Wage & Hour Counsel : Wage & Hour Lawyer & Attorney : Littler Mendelson Law Firm : Employment Law, Labor Relations

On appeal, the Seventh Circuit held that the clothes at issue in this case – flame-retardant pants and jacket, work gloves, work boots, a hard hat, safety glasses, ear plugs, and a hood – are clothes under section 203(o), and therefore the time spent putting on and taking off such items are not compensable. To the extent the hard hat, glasses, and ear plugs were not technically “clothes,” the court noted that putting on these items did not qualify as compensable “work” because the time spent in such activity was de minimis. Accordingly, U.S. Steel was not required to compensate its employees for the time spent changing into and out of work clothes.

The conclusion reached by the Seventh Circuit in Sandifer conflicts with Ninth Circuit authority holding that “special protective gear [is] different in kind from typical clothing” and is not “clothes” under section 203(o). Still, the Fourth, Sixth, Tenth, and Eleventh Circuits have adopted a different definition – one that includes anything one “wears,” including “accessories” such as ear plugs and safety glasses.

The time it takes for an individual employee to don or doff work related clothing may seem inconsequential, but when such time is aggregated in class and collective actions it can be significant. Thus, the Supreme Court’s resolution of what constitutes “changing clothes” in the context of section 203(o) may have a significant impact on employers nationwide.

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In that case the plaintiff worked as a medical technologist for Bostwick Laboratories. The plaintiff claimed that she and several coworkers met with the company’s chief operating officer to report that their supervisor was altering their timesheets to reflect that they had not worked the overtime that they had recorded, when they had worked the overtime hours. According to the plaintiff, the chief operating officer told them that he would look into the issue, but rather than resolving it, her employment was terminated on the following Monday. The plaintiff sued Bostwick Laboratories in the Eastern District of Virginia, claiming FLSA retaliation, among other things. Bostwick Laboratories moved to dismiss the complaint on the ground that an employee’s informal internal company complaint regarding a possible FLSA violation was not protected activity under the FLSA. The district court agreed, based on the then-precedential Fourth Circuit decision in Ball v. Memphis Bar-B-Q Co., and without having the guidance yet of the U.S. Supreme Court’s decision in Kasten, and dismissed the complaint. The plaintiff appealed.

The Fourth Circuit reversed, holding that “filed any complaint” includes internal company complaints, joining the First, Third, Sixth, Seventh, Eighth, Ninth, Tenth and Eleventh Circuits and leaving the Second Circuit’s minority position on this issue in doubt. In reaching its decision, the Fourth Circuit reasoned that protecting internal company complaints would further the remedial purposes of the FLSA and was consistent with agency enforcement positions.

While some circuits are still split on the issue of whether the FLSA retaliation protections apply to internal complaints, employers should investigate and remedy oral or written internal complaints regarding wage and hour violations, and strictly prohibit retaliation against those who make such complaints. For more information on FLSA retaliation, see the DOL’s recently posted Fact Sheet on FLSA retaliation.

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The plaintiff’s principal argument was that, in her view, Maryland's highest court, the Court of Appeals, in Medex v. McCabe, 811 A.2d 297 (Md. 2002), held that the MWPCL constituted such a fundamental Maryland public policy. There, the Court of Appeals refused to uphold a provision in an employment agreement between a Maryland company and a Maryland resident requiring continued employment to receive already earned payments, holding that the provision violated the MWPCL. Because the Maryland Court of Appeals struck down the provision at issue, the plaintiff reasoned that the Maryland Court of Appeals would likely strike down any provision in an employment agreement that contradicted or violated the MWPCL. Thus, the plaintiff argued, the Court of Appeals would strike the choice of law provision at issue because the New Jersey wage payment and collection law was more favorable to employers.

The Fourth Circuit easily distinguished Medex. In particular, the court emphasized that the employment agreement at issue was between a Maryland employer and a Maryland employee. Hence, the only issue was whether the provision violated the law, and not whether the MWPCL itself contained a fundamental Maryland public policy. The court then noted that the fact that 42 other states have enacted similar wage payment laws undermines the notion that the MWPCL is a fundamental public policy.

Notably, no Maryland state court has yet evaluated whether the MWPCL embodies a fundamental public policy. However, three Maryland federal district courts, and now the Fourth Circuit, have held that this law does not appear to represent a fundamental policy of the State of Maryland. If it chooses to do so, the Maryland Legislature can of course always amend the MWPCL to expressly state that it does.

