Tag Archives: Fourth Circuit

D.Md.: Compensatory Damages for Emotional Distress Are Available Under §§ 215 and 216(b) for Retaliation Claims

Randolph v. ADT Sec. Services, Inc.

This case was before the court on several pretrial motions of the parties. As discussed here, among the issues briefed before the court was whether compensatory damages are available to a plaintiff-employee pursuing a claim of retaliation under the FLSA. The court answered this question in the affirmative, noting the issue was one of first impression within the Fourth Circuit.

Restating the parties’ respective positions, the court explained:

ADT maintains that, as a matter of law, Plaintiffs are precluded from seeking emotional distress damages because such damages are unavailable under “the very similar damages provision of the ADEA.” (ECF No. 101, at 18). Plaintiffs disagree, pointing to several circuit court opinions upholding such awards. On this issue, Plaintiffs have the better end of the argument.

The court noted that the issue presented was one of first impression in the Fourth Circuit and then examined case law from other circuit and district level courts:

Neither the Fourth Circuit nor any district court within this circuit has previously determined whether a plaintiff may recover compensatory damages from emotional distress in an FLSA action. Four circuit courts of appeal—the Sixth, Seventh, Eighth, and Ninth Circuits—have, however, either directly or indirectly addressed the issue, and all have permitted the recovery of emotional distress damages. Moore v. Freeman, 355 F.3d 558, 563–64 (6th Cir.2004) (explaining that “consensus on the issue of compensatory damages for mental and emotional distress [in FLSA cases] seems to be developing”); Broadus v. O.K. Indus., Inc., 238 F.3d 990, 992 (8th Cir.2001) (upholding a compensatory award that may have included damages for emotional distress); Lambert v. Ackerley, 180 F.3d 997, 1011 (9th Cir.1999) (affirming an award of emotional distress damages in an FLSA action); Avitia v. Metro. Club of Chi., Inc., 49 F.3d 1219, 1226–30 (7th Cir.1995) (reducing an award for emotional distress damages after finding the award excessive, but noting that such damages are available under the FLSA (citing Travis, 921 F.2d at 111–12)).

The compensatory nature of the remedies in § 216(b) supports the outcome in these cases. “The [FLSA's] statutory scheme contemplates compensation in full for any retaliation employees suffer from reporting grievances.” Moore, 355 F.3d at 563 (citing Snapp, 208 F.3d at 934; Lanza, 97 F.Supp.2d at 740); Republic Franklin Ins. Co. v. Albemarle Cnty. Sch. Bd., 670 F.3d 563, 568 (4th Cir.2012) (citing Snapp and Lanza for the proposition that the relief provided in § 216(b) “is compensatory in nature”). The text of § 216(b) expressly provides for “such legal or equitable relief as may be appropriate to effectuate” this compensatory purpose, employing the broad phrase “without limitation” to indicate that the enumerated remedies within that section are not exhaustive. 29 U.S.C. § 216(b). “[L]ike the forms of relief mentioned [therein], damages for mental anguish are intended to compensate the injured party for harm suffered.”   Moore, 355 F.3d at 564.

Certainly, an argument could be made that the availability of liquidated damages [under § 216(b) ] would be sufficient to fully compensate a plaintiff with proof of actual economic damages but only minor, subjective mental anguish occasioned by an employer’s violation of the [FLSA]. However, in a case involving only nominal economic losses but proved retaliation consisting of concerted, directed harassment, resulting in grave emotional distress, such nominal economic damages or the available doubling of those damages would be insufficient to make the plaintiff whole. Damages for mental anguish would be the necessary compensatory legal relief “appropriate to effectuate the purposes of [the anti-retaliation provision].” Bogacki v. Buccaneers Ltd. P’ship, 370 F.Supp.2d 1201, 1203 (M.D.Fla.2005) (quoting 29 U.S.C. § 216(b)); cf. Snapp, 208 F.3d at 937 (reasoning that “district courts may have to exercise some creativity in awarding relief in retaliation cases” beyond those forms set forth in the statutory text).

The court then rejected the contrary holdings of courts that had held ADEA cases to be persuasive based upon the fact that the ADEA was patterned after the FLSA, noting that such reasoning:

fails to consider that the relief authorized under both statutes must be determined ‘not in isolation, but in conjunction with the other provisions of the Act[s], the policies they further, and the enforcement framework[s] they envision.’ Dean, 559 F.2d at 1038.” The court further distinguished the ADEA legislative framework by pointing out that “[t]he ADEA includes an administrative conciliation process that is critical to its enforcement framework… [and] [l]ooking to this process, circuit courts have repeatedly held that emotional distress damages are unavailable in ADEA actions because they would impede mediation and conciliation by discouraging early resolution of ADEA claims.

Thus, the court concluded:

Because “full compensation is the evident purpose and paramount policy” in an FLSA retaliation action, “the more reasoned approach” would permit a plaintiff who makes a proper showing to recover damages for emotional distress. Id.; Moore, 355 F.3d at 563–64. Neither party here has addressed the strength or weakness of Plaintiffs’ evidence of alleged emotional distress. Until the parties do so at trial, the court cannot conclude—as a matter of law—”that damages for mental anguish should be disallowed.” Id. at 1205–06.  Plaintiffs will be permitted to seek emotional distress damages through a jury trial, and their motion on this issue will, therefore, be granted.

In light of the continuing disagreement of courts regarding this issue, this might be one to watch for further appellate level developments in the future.

