FLSA Retaliation Claim by Advocate for Co-Worker Approved by Fifth Circuit

By George W. Loveland, II

In Starnes v. Wallace, No. 15-41341 (5th Cir. Feb. 24, 2017), the U.S. Court of Appeals for the Fifth Circuit reversed a summary judgment decision in favor of the employer and found instead that there was sufficient evidence to support the advocate’s claim that she had been retaliated against in violation of the Fair Labor Standards Act (“FLSA”). In addition, based on a recent decision by the Fifth Circuit in another case, the court ruled that emotional distress damages are available to plaintiffs asserting FLSA retaliation claims.

What Happened

LeAnn Starnes (“Starnes”) worked as a Risk Manager in the corporate office of Daybreak Ventures, LLC (“Daybreak”), a supplier of thousands of employees to nursing homes in Texas. Starnes’s job involved investigating work-related injuries, reviewing and responding to workers’ compensation and discrimination claims, and attending mediations for lawsuits involving the Risk Management Department.

In late October or early November 2010, Starnes was approached by Ludy Estrada (“Ludy”), a co-worker, who complained that her husband, Vincent Estrada (“Vincent”), a maintenance worker employed by Daybreak, was not being paid the travel time and overtime to which he was entitled. After reviewing the information Ludy provided, Starnes told her to see HR Director Shelton (“Shelton”), because Starnes believed that FLSA claims were handled exclusively by HR. Ludy was afraid to report the claimed violation to Shelton, so Starnes met with Shelton a few days later on Ludy’s behalf. During the meeting, Starnes told Shelton that Daybreak was “violating the law by the way [it was] paying Vincent.” Before New Year’s, Daybreak President Rich (“Rich”) pulled Starnes aside to discuss Vincent’s situation. Starnes told Rich that “it looked to [her] like Daybreak was breaking the law” by the way it was paying Vincent. Rich assured Starnes that the company would resolve the matter.

Around this time, Daybreak began requiring each employee to sign a job description, and Starnes signed hers, which was dated October 25, 2010, on March 11, 2011. The new job description required Starnes to report “all allegations and findings related to violations of federal and state law” to Rich. This requirement was not in her prior job description.

As of November 2011, Vincent’s claim had not been paid, so Ludy went to Shelton and demanded that the claim be paid. At Shelton’s request, Ludy gave him a written request for nearly $69,000 in owed wages, and Shelton told her that he would give it to Rich. On December 9, 2011, Rich called Ludy into his office to discuss the amount of Vincent’s claim. Even though Starnes had not been involved in the dispute since her conversation with Rich in December 2010, and was not present at the meeting, Rich stated that Starnes “was to blame” for the problems with Vincent’s wage claim. The discussion between Rich and Ludy became loud and heated, and Starnes could hear Rich from her office. After Ludy became upset, Rich agreed to resolve Vincent’s claim and assured her that she would not lose her job. In the last week of 2011, Daybreak settled Vincent’s claim for $40,000.

On January 6, 2012, 10 days after the settlement payment, Daybreak laid off Starnes, Ludy, and three other employees due to “financial difficulties.” However, one of the three other employees, Rich’s son, had taken a position at another company prior to the layoff, and the other two employees were reinstated into other positions at Daybreak.

The Court’s Decision

Starnes and Ludy filed a lawsuit asserting claims for retaliation under both the FLSA and a Texas statute regulating nursing homes. A preliminary motion by Daybreak resulted in the dismissal of the state law claims and the claims for emotional distress and punitive damages. The district court denied Daybreak’s later motion for summary judgment regarding Ludy’s FLSA retaliation claim, and Ludy settled her claim before trial. The district court reached the opposite conclusion regarding Starnes’s claim, finding that she did not engage in protected activity because reporting the wage dispute was within her job duties, and that causation could not be established because more than a year had elapsed between her reporting activity and her termination. Starnes appealed to the Fifth Circuit.

With respect to whether Starnes was acting in accordance with her duties, the Fifth Circuit first concluded (a) that Starnes had made a complaint; (b) that Daybreak recognized she had made a complaint; and (c) that this complaint could subject Daybreak to a later claim of retaliation. According to the appellate court, Starnes’ two assertions that Daybreak was “violating the law” by not paying Vincent for travel time and overtime were sufficiently clear and detailed for Daybreak to understand them as assertions of rights protected by the FLSA and a call for their protection. The court then determined that there was a genuine dispute as to which job description applied when Starnes made her complaints to Shelton and Rich. Even though the new job description requiring her to report violations of law to Rich was dated October 25, 2010, Starnes did not sign it until several months later, and there was no evidence regarding when the new job description was delivered to Starnes. Further, the reporting requirement was not in the prior job description, and her conduct in reporting the violation to HR was consistent with that job description and her primary responsibility involving insurance and workers’ compensation claims. Thus, after Ludy refused to go to Shelton with the complaint as Starnes suggested, Starnes took the complaint to Shelton, not Rich, on Ludy’s behalf.

Regarding whether the delay between Starnes’s protected activity and her termination precluded a causal connection between the two events, the court declined to rely solely on temporal proximity, particularly where nearly identical evidence of pretext was found sufficient to allow Ludy’s FLSA retaliation claim to proceed. The court concluded that the evidence of pretext the district court relied on – the questionable validity of Daybreak’s proffered “financial difficulties” justification for the terminations of Ludy and Starnes, where they were the only employees to complain about FLSA violations and were the only ones terminated within a month of Starnes being blamed for the Vincent wage problem and within 10 days of the $40,000 settlement payment – was proof of a retaliatory motive for Starnes’s termination. In the court’s opinion, that evidence was sufficient to establish causation and to overcome the delay between protected activity and termination, and warranted its conclusion that Starnes’s FLSA retaliation claim should proceed.

Lessons to be Learned

Be aware of the potential for claims of retaliation resulting from attempts by employees, either on their own behalf or on behalf of a co-worker, to enforce rights under employment statutes and take any such claims seriously. The FLSA, along with the National Labor Relations Act, were the first employment-related statutes to include anti-retaliation provisions when they were passed by Congress in the 1930s. Today, virtually all employment-related statutes contain such provisions. For FY 2016, the EEOC reported that 42,018 charges alleging retaliation were filed with the agency, a whopping 45.9% of all charges filed.

Specifically regarding Starnes v. Wallace, the decision highlights the seriousness with which the courts, here the Fifth Circuit, address allegations of protected activity retaliation by employers. In its decision, the court pointed out that it was looking at the “big picture,” and it used all the facts favorable to Starnes to reverse summary judgment and allow her FLSA retaliation claim to proceed.

George W. Loveland, II Special Counsel Littler-Memphis Office gloveland@littler.com www.littler.com

George W. Loveland, II
Special Counsel
Littler-Memphis Office