The Fair Labor Standards Act (FLSA) is a statute of broad application that regulates, among other things, the payment of overtime. It includes an “anti-retaliation” provision, found at 29 USC § 215(a)(3), that prohibits an employer from retaliating against an employee “because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter.”

Last year, the U.S. Supreme Court held in Kasten v. Saint-Gobain Performance Plastics Corp. that an oral complaint could fall within the purview of FLSA’s anti-retaliation provision. The Court expressly declined to address the issue of whether the oral complaint had to be made to a government agency or whether an internal, intra-company complaint would be covered under the anti-retaliation provision. Interestingly, the complaints at issue in Kasten were, in fact, oral complaints made internally to a private employer. However, the Court found that the employer failed to raise the issue on appeal and declined to address it, leaving a split among circuit courts on the matter.

The Fourth Circuit Court of Appeals, which includes North and South Carolina, recently joined the majority of other circuits by holding, in the case of Minor v. Bostwick Laboratories, that an internal complaint can be protected under the FLSA’s anti-retaliation provision.

Minor Voices An Internal Complaint and is Subsequently Terminated

The plaintiff, Kathy Minor, was employed as a medical technologist with the defendant, Bostwick Laboratories, from December 2007 through May 2008. About one week prior to her termination, a group of Bostwick employees (including Minor) met with the company’s chief operating officer to report alleged violations of the FLSA. During the meeting, Minor reported to the COO that her supervisor was altering employee timesheets to remove overtime hours. The COO reportedly responded that he would look into the allegations raised during the meeting.

Six days later, Minor’s employment was terminated. Bostwick’s HR manager stated that she was fired because there was “too much conflict between Minor and the supervisor.” Moreover, the COO and HR manager stated that they had met with Minor’s co-workers and “had determined that [Minor] was the problem.” Minor contended that she never had any conflict with her supervisors and that she had never been written up or reprimanded by Bostwick.

Minor Files a Lawsuit Against Bostwick That is Dismissed

Following her termination, Minor filed a lawsuit against Bostwick in the U.S. District Court for the Eastern District of Virginia, alleging a violation of the FLSA. Minor contended that her complaint to the Bostwick COO regarding alleged alterations of employee timesheets constituted a “protected activity” under the FLSA. By extension, Minor argued that her employment was terminated in violation of the FLSA’s “anti-retaliation” provision because she engaged in that “protected activity.”

In response, Bostwick argued that an internal complaint was not covered as a “protected activity” under the FLSA’s “anti-retaliation” provision. The company filed a motion to dismiss Minor’s complaint, which was decided by the district court before the Supreme Court’s opinion in Kasten was issued.

Evaluating the text of the FLSA’s “anti-retaliation provision” without the guidance of Kasten, the district court reasoned that in order to constitute a “protected activity,” an act was required to be more akin to a formal, official proceeding to invoke the protections of the statute. The court went on to find that Minor’s internal complaint did not rise to the level of a “protected activity,” and dismissed her lawsuit. Minor appealed to the Fourth Circuit Court of Appeals.

Although the Fourth Circuit did not find the Supreme Court decision in Kasten to be controlling, it adopted much of the high court’s reasoning in its opinion.

In the text of its opinion, the three-judge panel engaged in a detailed examination of the FLSA and its remedial purpose. Moreover, the court noted that both the Secretary of Labor and the Equal Employment Opportunity Commission take the position that oral complaints constitute a “protected activity” under the circumstances. Ultimately, the court concluded that internal complaints, such as the one asserted by Minor, could be covered under the FLSA’s “anti-retaliation” provision.

Requirements For Internal Complaints To Constitute a “Protected Activity” Under the FLSA

Notably, the Fourth Circuit Court of Appeals observed that although an internal complaint could constitute a “protected activity” under the FLSA, not every instance of an employee “letting off steam” would qualify. The court noted that “some degree of formality” is required to constitute a “protected activity,” rising to the level where the employer receives “fair notice that a grievance has been lodged and does, or should, reasonably understand that matter as part of its business concerns.”

Applying the test articulated by the Supreme Court in Kasten, the appeals court held that the proper standard to be applied to determine whether an internal complaint constitutes a “protected activity” is whether the complaint was:

• “sufficiently clear and detailed for reasonable employer to understand it”;
• “in light of both content and context”;
• “as an assertion of rights protected by the [FLSA]”; and
• “a call for their protection”

It remains to be seen in the Fourth Circuit how broadly the foregoing test will be applied.

What Can Employers Do?

The Fourth Circuit’s opinion in Minor emphasizes the importance for employers to be on the lookout and “keep their ears peeled” for internal complaints. Given the potential consequences of failing to identify or otherwise mishandling such complaints, employers should review their internal grievance policies (including checking for anti-retaliation language), and update them as needed.

Moreover, once employee complaints related to the FLSA are identified, it is important that they be processed through a company’s grievance policy. To that end, employers should consider reviewing these issues with supervisory personnel to enable them to recognize and refer any such complaints to appropriate personnel.

Once a complaint has been processed through a company’s grievance policy, it is of paramount importance that it be directed to and administered by appropriate members of company management. Ideally, trained personnel should make the determination as to whether an internal complaint constitutes a “protected activity.” Consider documenting the results of grievances processed through the company’s policy, especially if those grievances have the potential for subsequent litigation.