Click Randolph v. ADT Sec. Services, Inc. to read the entire Memorandum Opinion.

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4th Cir.: Intracompany Complaints Regarding FLSA Violations Are Protected Activity Within the Meaning of Anti-Retaliation Provision of 29 U.S.C. § 215(a)(3)

Minor v. Bostwick Laboratories, Inc.

Jafari v. Old Dominion Transit Management Co.

In two new opinions, one published (Minor) and one unpublished (Jafari) the Fourth Circuit confirmed that post-Kasten, intracompany complaints of FLSA violations are sufficient to trigger the protections of the anti-retaliation provision of 29 U.S.C. § 215(a)(3).

In Minor, the lower court had dismissed the plaintiff’s complaint premised on a violation of 215, holding that internal complaints, as opposed to those to a government agency, do not constitute protected activity.  Reversing the lower court, the Fourth Circuit held that such intracompany complaints are indeed protected activity and thus, trigger the protections of 215.

Framing the issue the Fourth Circuit explained:

“The sole question presented by this appeal is whether an employee’s complaint lodged within her company—as opposed to a complaint filed with a court or government agency—may trigger the protection of the FLSA’s antiretaliation provision. This is an issue of first impression in this circuit.”

Initially the court noted that neither Kasten, nor any Fourth Circuit case law was directly on point.  However, following the majority of circuits to have addresssed the issue, the court concluded that the statute was ambiguous as to this point and given the remedial nature of the FLSA such informal complaints should be protected.

After discussing the ambiguity in 215’s language regarding “filing” a complaint, the court reasoned:

“The Supreme Court in Kasten determined that oral complaints could constitute protected activity within the meaning of § 215(a)(3) based upon “functional considerations.” 131 S.Ct. at 1333. In light of the ambiguous nature of § 215(a)(3)‘s “filed any complaint” language, we find that these same functional considerations dictate that intracompany complaints qualify as protected activity within the meaning of the FLSA’s antiretaliation provision.

We first consider the basic goals of the FLSA. Consistent with other authority, we conclude that, because of the statute’s remedial purpose, § 215(a)(3) must be interpreted to include intracompany complaints.

The FLSA was enacted to combat “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). “The central aim of the Act was to achieve … certain minimum labor standards.” Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 292, 80 S.Ct. 332, 4 L.Ed.2d 323 (1960). To ensure compliance with the provisions enacted to serve this purpose, Congress “chose to rely on information and complaints from employees seeking to vindicate rights claimed to have been denied.” Id. It included the antiretaliation provision in recognition of the fact that “fear of economic retaliation might often operate to induce aggrieved employees quietly to accept substandard conditions.” Id. In light of these objectives, the Supreme Court has consistently held that the FLSA “must not be interpreted or applied in a narrow, grudging manner.” Tenn. Coal, Iron & R.R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 597, 64 S.Ct. 698, 88 L.Ed. 949 (1944). We likewise recognized in Ball that where the statutory language permits, “we are instructed to read the FLSA to effect its remedial purposes.” 228 F.3d at 363–64.

With the statute’s purpose in mind, Kasten stated that “an interpretation [of § 215(a)(3) ] that limited the provision’s coverage to written complaints would undermine the [FLSA's] basic objectives.” 131 S.Ct. at 1333. The Supreme Court further observed that such a limitation on the scope of the anti-retaliation provision would circumscribe flexibility in enforcing the FLSA. Id . at 1334. As a supporting point, the Supreme Court stated that “insofar as the antiretaliation provision covers complaints made to employers …, [limiting the scope of § 215(a)(3) ] would discourage the use of desirable informal workplace grievance procedures to secure compliance with the Act.” Id. Following this reasoning, we conclude that an interpretation that limits § 215(a)(3)‘s coverage to complaints made before an administrative or judicial body would overly circumscribe the reach of the antiretaliation provision in contravention of the FLSA’s remedial purpose. Allowing intracompany complaints to constitute protected activity within the meaning of § 215(a)(3), on the other hand, comports with the statute’s objectives as described by Congress’s findings and the Supreme Court’s interpretation of those findings.

Amici offer several persuasive policy arguments in support of this conclusion. They point out that protection of internal complaints encourages resolution of FLSA violations without resort to drawn-out litigation—and that failure to protect internal complaints may have the perverse result of encouraging employers to fire employees who believe they have been treated illegally before they file a formal complaint. Our sister circuits have voiced the same concerns in concluding that § 215(a)(3) protects intracompany complaints. See Valerio v. Putnam Assocs., Inc., 173 F.3d 35, 43 (1st Cir.1999) (“By protecting only those employees who kept secret their belief that they were being illegally treated until they filed a legal proceeding, the Act would discourage prior discussion of the matter between employee and employer, and would have the bizarre effect both of discouraging early settlement and creating an incentive for the employer to fire an employee as soon as possible after learning the employee believed he was being treated illegally.”).

