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This post was contributed by Tony D. Dick Esq., an Associate and a member of McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio.

In a 6-2 decision, the United States Supreme Court recently ruled in Kasten v. Saint-Gobain Performance Plastics Corp., ___ U.S. ___, No. 09-834 (2011) (pdf), that an employee’s verbal complaint about alleged wage and hour violations can be sufficient to trigger the anti-retaliation protections under the Fair Labor Standards Act (“FLSA”).

At issue was the provision in the statute that makes it illegal “to discharge . . . any employee because such employee has filed any complaint” alleging a violation of the Act. 29 U.S.C. § 215(a)(3). Plaintiff Kevin Kasten, a former employee of Saint-Gobain, alleged he was terminated in retaliation for making oral complaints to his supervisors and human resources personnel regarding the location of the company’s time clocks, which Kasten alleged prevented employees from recording time spent “donning and doffing” protective equipment. The question before the Court was whether the phrase “filed any complaint” in the statutory text of the FLSA included both verbal and written complaints. The District Court granted Saint-Gobain’s motion for summary judgment, concluding the FLSA's anti-retaliation provision did not cover verbal complaints. The Seventh Circuit affirmed the lower court’s decision.

In reversing the Seventh Circuit’s decision, the Supreme Court first analyzed the actual text of the statute but, finding the text to be open to multiple interpretations, ultimately relied on an examination of congressional intent and the Department of Labor’s and the Equal Employment Opportunity Commission’s interpretation of the phrase. With respect to Congress’s intended purpose in enacting the anti-retaliation provision of the FLSA, the Court stated specifically:

Several functional considerations indicate that Congress intended the anti-retaliation provision to cover oral, as well as written, “complaint[s].” First, an interpretation that limited the provision's coverage to written complaints would undermine the Act's basic objectives. The Act seeks to prohibit “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” 29 U.S.C. § 202(a). It does so in part by setting forth substantive wage, hour, and overtime standards. It relies for enforcement of these standards, not upon “continuing detailed federal supervision or inspection of payrolls,” but upon “information and complaints received from employees seeking to vindicate rights claimed to have been denied.” And its anti-retaliation provision makes this enforcement scheme effective by preventing “fear of economic retaliation” from inducing workers “quietly to accept substandard conditions.”

Slip op. at 7.

The Court articulated a test to determine whether a complaint is “filed” for FLSA purposes. Under the test, if a reasonable and objective person would have “fair notice” that the employee is asserting statutory rights, the employee is protected under the FLSA. “Fair notice” is achieved where a “complaint [is] sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights.”

What does the Court’s decision mean for employers? It should be clear that the case expands the bounds of potential employer liability under the FLSA. The Court’s decision may also have farther reaching implications beyond the FLSA as several other federal statutes, including Occupational Safety and Health Act and the Clean Air Act, contain similar anti-retaliation provisions. A cautious employer will treat a verbal complaint the same as a written complaint. In disciplinary investigations, employers should ask supervisors whether the particular employee has made any oral complaints to determine whether the employee may make an argument in the future that any disciplinary action was in retaliation for making the complaint. As always, employers should document the specific reasons for employee terminations and disciplinary actions and follow established company policies to limit later arguments by a terminated employee that he or she was terminated because of a retaliatory motive on the part of the employer.

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This post was contributed by Brett E. Younkin, Esq., an Associate and a member of McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio.

The receipt of a federal lawsuit is generally viewed as a bad day for any employer; seeing that a plaintiff is seeking class action status on behalf of hundreds or thousands of current and past employees is enough to turn a bad day into an unenviable nightmare. Such was the situation when Wal-Mart, one of the country’s largest employers, was notified that a female manager, Betty Dukes, was suing the company on behalf of all female managers alleging a pattern and practice of discriminatory pay and promotion practices. Ms. Dukes alleged that despite the company’s non-discrimination policy, the Arkansas-based employer paid their female managers at lower rates than their male counterparts on a nationwide scale and women were promoted less often than men.

Recently, the issue of certifying the class of female employees became the focal point of what many view to have been one of the liveliest oral arguments before the United States Supreme Court in years. During each side’s hour-long presentation, it seems that the Justices spoke almost as much as the attorneys, often-times overlapping each other’s questions and even interrupting a colleague’s question in an attempt to make their own point. However, the result of the heated debate is far from clear. Will Wal-Mart be faced with a multi-million dollar class action for discriminatory practices or will it be just another single-litigant against one of the world’s largest retail empires?

Class certification is governed by Rule 23 of the Federal Rules of Civil Procedure and generally requires (1) that there to be too many potential members to identify and join each of them; (2) a common question of law or fact; (3) a commonality of claims or defenses; and (4) that the representative parties will adequately protect the interests of the entire class. It’s generally agreed that the potential plaintiffs here would meet most of these requirements. However, the focus of the discussion before the Court was whether the proposed class of female managers truly shared common legal and factual issues. One key question from Justice Kennedy has led many to speculate that Ms. Dukes and her potential class members have a fatal flaw in their argument.

During the plaintiffs' presentation, Justice Kennedy asked the rather straight-forward question: “What is the unlawful policy that Wal-Mart has adopted?” The response was that the store managers have “unchecked discretion” in the decision-making process and have used that power to create a culture of discrimination throughout the corporation. The problem with this response is that it contradicts the position that Wal-Mart’s headquarters enforces a consistent, nationwide policy, which is a key aspect of the plaintiffs' case and may be necessary to establish corporate-wide liability.

The plaintiffs' attorney tried to argue both sides of an opposing view – that there is a top-down corporate culture to discriminate against females, and that the actual decision-makers in the individual stores themselves have too much power and discretion. It was on this point where Justice Scalia accused the plaintiffs' counsel of trying to “whipsaw” the Court stating that the power given to store managers is too subjective while there is a corporate culture to guide those same managers to discriminate against women. While the commonality issue appeared to weigh in Wal-Mart's favor, how the court will decide the case is unclear at this time. A decision is expected sometime this summer, and we will be sure to provide an update when it is issued.
 

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This post was contributed by Eric N. Athey, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Law Practice Group.

Over the past several years, federal courts across the United States have experienced a surge in class action lawsuits alleging wage and hour violations by employers. In many of these cases, the primary allegation is that employees were not paid for all of their activities that are considered "compensable work" under federal regulations. An employer's failure to pay employees for short breaks and for work from home are often cited violations. In an apparent attempt to provide support for such claims, the U.S. Department of Labor (DOL) has announced the launch of its first application, or "app," for smartphones. The iPhone-compatible app is an electronic timesheet that is intended "to help employees independently track the hours they work and determine the wages they are owed."

The DOL announcement notes that this new technology is significant because, "instead of relying on their employers' records, workers now can keep their own records," which can "prove invaluable during [a DOL]…investigation when an employer has failed to maintain accurate employment records." The DOL further indicated that future apps may be launched to assist employees with compliance issues relating to payment of tips, commissions, bonuses, holiday pay, weekend pay, shift differential and pay for regular days of rest, as well as for impermissible pay deductions.

The introduction of the new DOL app serves to highlight the importance of carefully drafted employer wage policies and practices. Such policies include procedures for proper timekeeping, a requirement that overtime be authorized in advance, a procedure for reporting and correcting payroll errors (overpayments and underpayments) and a sound understanding by managers of what activities must be treated as paid work.

If you have any questions regarding this article or suggested wage policies, please contact any member of our Labor and Employment Law Group.
 

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