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FLSA Retaliation Lands Employer in Hot Water

November 18, 2019
A recent Massachusetts court case illustrates the importance of the anti-retaliation provision of the federal Fair Labor Standards Act (FLSA). The case highlights the fact that employers face the same risk of a retaliation charge under the FLSA as they do under anti-discrimination laws. 
A former employee who had been a plaintiff in a wage-and-hour lawsuit against the company and subsequently terminated for another reason sued his former employer alleging that the termination was retaliatory because of the employee’s prior involvement in the FLSA litigation.
FLSA fact sheet 77A discusses what constitutes retaliation under the FLSA. Section 15(a)(3) of the FLSA states that it is a violation for any person to “discharge or in any other 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 Act, or has testified, or is about to testify in any such proceeding, or has served or is about to serve on an industry committee.”
Employees are protected regardless of whether the complaint is made orally or in writing. Complaints made to the federal Wage-and-Hour Division are protected, and most courts have ruled that internal complaints to an employer are also protected
Employer’s argument
The employer argued that that the case should be dismissed through summary judgment because there was no dispute about the reason for the termination. The case should not go to trial, the employer contended, because there was no dispute to resolve.
The employer said it had a valid independent reason, unrelated to the FLSA litigation, for terminating the employee.
The court reviewed both the FLSA lawsuit in which the employee was a named (lead) plaintiff, and the disciplinary matter the company had investigated by an outside law firm and concluded that the employee had in fact violated company policy.
One of the most salient issues for the court was the fact that the lawsuit was settled at almost the exact same time (within a few months) that the complaint was filed against the employee for violating company policy. The records also showed that some of the people who knew about the lawsuit settlement were also involved in the decision to terminate the employee based on the employee’s performance. 
Because of the close timeframe and the overlapping knowledge of some managers of the company, the court determined that there was the potential for retaliation that could not be resolved by summary judgment.
The court noted: “A showing of adverse action soon after an employee engages in protected activity is evidence that there is a causal connection between the adverse action and the protected activity.” 
Final thoughts
This case is challenging because it leaves the employer on the horns of a dilemma. There is no doubt in this case that the employee violated company policy. There is also no doubt that the FLSA protects employees against retaliatory action by employer.
So, the employer needs to figure out how to protect itself procedurally from a retaliation challenge while still being able to take appropriate disciplinary action when called for.
Here are some lessons:
  • The employer should have taken steps to ensure that the people investigating or overseeing the investigation done by an outside party of the employee’s inappropriate action were unaware of or unassociated with the managers who were aware of the employee’s role in the FLSA litigation.
  • In a smaller company that may not have enough managers to divide the responsibilities, the employer will either have to live with the risk that they may be sued for the FLSA or consider discipline less than termination for the other violation.
  • The employer should tell the outside law firm of the other legal matter (in this case the FLSA lawsuit) as it may be able to provide advice on how to handle the disciplinary issue more effectively.
AIM members with questions about this or any other HR-related issue may call the AIM Employer Hotline at 1-800-470-6277.
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