Indeed, the majority of circuits to consider the question of whether intracompany complaints are protected activity within the meaning of “filed any complaint” have answered in the affirmative, basing their decisions on the FLSA’s remedial purpose.FN8 See, e.g., Hagan v. Echostar Satellite, LLC, 529 F.3d 617, 626 (5th Cir .2008) (“We adopt the majority rule, which allows an informal, internal complaint to constitute protected activity under Section 215(a)(3), because it better captures the anti-retaliation goals of that section.”); Lambert v. Ackerley, 180 F.3d 997, 1004 (9th Cir.1999) (en banc) (finding that § 215(a)(3) covered internal complaints based on its remedial purpose); Valerio, 173 at 42 (same); EEOC v. White & Son Enters., 881 F.2d 1006, 1011 (11th Cir.1989) (same); Love v. RE/MAX of Am., Inc., 738 F.2d 383, 387 (10th Cir.1984) (same); Brennan v. Maxey’s Yamaha, Inc., 513 F.2d 179, 181 (8th Cir.1975) (same); see also EEOC v. Romeo Cmty. Sch., 976 F.2d 985, 989 (6th Cir.1992) (holding that an employee’s complaints to her employer were sufficient to trigger protection of the FLSA’s antiretaliation provision without explaining its rationale). Cf. Brock v. Richardson, 812 F.2d 121, 124–25 (3d Cir.1987) (holding that, because of the FLSA’s remedial purpose, a retaliatory firing based on an employer’s belief that an employee had filed a complaint—even when he had not—was prohibited by § 215(a)(3)). Thus, we adopt the majority view by holding that the remedial purpose of the FLSA requires intracompany complaints to be considered protected activity within the meaning of its antiretaliation provision.

Supporting our conclusion is the Secretary of Labor and the EEOC’s consistent position that intracompany complaints are included within the meaning of “filed any complaint.” We afford agency interpretations that do not have the force of law, like agency manuals and litigation documents, respect to the extent that they possess the “power to persuade.” Christensen v. Harris Cnty., 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944)). Factors we consider when determining whether an agency interpretation has the power to persuade include “the thoroughness evident in its consideration, the validity of its reasoning, [and] its consistency with earlier and later pronouncements.” Skidmore, 323 U.S. at 140; see also Cunningham v. Scibana, 259 F.3d 303, 306–07 (4th Cir.2001).

Here, the EEOC has set forth the position that intracompany complaints constitute “fil[ing] any complaint” within the meaning of § 215(a)(3) in the compliance manual it issues to field offices. 2 EEOC Compliance Manual § 8–II(B) & 8–II(B) n. 12 (2006). In addition, both the Secretary and the EEOC have argued in litigation that intracompany complaints are covered by the FLSA’s antiretaliation provision. See, e.g., Br. for the Sec. of Labor and the EEOC as Amici Curiae at 26–30; Br. for the Sec. of Labor as Amicus Curiae, Kasten v. Saint–Gobain Performance Plastics Corp., 570 F.3d 834 (7th Cir.2009) (No. 08–2820). Thus, although it is not determinative, because the Secretary and the EEOC have consistently advanced this reasonable and thoroughly considered position, it “add[s] force to our conclusion.” Kasten, 131 S.Ct. at 1335.

We conclude by emphasizing that our holding that intracompany complaints may constitute “fil[ing] any complaint” under § 215(a)(3) does not mean that every instance of an employee “letting off steam” to his employer constitutes protected activity. Kasten, 131 S.Ct. at 1334. To the contrary, “the statute requires fair notice” to employers. Id. 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 recipient has been given fair notice that a grievance has been lodged and does, or should, reasonably understand that matter as part of its business concerns.” Id. Therefore, the proper standard for the district court to apply is the aforementioned test articulated in Kasten: 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 a call for their protection.” Id. at 1335.

Minor’s allegations here meet the standard we have articulated to the extent required to survive a motion to dismiss. The facts as alleged in her complaint indicate that Minor expressed her concerns regarding FLSA violations to the chief operating officer of her company in a meeting specifically called for that purpose. Minor also alleges that this executive-level employee agreed to investigate her claims. At this stage, these allegations are sufficient. We note again that we express no view as to whether Minor should ultimately prevail under the standard we have articulated. We simply hold that, on the facts alleged, her complaint survives a motion to dismiss.”

Click Minor v. Bostwick Laboratories, Inc. to read the entire published Opinion.  Click Jafari v. Old Dominion Transit Management Co. to read the companion unpublished Opinion.  Also of interest is the DOL/EEOC Amici Brief filed in Jafari.

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4th Cir.: Job Applicant Lacked Standing Under § 215 for Retaliation Against Prospective Employer; Protections Extend Only to “Employees”

Dellinger v. Science Applications International Corp.

Plaintiff commenced this action under the Fair Labor Standards Act of 1938 (“FLSA”) against Science Applications International Corporation which, she alleges, retaliated against her, in violation of the FLSA’s anti-retaliation provision, 29 U.S.C. § 215(a)(3), by refusing to hire her after learning that she had sued her former employer under the FLSA.  As discussed here, the district court granted Science Applications’ motion to dismiss, concluding that Plaintiff was not an “employee” of Science Applications, as defined in the FLSA, and that the FLSA’s anti-retaliation provision does not cover prospective employees.  On appeal, Dellinger contended that the district court’s reading of the statute was too narrow and that the FLSA’s anti-retaliation provision protects any employee that has been the victim of FLSA retaliation by “any person,” including future employers.  Affirming the dismissal, the Fourth Circuit concluded that the FLSA gives an employee the right to sue only his or her current or former employer and that a prospective employee cannot sue a prospective employer for retaliation.

