Employment Law Monitor : Employment Lawyer & Attorney : Cole Schotz Meisel Forman & Leonard Law Firm : NJ, Mid-Atlantic Wage & Hour, Wrongful Termination

On March 22, 2011, in Kasten v. Saint-Gobain Performance Plastics Corp., the United States Supreme Court held that an employee who lodges verbal complaints regarding alleged violations of the Fair Labor Standards Act of 1938, 29 U.S.C. §201 et seq. (“FLSA”), may be entitled to protection of the FLSA’s anti-retaliation provision. The Kasten decision is a boon to employees, but could create potential problems for employers.

The FLSA’s anti-retaliation provision prohibits an employer from discharging or discriminating against an employee “because such employee has filed any complaint or instituted any proceedings under or related to [the FSLA][.]” 29 U.S.C. §215(a)(3).  The Kasten Court was presented with the question as to whether “filed any complaint” includes oral as well as written complaints. In a 6-2 decision, the Court concluded that it did.

In Kasten, the plaintiff, Kevin Kasten (“Kasten”), sued his former employer, Saint-Gobain Performance Plastics Corp. (“Saint-Gobain”), alleging that he was terminated in violation of the FLSA’s anti-retaliation provision after he orally complained to Saint-Gobain’s management of alleged violations of the FLSA. Kasten complained internally in accordance with Saint-Gobain’s grievance resolution process. Saint-Gobain subsequently terminated Kasten, leading to the underlying lawsuit.

Even though the parties disputed the reason for Kasten’s termination, the district court granted summary judgment in favor of Saint-Gobain and dismissed the complaint, finding that the FLSA’s anti-retaliation provision did not protect oral complaints. The Seventh Circuit Court of Appeal, agreed and affirmed the grant of summary judgment.

The Supreme Court, however, held differently, resolving a conflict on this question among the Circuit Courts. The Court analyzed the meaning of “filed” and “any complaint,” and held that the FLSA includes oral complaints. In reaching this holding the Court considered dictionary definitions of the words in question, legislative intent, and the views of agencies such as the Department of Labor and the Equal Employment Opportunity Commission.

The Court appears to have left somewhat open the question of when an oral complaint will be deemed “filed” within the meaning of the FLSA. The Court did, however, note that “a ‘filing’ is a serious occasion, rather than a triviality”, and that the FLSA “contemplates some degree of formality” such that the employer receives fair notice of the complaint. The Court did not, however, expound upon the contours of such formality and notice, and these will likely be issues in future FLSA retaliation lawsuits.

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High school and college students often are willing to work for little or no pay during the summer months to bolster their resumes. Businesses see this as a good opportunity to get some extra help around the office. However, private sector, "for-profit" employers need to be aware that they are required to pay at least minimum wage and overtime to summer help unless these internships or training programs meet the following criteria:

1. The internship is similar to training which would be given in an educational environment;
2. The internship is for the benefit of the trainees;
3. The interns do not displace regular employees, and work under close supervision of existing staff;
4. The employer derives no immediate advantage from the activities and, on occasion, its operations may actually be impeded;
5. The interns are not guaranteed permanent positions at the conclusion of the internship; and
6. The employer and interns understand beforehand that the internship is unpaid.

See U.S. Dept. of Labor, Wage and Hour Division, Fact Sheet #71.

The determination whether an internship or training program meets all six requirements depends upon all the facts and circumstances of each program. In addition to owing unpaid wages and potentially hefty fines, unpaid programs that do not meet all of the Department of Labor's criteria could lead to legal problems involving workers' compensation, employee benefits, unemployment insurance and federal and state taxes.

Employers should structure unpaid internships to meet the above criteria. Also consider having a written agreement with the interns outlining the nature of the work and that the program is being operated to provide a learning experience for the interns. If in doubt about compliance, employers should pay at least minimum wage and overtime to avoid legal problems because the Fair Labor Standards Act, the federal statute that covers minimum wages and overtime, as well as state wage and hour laws, define “employ” very broadly.

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In July, the United States Department of Labor released an updated "Frequently Asked Questions Regarding Furloughs and Other Reductions in Pay and Hours Worked Issues."  The FAQ can be found at http://www.dol.gov/esa/WHD/flsa/FurloughFAQ.pdf and answers basic questions regarding how the Fair Labor Standards Act ("FLSA") impacts reductions in pay or in hours worked by employees.

Given the current economic environment many employers are reducing their workforce.  Other employers, instead of terminating employees, are reducing the compensation their employees' receive or reducing the hours worked in order to reduce payroll.  Any employer seeking to reduce pay or hours should be familiar with how the FLSA might impact such a decision.  Many of the questions an employer may have are covered by the FAQ, which answers questions such as whether it is legal to reduce salary or hours of employees under the FLSA.  The FAQ includes discussions of situations involving both exempt and non-exempt employees under the FLSA and can help employers avoid violating the FLSA. 

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