Former employee may file retaliation claim under the FLSA for action taken after termination of employment

For the week of February 11, 2008

To establish a claim of retaliation under the Fair Labor Standards Act, an individual must be able to show that he took an action protected by that Act; that he suffered an adverse employment action; and that a “causal link” existed between those two. A federal district court’s decision to dismiss such a claim by a former employee of a telecommunications company was recently reversed by the 4th U.S. Circuit Court of Appeals. The lower court held that the former employee could not demonstrate that a company had taken an “adverse employment action” after employment had ended. The Fourth Circuit reversed, holding that the company’s state court lawsuit against a former employee filed two weeks after that individual filed a federal court action under the FLSA constituted an adverse action sufficient to support a claim of retaliation under that Act. Darveau v. Detecon, Inc., 4th Cir., No. 06-2092, Jan. 31, 2008.

Larry Darveau held the position of Director of Sales for Detecon, Inc., a telecommunications consulting company. In December of 2004, Detecon informed Darveau that it was terminating his employment, effective January 31, 2005. On August 31, 2005, Darveau filed a complaint in federal court, alleging that Detecon had failed to pay overtime owed to Darveau under the FLSA. Two weeks later, Detecon filed a state court action against Darveau alleging fraud and fraudulent concealment arising out of a sales contract in which Darveau had been involved. Darveau then amended his federal court case to add a claim of retaliation under the FLSA. The lower court granted a motion to dismiss the retaliation claim, and Darveau appealed. The Fourth Circuit reversed the dismissal, allowing the retaliation claim to go forward.

The FLSA’s anti-retaliation provision makes it unlawful to discharge or discriminate against “any employee because such employee has filed any complaint or instituted . . . any proceeding under or related to this chapter.” While the lower court focused on the term “employee,” the Fourth Circuit analyzed the elements of a prima facie case of retaliation, and found that Darveau had set forth the required factors. First, the Court found that Darveau had an “objectively reasonable belief” that Detecon had violated the FLSA, and that he had therefore engaged in a protected activity when he filed his federal claim against the company. The crux of Darveau’s argument on appeal – and the factor upon which the lower court actually dismissed the case – was whether Darveau had suffered an adverse employment action sufficient to support his retaliation claim.

In dismissing the case, the lower court relied on older cases cited to the court by Detecon. Those cases held that in order to establish retaliation, Darveau had to show an adverse action involving an “ultimate employment decision” like hiring, firing, or failure to promote. The lower court reasoned that because Darveau’s employment had been terminated six months before he filed his federal court action (his “protected act”), he could not have suffered an adverse employment action from Detecon.

However, the Fourth Circuit cited the Supreme Court’s 2006 opinion in Burlington v. White (126 S.Ct. 2405), where the Court held that it is not necessary to show a per se “adverse employment action” in order to prove retaliation. A plaintiff simply must show that a reasonable person would have found the act “materially adverse,” and that it may have “dissuaded a reasonable worker from making or supporting a charge of discrimination.” According to the Fourth Circuit, Detecon’s lawsuit, coming only 15 days after Darveau’s FLSA claim, was a materially adverse action, because it could well dissuade a reasonable worker from pursuing a claim against Detecon under the FLSA. On that basis, the Court reversed the dismissal of the retaliation claim, remanding it for further proceedings.

The Fourth Circuit’s decision is consistent with a number of other federal appellate courts – notably the Tenth, Sixth, and Fifth Circuits – all of which have held that the FLSA protects former employees against retaliation. Although Darveau’s case turned largely on the short period of time between the protected act and the alleged retaliation, it should not be interpreted to exclude longer time periods, or other types of adverse actions. The message here is that under the FLSA, companies cannot take any action that may dissuade an employee – or, as in this case, a former employee – from acting to protect his or her rights under that Act.