Rejecting the common sense approach proffered by the Plaintiff (and supported by the DOL, who filed an Amicus Brief in support of the Plaintiff), the Fourth Circuit reasoned:

“While § 215(a)(3) does prohibit all “persons” from engaging in certain acts, including retaliation against employees, it does not authorize employees to sue “any person.” An employee may only sue employers for retaliation, as explicitly provided in § 216(b). The use of the term “person” in § 215(a) is attributable to the structure of the provision, which prohibits a number of separate acts in addition to retaliation, not all of which are acts performed by employers. For instance, § 215(a)(1) prohibits any person from transporting “any goods in the production of which any employee was employed in violation of section 206 [minimum wages] or section 207 [maximum hours] of this title.” Thus, Congress prohibited the shipment of goods produced by employees who are paid in violation of the Act, and for enforcement, it authorized the criminal prosecution of any “person” violating the prohibition. See 29 U.S.C. § 216(a). Just as there is no remedy for an employee to sue such a shipper, there is also no remedy for an employee to sue anyone but his employer for violations of the anti-retaliation provision. Accordingly, if the person retaliating against an employee is not an employer, the person is not subject to a private civil action by an employee under § 216(b).

Considering the Act more broadly, we cannot overlook the fact that the FLSA was intended at its core to provide minimum wages and maximum hours of work to ensure employees a minimum standard of living necessary for “health, efficiency, and general well-being of workers.” 29 U.S.C. § 202(a). The anti-retaliation provision is included, not as a free-standing protection against any societal retaliation, but rather as an effort “to foster a climate in which compliance with the substantive provisions of the [FLSA] would be enhanced.” Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 293 (1960). Thus, the anti-retaliation provision was meant to ensure that employees could sue to obtain minimum wages and maximum hours from their employers without the employers taking adverse action against them for the exercise of those rights. This purpose is inherent in the employment relationship, which is the context in which the substantive provisions operate.

We have been unable to find any case that extends FLSA protections to applicants or prospective employees. Indeed, prior cases have reached the conclusion that we have, applying the anti-retaliation provision only within the employer-employee relationship. See, e.g., Glover v. City of North Charleston, S.C., 942 F.Supp. 243, 245 (D.S.C.1996) (noting that the “any employee” language in the anti-retaliation provision mandates that the plaintiff have an employment relationship with the defendant); Harper v. San Luis Valley Reg’l Med. Ctr., 848 F.Supp. 911 (D.Col.1994) (same); cf. Darveau v. Detecon, Inc., 515 F.3d 334, 340 (4th Cir.2008) (requiring, as part of a prima facie FLSA retaliation case, a showing of “adverse action by the employer”); Dunlop v. Carriage Carpet Co., 548 F.2d 139 (6th Cir.1977) (holding that an employee could sue his former employer when the former employer retaliated against the employee by advising a prospective employer that the employee had previously filed an FLSA suit).

We are sympathetic to Dellinger’s argument that it could be problematic to permit future employers effectively to discriminate against prospective employees for having exercised their rights under the FLSA in the past. The notion, however, that any person who once in the past sued an employer could then sue any prospective employer claiming that she was denied employment because of her past litigation would clearly broaden the scope of the FLSA beyond its explicit purpose of fixing minimum wages and maximum hours between employees and employers. We are, of course, not free to broaden the scope of a statute whose scope is defined in plain terms, even when “morally unacceptable retaliatory conduct” may be involved. Ball v. Memphis Bar–B–Q Co., 228 F.3d 360, 364 (4th Cir.2000).

Dellinger urges us to extend the FLSA’s definition of “employee” to protect job applicants, pointing to other statutes under which applicants are protected. In particular, she refers to the Energy Reorganization Act, the National Labor Relations Act (“NLRA”), the Occupational Safety and Health Act (“OSHA”), and the Pipeline Safety Improvement Act. Reference to these statutes, however, does not advance her cause. The case cited by Dellinger with respect to the Energy Reorganization Act merely assumed, without deciding, that an applicant was covered under that Act. See Doyle v. Secretary of Labor, 285 F.3d 243, 251 n. 13 (3d Cir.2002). While the NLRA does protect prospective employees from retaliation, the Act itself defines “employee” more broadly than does the FLSA, providing that the term “employee” “shall not be limited to the employees of a particular employer” unless explicitly stated. See 29 U.S.C. § 152(3). With respect to OSHA and the Pipeline Safety Improvement Act, regulations implementing those statutes have been promulgated to extend protections to prospective employees. See 29 C.F.R. § 1977.5(b) (OSHA); 29 C.F.R. § 1981.101 (Pipeline Safety Improvement Act). The Secretary of Labor has not, however, promulgated a similar regulation for the FLSA.

Because we conclude that the text and purpose of the Fair Labor Standards Act of 1938 link the Act’s application closely to the employment relationship and because the text of the applicable remedy allows for private civil actions only by employees against their employers, we hold that the FLSA anti-retaliation provision, 29 U.S.C. § 215(a)(3), does not authorize prospective employees to bring retaliation claims against prospective employers. The judgment of the district court is accordingly affirmed.”

In a must-read strong dissent, authored by Judge King, he indicated that he would have reversed the dismissal at the district court below.  Following a lengthy discussion of the parallels in this case to the Robinson case- in which the Supreme Court reversed an en banc decision of the Fourth Circuit and concluded that similar statutory text in Title VII should be read expansively to protect former employees- Judge King explained that he would have held that job applicants are protected by § 215.  Judge King challenges the majority who he asserts ignored binding opinions from both the Supreme Court and the Fourth Circuit in favor of what he calls their “textualist” approach:

“It is unlawful under the FLSA ‘for any person,’ not just employers, ‘to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted … any proceeding under or related to this chapter[.]‘ 29 U.S.C. § 215(a), -(a)(3). The Act criminalizes willful violations of § 215, and it also provides civil recourse to ‘employees affected’ by the retaliatory acts described in subsection (a)(3). See § 216(a), -(b). Affected employees are entitled to “legal or equitable relief as may be appropriate to effectuate the purposes of” the antiretaliation provision, ‘including without limitation employment, reinstatement, promotion, and the payment of wages lost and an additional equal amount as liquidated damages.’ § 216(b). Liability attaches to ‘[a]ny employer,’ id., which ‘includes any person acting directly or indirectly in the interest of an employer in relation to an employee .’ § 203(d).