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In affirming the district court’s decision, the Fourth Circuit observed that the minimum wage and overtime provisions and the anti-retaliation provision of the FLSA protect “employees,” and the term “employee” is not defined “in a vacuum,” but in relationship to an employer, i.e., “any individual employed by an employer.” The court noted that the FLSA's enforcement provision provides that “any employer” who violates the anti-retaliation provision is liable for legal and equitable remedies, and an action may be maintained against “any employer.” The court thus reasoned that an employee is given remedies for violation of the anti-retaliation provision as to his or her employer, and Dellinger could only state a claim if she could show that she was an employee and that SAIC was her employer. Because Dellinger was only an applicant whose application had been approved on a contingent basis and she never began work, the court concluded that she could not be an employee under the FLSA, which defines “employ” as “suffer or permit to work.”

Dellinger, the Secretary of Labor and the dissenting judge raised a number of arguments, all of which the court rejected. The court first rejected the argument that because the anti-retaliation provision prohibits “any person” from discharging or discriminating against “any employee” for filing or instituting an FLSA complaint or enforcement proceeding, Dellinger could sue “any person” for retaliation. While the court acknowledged that anti-retaliation provision does prohibit all “persons” from engaging in certain acts, including retaliation against employees, it noted that the enforcement provision does not authorize employees to sue “any person.” The court further noted that the use of the term “person” in the anti-retaliation provision is attributable to the fact that this section prohibits other acts not performed by employers, i.e., transporting hot goods, which is punishable by a criminal penalty, not a civil action.

The court also rejected the argument that the enforcement provision includes the remedies of “employment” and “reinstatement,” indicating that the FLSA protects prospective employees. The court reasoned that the remedy of “employment” could be afforded to a former employee hired back to a different position.

The court likewise rejected the argument that it should apply Robinson v. Shell Oil Co., which held that the definition of “employee” in Title VII included former employees, to extend the FLSA to applicants and prospective employees. The court considered Robinson to be inapposite because there was no dispute that the FLSA applied to former employees; rather, the issue here was whether the FLSA could extend to someone who had never worked for the employer.

The court also rejected the argument that Dellinger could sue SAIC because she was “any employee” insofar as she was her predecessor’s employee and SAIC was “any employer.” The court held that the purpose and text of the statute were consistent with the interpretation that it was referring only to an employer’s own employees. The court also declined to adopt the argument that Dellinger could be considered an “employee” of SAIC under the FLSA because, as the recipient of a contingent offer of employment, “there was no legitimate impediment between her and the imminent assumption of her job duties.”

While the court was sympathetic to Dellinger’s argument that prospective employers should not be able to discriminate against prospective employees for exercising their FLSA rights in the past, it held that it was not free to broaden the scope of the statute whose scope is clearly defined. In distinguishing other statutory frameworks, the court observed that the Secretary of Labor had not promulgated a regulation under the FLSA interpreting the term “employee” to include prospective employees and applicants.

We will continue to follow and report on legal developments on this important issue.

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Next, the court considered whether the prohibition of a class action voided the agreement. Notably, the Fourth Circuit in Adkins v. Labor Ready, Inc. had already addressed the issue and held that an arbitration agreement precluding class actions, and specifically a collective action under the FLSA, is not per se unlawful in light of the clear federal directive in support of arbitration. In this case, however, the court found that, in conjunction with the fee splitting provision, it would likely be that “no individual suits” would be brought except as a collective action under the FLSA.

Lastly, the court found that the provision truncating all statutes of limitations to one year would prevent Plaintiffs from vindicating their statutory rights, although the court recognized that some limitation periods may be shortened by agreement. Relying on Ninth Circuit precedent in Davis v. O’Melveny & Myers, the court held that a strict one year limitation period for employment-related statutory claims is oppressive in an arbitration context.

This case suggests that an employer may include one of the above provisions in an arbitration agreement, but not all three. In addition, the court left open the question of whether parties could agree to a two-year statute of limitations on some claims. 

Photo credit: Logan Simmons
 

In light of the Circuit split, the U.S. Supreme Court granted review of the Seventh Circuit’s decision in Kasten v. Saint-Gobain Performance Plastics Corp., and has now issued its opinion.

