In a recent decision, the United States Court of Appeals for the Fourth Circuit held that an employee’s internal complaint to company management about possible wage-hour violations may be protected under the Fair Labor Standards Act’s anti-retaliation provisions.  The Fourth Circuit reversed the decision of the trial court, which had dismissed the case based on its finding that the informal complaints were not protected under the FLSA.  This article examines the facts of this important case, as well as the significant implications for employers.

The plaintiff in the case, Cathy Minor, worked for Bostwick Laboratories, Inc. as a medical technologist.  According to her Complaint, Minor and several other members of her department met with Bostwick’s chief operating officer (COO) on May 6, 2008.  The purpose of the meeting was to call to the COO’s attention the fact that Minor believed her supervisor had willfully violated the FLSA.  Specifically, Minor informed the COO that her supervisor routinely altered employees’ timesheets to reflect that they had not worked overtime when they had.  At the conclusion of the meeting, the COO told the group that he would look into the allegations.  

The following Monday, Bostwick terminated Minor’s employment.  Minor was told that the reason for her termination was that there was “too much conflict with her supervisors and the relationship just was not working.”  When Minor further questioned the rationale behind her termination, she was told that she was “the problem.”  

Minor filed an action against Bostwick alleging that her termination was in retaliation for her having engaged in protected activity under the FLSA’s anti-retaliation provision.  The alleged protected activity consisted of Minor’s report to the COO concerning the alteration of the timesheets and the resulting lack of overtime pay.  Minor sought compensatory damages, punitive damages and attorneys’ fees.  

Bostwick moved to dismiss Minor’s claim.  The trial court framed the issue as whether an employee’s intra-company complaint regarding possible FLSA violations by her employer qualifies as protected activity under the FLSA.  The trial court found that it did not, in large part because the plain language of the statute indicated that a formal official proceeding was required to invoke the clause’s protection.  As a result, the trial court dismissed Minor’s claim.

The Appellate Decision

According to the Fourth Circuit, the sole question presented by the appeal was whether an employee’s compliant lodged within her company, as opposed to a complaint filed with a court or government agency, may trigger the protection of the FLSA’s anti-retaliation provision.  Finding that the issue was of first impression in the Fourth Circuit, the court then carefully reviewed statutory language, as well as relevant case law addressing this issue.

Under Section 215(a)(3) of the FLSA, it is unlawful for a covered employer 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 chapter, or has testified or is about to testify in any such proceeding.”  

In her appeal, Minor contended that an employee who complains of FLSA violations to her employer is protected because she has “filed any complaint” within the meaning of the statute.  In support of her position, Minor relied on a recent Supreme Court decision, Kasten v. Saint-Gobain Performance Plastics Corp., 131 S.Ct. 1325 (2011).  

In Kasten, the Supreme Court found that an employee did not have to file a formal written complaint with the U.S. Department of Labor in order to be entitled to the anti-retaliation provisions of the FLSA.  

In considering the applicability of Kasten on Minor’s claim, the Fourth Circuit found that while the reasoning in Kasten was persuasive, it was not directly controlling.  According to the court, in Kasten the Supreme Court considered whether an employee’s oral complaint to his employer qualified as protected activity.  In so doing, the Supreme Court looked at the text of the statute, focusing on the word “filed.”  It concluded upon review that the word “filed” did not unambiguously require a writing.  

The Supreme Court also looked at Congress’ intent in drafting Section 215(a)(3).  It concluded that Congress intended the anti-retaliatory provision to cover oral complaints based in large part on the FLSA’s remedial purpose requiring a broad interpretation to achieve its basic objectives.  The court also considered the positions of the Secretary of Labor and the EEOC that oral complaints are protected activity within the meaning of the FLSA.  

The Supreme Court did, however, stress that an employer needed fair notice as to when a complaint had been filed and held that “to fall within the scope of the anti-retaliatory provision, a complaint must be 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.”

Significantly, in Kasten, the Supreme Court declined to address the question of whether an intra-company complaint could qualify as protected activity under the FLSA.  The Supreme Court did, however, state that “insofar as the anti-retaliation provision covers complaints made to employers,” limiting the scope of protected activity to written complaints would “discourage the use of desirable informal workplace grievance procedures to secure compliance” with the FLSA.

In reaching its conclusion that Minor’s oral complaints to the COO could be protected under the FLSA, the Fourth Circuit emphasized that it did not intend that every employee complaint would constitute protected activity.  To the contrary, according to the Fourth Circuit, the statute requires fair notice to employers.  

Thus, to protect employers from unnecessary uncertainty, some degree of formality is required for an employee complaint to constitute protected activity—certainly to the point where the employer has been given fair notice that a grievance has been lodged and does, or should, reasonably understand that matter to be part of its business concerns.  Therefore, the Fourth Circuit directed that the proper standard to be applied was whether Minor’s complaint to her employer was 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 to call for its protection.

In this case, Minor’s allegations met that standard.  The facts as alleged by Minor indicated that she expressed her concerns regarding FLSA violations to the COO in a meeting specifically called for that purpose.  Minor also alleged that the COO agreed to investigate her claims, indicating that the COO had a clear and detailed understanding of the issues.  

While the court opined that it expressed no view as to whether Minor should ultimately prevail on her claims, in reversing the trial court’s decision, the Fourth Circuit found that her allegations were sufficient to survive summary dismissal and proceed to trial.  (Minor v. Bostwick Laboratories, Inc., 669 F.3d 428 (4th Cir. 2012))

Takeaway for employers: This is a significant decision for employers in Maryland (and other states encompassed by the Fourth Circuit) who must now tread carefully in responding to any oral complaints raised by employees alleging FLSA violations.  Prior to Kasten, and now Minor, it was well-settled in the Fourth Circuit that in order to be protected under the FLSA’s anti-retaliation provisions, the employee needed to file a complaint alleged FLSA violations with the Department of Labor.  Kasten held that an oral complaint was sufficient.  Now, under Minor, an employee need not even file an oral complaint with the DOL or any other appropriate agency.

To be sure, under Minor and Kasten, the employee must specifically complain about FLSA violations such that the employer understands the nature of the complaint.  However, as long as the employee includes the initials “FLSA” in his or her oral complaints, it would be prudent to consider such a complaint as protected under Section 215(a)(3) of the FLSA, and to avoid taking any actions that could constitute retaliation against that employee.