A plain reading of these several sections of the Act, taken together, indicates that Congress was concerned enough with retaliatory conduct to impose criminal penalties on actual decisionmakers (“any person”), regardless of whether that person could also be considered the employing entity or was acting at the entity’s behest. Civil liability for retaliation, on the other hand, is reserved for employers and their agents who are sued by an “employee,” which generally means “any individual employed by an employer.” § 203(e)(1). Science Applications is undoubtedly an employer subject to the Act, and Ms. Dellinger broadly qualifies as an employee, having once sued her former employer for allegedly violating the FLSA. It does not follow perforce, however, that “Dellinger could only sue Science Applications if she could show … that Science Applications was her employer.” Ante at 7 (emphasis added).

It would hardly be a stretch to interpret the FLSA to permit Ms. Dellinger’s action, particularly considering that other, similar remedial statutes already apply to employees in her situation…

…I am therefore left to wonder why, in the face of a statute’s relative silence as to a material enforcement term, we must presume that a particular avenue is foreclosed because it is not explicitly mentioned, rather than permitted because it is not specifically prohibited. See Healy Tibbitts Builders, Inc. v. Dir., Office of Workers’ Comp. Programs, 444 F.3d 1095, 1100 (9th Cir.2006) (“[F]aced with two reasonable and conflicting interpretations, [an act] should be interpreted to further its remedial purpose.”). The majority’s decision today bucks the trend begun by Robinson, which is indisputably toward an expansive interpretation of protective statutes like Title VII and the FLSA to thwart employer retaliation. See, e.g., Gomez–Perez v. Potter, 553 U.S. 474, 491 (2008) (concluding that, under applicable provision of ADEA, federal employee may state claim for retaliation as form of discrimination); CBOCS West, Inc. v. Humphries, 553 U.S. 442, 457 (2008) (ruling that anti-discrimination provisions of 42 U.S.C. § 1981 encompass action for retaliation); Jackson v. Birmingham Bd. of Educ., 544 U.S. 167, 178 (2005) (same with respect to Title IX).

Behind this impressive array of authority is the Supreme Court’s acknowledgment of the vital role that antiretaliation provisions play in regulating a vast range of undesirable behaviors on the part of employers. See, e.g., Crawford v. Metro. Gov’t of Nashville & Davidson Cnty., Tenn., 129 S.Ct. 846, 852 (2009) (observing that fear of retaliation is primary motivation behind employees’ failure to voice concerns about bias and discrimination and reversing Sixth Circuit’s judgment in employer’s favor as inconsistent with primary objective of Title VII to avoid harm to employees) (citations omitted); Burlington N. & Santa Fe Ry. Co. v. White, 548 U.S. 53, 57 (2006) (explaining that liability for Title VII retaliation extends well beyond those actions affecting terms and conditions of employment to include employer’s acts outside workplace that are “materially adverse to a reasonable employee or job applicant”). There is no reason to doubt that similar concerns obtain in the FLSA context, as expressed in Reyes–Fuentes v. Shannon Produce Farm, 671 F.Supp.2d 1365, 1368 (S.D.Ga.2009) (“Congress chose to rely upon information and complaints from employees seeking to vindicate their rights. Plainly, effective enforcement could thus only be expected if employees felt free to approach officials with their grievances”) (citations omitted).”

Given the strong dissent of Judge King, it is possible if not likely that this case might be headed to the Supreme Court.  This is certainly one to keep an eye on.

Click Dellinger v. Science Applications International Corp. to read the entire Opinion and Dissent.

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4th Cir.: When Salaried Employees Were Misclassified, Damages Properly Calculated At “Half-Time” Rather Than Time And A Half

Desmond v. PNGI Charles Town Gaming, L.L.C.

As discussed here previously, this was the second time this case ended up at the 4th Circuit.  Previously, the 4th Circuit had vacated the trial court’s Order determining the plaintiff’s to be administratively exempt and remanded the case for further findings.  On this appeal the plaintiffs challenged the lower court’s ruling as to how their damages in this so-called “salary misclassified” case should be determined.  Additionally, the defendant cross-appealed the lower court’s determination, on summary judgment, that it’s violations were willful.  Joining other Circuits who have ruled on the calculation issue, the 4th Circuit held that the lower court properly applied a so-called “half-time” calculation in determining the plaintiffs damages.

