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.