences. A well-trained management team and an active concern for fair treatment of dissenters go a long way toward the avoidance of your day(s) in court. (And just in case you are inclined to dismiss the comments as the ravings of a plaintiff's lawyer, sufficient to say that the author has been representing and advising employers exclusively for nearly 40 years.) Employers ignore these lessons at their peril.