In making its ruling, the 4th Circuit discussed, at length case law from other circuits:

“The former employees worked as racing officials with Charles Town Gaming. J.A. 50. Charles Town Gaming prepared the job descriptions for racing officials in 1999. Id. at 55-56. In doing so, Charles Town Gaming’s human resources director used a computer program to help determine whether to designate the position as exempt or non-exempt from overtime under the FLSA. Id. Charles Town Gaming paid the racing officials a per diem rate and treated them as exempt. See Aff. Karen Raffo, Nov. 20, 2007. Over the ensuing years, Charles Town Gaming changed the pay from per diem to a fixed weekly salary that the parties intended to cover all hours worked. See J.A. 56, 146-52; Aff. Karen Raffo, Nov. 20, 2007. Charles Town Gaming believed (erroneously) that the former employees were subject to the FLSA administrative exemption; therefore, Charles Town Gaming did not pay them overtime. J.A. 49. All three appellants often worked more than 40 hours in a week. Id. at 50. After the appellants unanimously declared the wrong horse to have won a race, Charles Town Gaming dismissed them from their employment. Id.

The former employees contend the district court erred in calculating their unpaid overtime compensation under 29 U.S.C. § 216(b). Charles Town Gaming contends the district court erred by concluding that their FLSA violation was willful. We review a grant of summary judgment de novo. See, e.g., United States v. Bergbauer, 602 F.3d 569, 574 (4th Cir.2010). When cross-motions for summary judgment are before a court, the court examines each motion separately, employing the familiar standard under Rule 56 of the Federal Rules of Civil Procedure. See, e.g., Ga. Pac. Consumer Prods., L.P. v. Von Drehle Corp., 618 F.3d 441, 445 (4th Cir.2010).

The former employees challenge how the district court calculated their unpaid overtime compensation under 29 U.S.C. § 216(b). The Supreme Court addressed how to calculate such unpaid overtime compensation under 29 U.S.C. § 216(b) in Overnight Motor. 316 U .S. at 580. The Court held that when calculating the “regular rate” of pay for an employee who agreed to receive a fixed weekly salary as payment for all hours worked, a court should divide the employees fixed weekly salary by the total hours worked in the particular workweek.   Id. at 579-80 (analyzing section 7 of the FLSA, now codified at 29 U.S.C. § 207(a)(1)). This calculation should be completed for each workweek at issue and results in a regular rate for a given workweek. Id. Of course, the Court recognized that the regular rate could vary depending on the total hours worked. The Court then determined that the employee should receive overtime compensation for all hours worked beyond 40 in a given workweek at a rate not less than one-half of the employee’s regular rate of pay. Id.

Although the parties agree that Overnight Motor applies in calculating the regular rate, they disagree about how to calculate the overtime premium. Specifically, the parties disagree over whether the former employees should receive 150% of the regular rate for all hours worked over 40 in a given workweek or 50% of the regular rate for all hours worked over 40 in a given workweek.

In analyzing how to calculate unpaid overtime compensation under 29 U.S.C. § 216(b) in this mistaken exemption classification case, we note that four sister circuits have addressed this issue. The First, Fifth, Seventh, and Tenth Circuits all have determined that a 50% overtime premium was appropriate in calculating unpaid overtime compensation under 29 U.S.C. § 216(b) in mistaken exemption classification cases, so long as the employer and employee had a mutual understanding that the fixed weekly salary was compensation for all hours worked each workweek and the salary provided compensation at a rate not less than the minimum wage for every hour worked. See Urnikis-Negro v. Am. Family Prop. Servs., 616 F.3d 665 (7th Cir.2010); Clements v. Serco, Inc., 530 F.3d 1224 (10th Cir.2008); Valerio v. Putnam Assocs., Inc., 173 F.3d 35 (1st Cir .1999); Blackmon v. Brookshire Grocery Co., 835 F.2d 1135 (5th Cir.1988).

In Blackmon, the Fifth Circuit applied 29 C.F.R. § 778.114 to calculate unpaid overtime compensation in a mistaken exemption classification case. 835 F.2d at 1138. The employees in Blackmon were meat-market managers who were wrongly classified as exempt. Id. at 1137-38. The district court calculated their unpaid overtime compensation by dividing the weekly salary by 40 hours to determine their regular rate, multiplying that rate by 150%, and then multiplying that result by the number of overtime hours. Id. at 1138. The Fifth Circuit rejected this method, instead applying 29 C.F.R. § 778.114 to determine the regular rate, and only using a 50% multiplier. Id. The Fifth Circuit did not cite, much less discuss, Overnight Motor.

In Valerio, the First Circuit upheld an award of summary judgment in a mistaken exemption classification case. 173 F.3d at 39-40. Valerio was wrongly classified as an exempt employee. Id. at 37. Upon dismissing Valerio from employment, her employer gave her a lump-sum payment intended to cover any overtime owed to her. Id. at 38. In calculating the unpaid overtime compensation, the employer paid her a 50% overtime premium and relied on 29 C.F.R. § 778.114. The First Circuit affirmed the district court’s finding that the amount paid was more than was owed to Valerio under the FLSA. Id. In Valerio, the First Circuit cited, but did not discuss, Overnight Motor. Id. at 39-40.

In Clements, the Tenth Circuit affirmed a district court’s application of 29 C.F.R. § 778.114 to calculate unpaid overtime compensation in a mistaken exemption classification case. 530 F.3d at 1225. The employees in Clements provided recruiting services to the Army on behalf of their employer, Serco. Id. Serco had erroneously classified these employees as exempt under the “outside salesmen” exemption. Id. at 1227; cf. 29 U.S.C. § 213(a)(1). The employees claimed a 150% multiplier applied because the employer and employees had not agreed on whether overtime compensation was owed. Clements, 530 F.3d at 1230. In affirming the use of a 50% multiplier in calculating the unpaid overtime compensation, the Tenth Circuit cited 29 C.F.R. § 778.114, the First Circuit’s decision in Valerio, and our decision in Bailey v. County of Georgetown, 94 F.3d 152, 155-57 (4th Cir.1996).   Clements, 530 F.3d at 1230. The Tenth Circuit found the lack of a clear and mutual understanding on the overtime premium to be “irrelevant as to whether the Employees understood they were being paid on a salaried … basis.” Id. at 1231. In Clements, the Tenth Circuit did not cite, much less discuss, Overnight Motor.

