Friday, February 01, 2008, 11:30 AM

Fourth Circuit Rolls Out Yet Another FLSA Case, This One Favoring Employees Alleging Retaliation

Yesterday in Darveau v. Detecon, Inc. the Fourth Circuit issued another FLSA decision, this one addressing whether a former employee can assert against his former employer a "retaliation" claim under the FLSA, even though the allegedly retaliatory act (a lawsuit against the employee) occurred after his employment terminated, and thus had no materially adverse effect on his employment (e.g., hiring, discharage, promotion, or compensation).

This federal case began as a FLSA case for unpaid overtime compensation brought by a former employee whose position had been eliminated. After he filed the FLSA suit, the employer filed a state court lawsuit against him for fraud. So he amended his federal complaint to charge that the employer's lawsuit constituted retaliation under the FLSA. See 29 U.S.C. 215(a)(3). The district court dismissed the retaliation claim and then granted summary judgment to the employer on the overtime compensation claim, holding that plaintiff was exempt from the FLSA's overtime provisions as an administrative employee.

The Fourth Circuit first upheld that summary judgment ruling, concluding, as a matter of law, that plaintiff had no FLSA claim because, given the range of his former employment duties, he fell within the administrative exemption.

The Court then addressed his retaliation claim. The Court first held that the retaliation claim wasn't foreclosed by the Court's holding that plaintiff was not protected by the FLSA (since he fell within the administrative exemption). Because he had a colorable (though unavailing) argument that he was entitled to overtime compensation under the FLSA, he had standing to raise the retaliation claim under the FLSA, the Court concluded.

The Court next addressed the employer's principal argument: that a retaliation claim under the FLSA can't lie unless the employee suffered an adverse employment action (relating to hiring, leave, discharge, promotion, or compensation). The district court had held that, because plaintiff's employment had terminated months before he filed the FLSA suit and the employer filed its lawsuit, he couldn't have suffered any adverse employment action by the employer's allegedly retaliatory lawsuit. The Fourth Circuit rejected that reasoning.

The Court concluded that requiring a FLSA retaliation plaintiff to prove a materially adverse employment action would have the practical effect of declaring that the FLSA's prohibition applies to retaliation exclusively against current, and not former, employees. The Court relied on Title VII cases (rejecting the employer's argument that Title VII cases are inapposite in this FLSA context); those cases hold that, for purposes of a retaliation claim, an "employee" encompasses former as well as current employees; a plaintiff need simply allege and prove that the challenged act is one that might have dissuaded a reasonable worker from bringing a claim. The employer argued that extending to former employees the FLSA's protection from retaliation would be anomolous since former employees no longer enjoy the substantive protections of the FLSA. The Fourth Circuit rejected the argument.

The ultimate holding: "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.'"

Thus, plaintiff's retaliation claim in this case will go forward, even though he was exempt from the FLSA and the retaliatory conduct he alleges occurred months after his employment terminated and thus didn't affect the terms or conditions of his employment.

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