The Kasten case involved an unwritten, oral complaint to the employer, thus implicating both issues (1) and (2) above. Kevin Kasten worked at a Saint-Gobain manufacturing plant in Wisconsin. Kasten claimed that on several occasions he complained to his supervisors and a Human Resources generalist that the location of the time clocks was illegal because it prevented employees from being paid for time spent donning and doffing their required protective gear, and said that he might file a lawsuit. After frequently being warned about not recording his comings and goings on the time clock, Kasten was terminated. He sued Saint-Gobain, claiming that his employment was terminated in retaliation for his complaints in violation of the FLSA. The Western District of Wisconsin dismissed Kasten’s case, holding that unwritten, oral complaints are not protected activity under the FLSA’s anti-retaliation provision. The Seventh Circuit affirmed, holding that while internal complaints to an employer are protected under the FLSA, such complaints must be in writing because the term “filed” implies a writing. The court thus affirmed the dismissal of Kasten’s complaint.

In light of the circuit split surrounding the interpretation of the phrase “filed any complaint,” the Supreme Court granted review. The Court vacated the Seventh Circuit’s decision, holding that unwritten, oral complaints are protected. Justice Breyer (joined by Justices Roberts, Kennedy, Ginsburg, Alito and Sotomayor, with Kagan not taking part) held that while the meaning of the phrase “filed any complaint” was ambiguous, considering the purpose and context of the statute, it should be interpreted to include unwritten, oral complaints. The Court reasoned that excluding oral complaints would: (1) undermine the FLSA’s enforcement scheme as the anti-retaliation provision enables employees to report substandard conditions without fear of economic retaliation, (2) disadvantage those with difficulty making requests in writing such as the illiterate, less educated and/or overworked, (3) prevent government agencies from using hotlines, interviews and other oral methods of receiving complaints, and (4) discourage private employers from using informal workplace grievance procedures to secure compliance.

In order to ensure fair notice to the employer, the Court held that the phrase “filed any complaint” contemplates “some degree of formality, certainly to the point where the recipient has been given fair notice that a grievance has been lodged and does, or should, reasonably understand the matter as part of its business concerns.” The Court articulated the following standard: a complaint is “filed” when “a reasonable, objective person would have understood the employee to have put the employer on notice that the employee is asserting statutory rights under the Act.” The complaint “must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both the content and context, as an assertion of rights protected by the statute and a call for their protection.”

Surprisingly, the Court declined to comment on whether the FLSA protected only complaints filed with the government or whether complaints to an employer are also protected. The Court reasoned that, while the issue was addressed by the Seventh Circuit, it was not raised by the Company in its opposition to Kasten’s petition for certiorari and there was no need to resolve it in order to decide the oral/written issue. In his dissent, Justice Scalia (joined by Thomas) criticized the majority’s approach, noting that the issue was fairly encompassed within the Company’s opposition to the petition for certiorari, and would have been more logically addressed first. Justice Scalia would have affirmed the dismissal of the complaint on the ground that the plain meaning of “filed any complaint” and its context make clear that the anti-retaliation provision contemplated an official grievance filed with a court or agency, not oral or written complaints to an employer. Thus, the circuit split on whether a complaint must be filed with the government to be protected remains. However, employers are cautioned to tread carefully and be mindful that a majority of the circuit courts have extended the FLSA’s protection to internal company complaints.

The employee and Petitioner argued that these issues were important for the Court to resolve because there is a conflict among the circuits and district courts. Most notably, the Ninth Circuit in Alvarez v. IBP, Inc., 339 F.3d 894 (9th Cir. 2003), aff’d on other grounds, 546 U.S. 21 (2005), held that that protective items worn in the beef and pork industries are not “clothes” within the meaning of Section 203(o), and, therefore, employees are required to be paid for this time, which is in direct conflict with the Fourth Circuit’s opinion.

In opposition to the petition for review to the Supreme Court, the employer and Respondent, Allen Family Foods, Inc., distinguished Alvarez v. IBP, Inc., noting that the meat packing and poultry industries use different protective gear, and that the Petitioner oversimplified the facts in the case. In addition, the employer noted that, after the petition was filed, the U.S. Department of Labor issued an opinion letter stating that the term “clothes” in Section 203(o) does not apply to the protective gear worn by meat packing employees, but distinguished the heavy protective gear worn in meat packing plants from the lighter gear worn in poultry plants. Administrator’s Interpretation No. 2010-2 (June 16, 2010).

The employee also presented the issue of whether the requirement that exemptions from the FLSA are to be narrowly construed also applies to Section 203(o). In response, the employer argued that Section 203(o) is not an exemption, because it does not exempt any employee from the minimum wage or overtime provisions of the Act, and, therefore, ordinary statutory interpretation should apply.

Employers should not read too much into the Court’s refusal to hear this case. It is possible the Court prefers that other circuits weigh in on the issue before accepting review, particularly in light of the Department of Labor’s recent Administrator’s Interpretation.

This entry was written by Steven Kaplan.