In Urnikis-Negro, the Seventh Circuit affirmed a district court’s award of a 50% overtime premium to calculate unpaid overtime compensation in a mistaken exemption classification case. 616 F.3d at 684. However, the court rejected the district court’s retroactive application of 29 C.F.R. § 778.114, finding it a “dubious source of authority for calculating a misclassified employee’s damages.” Id. at 679. Instead, the court relied on Overnight Motor. Id. at 680-84. The court held that when an employer and employee agree that a fixed salary will constitute payment at the regular rate for all hours worked and the rate is not lower than the minimum wage, a court should rely on Overnight Motor to calculate unpaid overtime compensation under 29 U.S.C. § 216(b). Id. Moreover, in such a situation, the court calculates the unpaid overtime compensation using a 50% multiplier rather than a 150% multiplier. See id.

In addition to these decisions from our sister circuits, the Department of Labor also has approved using a 50% overtime premium to calculate unpaid overtime compensation in a mistaken exemption classification case. See Retroactive Payment of Overtime and the Fluctuating Workweek Method of Payment, Wage and Hour Opinion Letter, FLSA 2009-3 (Dep’t of Labor Jan. 14, 2009). The DOL issued the opinion letter in response to an employer who asked how to compensate employees mistakenly classified as exempt. Id. at 1. In the opinion letter, the DOL states that “because the fixed salary covered whatever hours the employees were called upon to work in a workweek; the employees will be paid an additional one-half their actual regular rate for each overtime hour …; and the employees received and accepted the salary knowing that it covered whatever hours they worked,” a retroactive payment of overtime using the 50% multiplier conforms with FLSA requirements. Id. at 2.

Here, the district court did not apply 29 C.F.R. § 778.114 to this mistaken exemption classification case. Rather, the district court relied on the logical implications of Overnight Motor to calculate unpaid overtime compensation under 29 U.S.C. § 216(b). Desmond, 661 F.Supp.2d at 584. The district court found that there was an agreement that the fixed weekly salary covered all hours worked. Id. The district court then reasoned that Overnight Motor’s regular-rate determination implies the previously paid weekly salary covers the base compensation for all hours worked. Id. Thus, the district court concluded that it need only award 50% of the regular rate to provide the employees their “unpaid overtime compensation” under 29 U.S.C. § 216(b). Id.

Appellants disagree and insist that such a reliance on Overnight Motor improperly expands federal common law. They also (confusingly) argue that Chevron deference to 29 C.F.R. § 778.114 requires courts to use a 150% multiplier and that if employers are allowed to retroactively apply section 778.114 in mistaken exemption classification cases, employers have no motive to pay for overtime as it accrues, effectively treating nonexempt employees as if they were exempt. In appellants’ view, such a holding will create an incentive for employers to pay a fixed weekly salary, never to pay overtime, and then simply pay a 50% premium on the regular rate if caught misclassifying non-exempt employees as exempt employees. Cf. 29 U.S.C. § 213(a)(1); 29 C.F.R. pt. 541 (white-collar exemption regulations).

As the district court held, appellants’ argument ignores the teaching of Overnight Motor. After all, in Overnight Motor, the Court recognized that employees and employers are free to agree to a reduced hourly wage in exchange for a fixed weekly salary, provided the fixed weekly salary covers all hours worked and meets minimum wage requirements. 316 U.S. at 580. In our view, the district court correctly concluded that Overnight Motor provides the appropriate method for calculating the unpaid overtime compensation under 29 U.S.C. § 216(b) in this case. Tellingly, in Overnight Motor, the Court provided the formula to compute the overtime due an employee who was paid a fixed weekly salary intended to cover all hours worked. Overnight Motor, 316 U.S. at 580 n. 16. Although Overnight Motor concerned the more basic question of whether overtime compensation applies to those earning more than the minimum wage requirements in the FLSA, 316 U.S. at 575, it contains nothing to indicate why such a computation would not apply in determining unpaid overtime compensation under 29 U.S.C. § 216(b) in a mistaken exemption classification case. Indeed, in Overnight Motor, the Court interpreted 29 U.S.C. § 207(a) and explained the meaning of “the regular rate at which he is employed,” and interpreted 29 U.S.C. § 216(b) and explained how to calculate “unpaid overtime compensation.” See Overnight Motor, 316 U.S. at 574 n. 2, 579-80.

Traditional principles of compensatory damages bolster this conclusion. Compensatory damages are “[d]amages sufficient in amount to indemnify the injured person for the loss suffered.” Black’s Law Dictionary 445 (9th ed.2009). Here, the former employees agreed to receive straight time pay for all hours worked in a given workweek and have already received such pay. Thus, the “loss suffered” is the 50% premium for their overtime hours. Accordingly, we affirm the district court’s judgment about how to calculate unpaid overtime compensation under 29 U.S.C. § 216(b).”

Currently, the plaintiffs in the 7th Circuit case, Urnikis-Negro v. Am. Family Prop. Servs., 616 F.3d 665 (7th Cir.2010), have filed a petition for cert in the Supreme Court, so the effect of the 4th Circuit’s holding may be should-lived.

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D.S.C.: South Carolina Is Sovereign Immune From FLSA Suits Seeking Money Damages

Morris v. South Carolina Dept. of Corrections

In this case Plaintiff, an employee of the South Carolina Department of Corrections (“SCDC”), sought compensation for overtime work under Section 16(b) of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 216(b).  The Defendant moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), claiming it was sovereign immune from such claims.  The Court agreed and granted Defendant’s motion to dismiss stating:

“SCDC argues that Plaintiff’s claim is barred because the state is immune from claims for money damages brought under Section 16(b). In making these arguments, SCDC relies on Alden v. Maine, which held that states are immune from private suits filed in state courts for damages brought under Section 16(b) of the FLSA. Based on Alden and its progeny, Defendant argues that state agencies are immune from private suits for money damages under the FLSA whether that suit is brought in state or federal court. See Alden v. Me., 527 U.S. 706, 119 S.Ct. 2240, 144 L.Ed.2d 636 (1999); see also Dkt. No. 15 at 4. Plaintiff disagrees, arguing that Alden applies only to FLSA suits brought in state court. Dkt. No. 16 at 2.

State Sovereign Immunity. The doctrine of state sovereign immunity bars suits in federal court for money damages against an “unconsenting State.” Edelman v. Jordan, 415 U.S. 651, 663, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974); see also Alden, 527 U.S. at 713 (noting that, while “Eleventh Amendment immunity” is often used as convenient shorthand for state sovereign immunity, the latter is “a fundamental aspect of the sovereignty which the States enjoyed before the ratification of the Constitution, and which they retain today … except as altered by the plan of the Convention or certain constitutional Amendments.”). This immunity extends to “arm[s] of the State,” Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568, 50 L.Ed.2d 471 (1974), including state agencies and state officers acting in their official capacity.   Gray v. Laws, 51 F.3d 426, 430 (4th Cir.1995). This doctrine does not, however, preclude private suits against state officials (but not the state or state agency itself) for prospective or declaratory relief designed to remedy ongoing violations of federal law. Ex parte Young, 209 U.S. 123, 157, 28 S.Ct. 441, 52 L.Ed. 714 (1908); see also Virginia v. Reinhard, 568 F.3d 110 (4th Cir.2009).

Congress may abrogate state sovereign immunity, but “only by stating unequivocally its desire to do so and only pursuant to a valid exercise of constitutional authority.” Constantine v. Rectors & Visitors of George Mason Univ., 411 F.3d 474, 484 (4th Cir.2005) (citing Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 55, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996)).  Section 5 of the Fourteenth Amendment to the United States Constitution, the Amendment’s enforcement provision, provides one (and possibly the only) basis on which Congress may, under specific circumstances, abrogate state sovereign immunity. Nev. Dep’t of Human Res. v. Hibbs, 538 U.S. 721, 727, 123 S.Ct. 1972, 155 L.Ed.2d 953 (2003) (noting that, while Congress may abrogate the States’ sovereign immunity under Section 5 of the Fourteenth Amendment, it may not do so “pursuant to its Article I power over commerce”) (citing Fitzpatrick v. Bitzer, 427 U.S. 445, 456, 96 S.Ct. 2666, 49 L.Ed.2d 614 (1976)); see also Seminole Tribe, 517 U.S. at 73 (“Article I cannot be used to circumvent the constitutional limitations placed upon federal jurisdiction”).

Applied to Section 16(b) of the FLSA. In Alden, the Supreme Court held that states are immune from private suits for damages brought under Section 16(b) of the FLSA in state court. The Court’s reasoning was based, in part, on the principle that Congress cannot extend state court jurisdiction beyond where it may extend federal court jurisdiction. See 527 U.S. at 754 (“We are aware of no constitutional precept that would admit of a congressional power to require state courts to entertain federal suits which are not within the judicial power of the United States and could not be heard in federal courts.”). Put differently, as applied to Section 16(b) of the FLSA, it is precisely because Congress lacks the authority to subject states to suit in federal court that it also lacks the authority to subject states to suit in their own courts. Thus, the Alden rationale fully supports Defendant’s position.

Prior to Alden, the Fourth Circuit ruled that state sovereign immunity bars Section 16(b) claims for damages brought by state employees in federal court. See Abril v. Va., 145 F.3d 182, 186-89 (4th Cir.1998) (concluding that Section 16(b) was not a valid abrogation of state sovereign immunity under Congress’s Section 5 enforcement powers). No subsequent rulings appear to alter this rule, which is consistent with the rationale in Alden. As explained in Rodriguez v. Puerto Rico Federal Affairs Administration, a post-Alden decision addressing a Section 16(b) claim for damages, Seminole Tribe and Alden operate in tandem to protect states from liability for money damages under the FLSA. Rodriguez v. P.R. Fed. Affairs Admin., 435 F.3d 378, 380 (D.C.Cir.2006) (“Taken together, Seminole Tribe and Alden mean that state employees no longer have any ‘court of competent jurisdiction,’ 29 U.S.C. § 216(b), in which to sue their employers for FLSA violations.”). While not binding, the court finds the Rodriguez court’s reasoning persuasive.”

Thus, the Court concluded that, “SCDC is immune from suits for money damages brought pursuant to Section 16(b) of the FLSA, 29 U.S.C. § 216(b).”  Accordingly, Plaintiff’s case was dismissed.

To read the Court’s entire decision, click here.

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