Sixth Circuit Revives FLSA Retaliation Claim as a Jury Question When Plaintiff is Fired After Repeated Complaints About Not Getting Paid for Making and Obtaining Repairs

Last week, the Sixth Circuit reversed an employer’s summary judgment on a FLSA retaliation claim.  Caudill v. Hard Drive Express, Inc., No. 23-1145 (6^th Cir. 2/7/24).  The employee trucker had complained repeatedly during his employment that the employer failed to pay him for minor repairs that he made on his truck or for time driving it to an authorized repair shop.  On his last day of work, they argued over that and whether he was eligible for PTO before he was fired.  The Court found that there was a dispute over material facts which a jury must resolve about the reason he was fired when he had threatened to go to “the labor board” after the employer referred to uncompensated repairs that the employee had made.   While the employer had argued and the trial court had found that this threat related to unprotected complaints about the PTO policy, the Court found that the employee’s numerous prior complaints about the uncompensated time and repair issue could also have been sufficient to put the employer on notice that he was engaging in conduct protected under the FLSA.

According to the Court’s opinion, the plaintiff trucker had repeatedly complained about not being paid for time spent making and obtaining repairs on his truck. The employer explained that he had failed to turn in receipts for reimbursement and was supposed to have had all repairs made by authorized vendors.  (The plaintiff asserted that he had turned in the original receipts without keeping copies).   On his last day of work, they argued again -- mostly by text message -- about this and his ineligibility for PTO before he was fired. During the text message argument, he threatened to report the employer to the “labor board”  after his boss had pointed out that he had made him many no-interest loans and was offended that he wanted paid for changing filters which he should have been done only by the authorized repair shops.  They also argued about whether he qualified for paid time off when he failed to give 30 days advance notice, etc.  The trial court granted summary judgment to the employer on the grounds that the employee’s complaints about getting paid for repairs were too vague to have put the employer on notice that they were protected by the FLSA and that his complaints about PTO were unprotected by the FLSA.

The Court did not dispute that his complaints about PTO were unprotected by the FLSA.  However, it did not find the trucker’s threat to be too vague to prove that he was terminated in retaliation for engaging in protected conduct under the FLSA, which “contains an antiretaliation provision that makes it unlawful “to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter.” Id. § 215(a)(3).”  The Court essentially follows the same burdens of proof that exist under the federal discrimination laws.   

While the trial court’s interpretation of the text message exchange between the plaintiff and employer was plausible, it was not the only possible interpretation.

Given the muddled nature of the back-and-forth between the two, the message could support either reading. Additionally, [the plaintiff’s] statement that he was on his way to the labor board came in response to a message from [his boss] complaining that he was asked to reimburse truck maintenance even though he made no-interest loans to drivers . . . .

Because a reasonable jury could find that these messages put Defendants on notice that [plaintiff] intended to report them for their asserted failure to compensate drivers for repairs, summary judgment should not have been granted.

Moreover, his

“prior complaints about reimbursements provide another potential grounding for his FLSA claim. The district court held that the prior complaints did constitute protected activity under the FLSA, as it covers informal and internal complaints. . . . It concluded, however, that these complaints did “not appear to be more than mere grumblings” that failed to satisfy the notice requirement. . . . In reaching this conclusion, the court distinguished [his] earlier complaints from a case in which the plaintiff’s “numerous internal complaints” included one that cited FLSA penalties; it also noted that [he] failed to produce records of unreimbursed expenses.  . . . But as Defendants themselves admitted in their summary judgment motion, “Plaintiff repeatedly complained (commencing in 2017) and threatened to report the company . . . about alleged unpaid services or non-reimbursed, out-of-pocket expenses.”  . . . The district court did not explain why, given those threats, the complaints were too indefinite to place Defendants on notice that [he] was asserting statutory rights.  . . . . And to the extent that [he] must establish that [his employer] in fact failed to reimburse him, he submitted an affidavit stating that he turned in receipts to [his boss] and was not reimbursed. This is competent evidence to overcome summary judgment, even if the lack of corroborating documentation (and conflicting attestations from Defendants) might affect how a jury weighs it.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Supreme Court Reinstates SOX Jury Verdict With Lower Burden of Proving Employer's Motive Against Whistleblower

 This morning, the Supreme Court unanimously found that proof of retaliatory intent is not necessary to prevail on a claim for wrongful discharge brought under §1514A(a) of the Sarbanes-Oxley Act of 2002, and the employee must prove that the protected activity was merely a contributing factor to his or her employment termination.  Murray v. UBS Securities, LLC, No. 22-660 (U.S. 2-8-24).  “Under the whistleblower-protection provision of the Sarbanes-Oxley Act of 2002, no covered employer [publicly-traded companies] may ‘discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of’ protected whistleblowing activity. 18 U. S. C. §1514A(a).”  The protected activity includes reports by employees “what they reasonably believe to be instances of criminal fraud or securities law violations.”     “When a whistleblower invokes this provision, he bears the initial burden of showing that his protected activity ‘was a contributing factor in the unfavorable personnel action alleged in the complaint.’ 49 U. S. C. §42121(b)(2)(B)(iii). The burden then shifts to the employer to show that it ‘would have taken the same unfavorable personnel action in the absence of ‘ the protected activity. §42121(b)(2)(B)(iv).”  The statutory language prohibiting discrimination against the employee does not require proof of retaliatory intent. 

According to the Court’s opinion, the plaintiff was employed as a research strategist who was required by SEC regulations to certify to his employer’s current and prospective customers that his reports were prepared independently and reflected his own views.  He alleged that he was fired after internally reporting in December 2011 and January 2012 that the leaders of two trading desks were improperly pressuring him to skew his reports to support their business strategies and to “clear” his articles with them before publication.  He found their conduct to be both unethical and illegal.  His supervisor, while sympathetic, urged him to not alienate those two individuals and was not helpful when the plaintiff reported that he was improperly being left out/excluded from meetings.   Despite having just given the plaintiff a strong performance evaluation, the manager then recommended him for layoff or to be transferred to a trading desk analyst position where he would not have SEC-certification responsibilities.  When the trading desk rejected him, he was fired in March 2012.  At trial, the employer argued that “market-wide difficulties and a $2-billion loss on a [its] trading desk in London had required the elimination of certain positions,” including his.

At trial, the judge instructed the jury that he was “not required to prove that his protected activity was the primary motivating factor in his termination, or that . . . UBS’s articulated reason for his termination was a pretext.”  When the jury sought clarification, the judge instructed that they ““should consider” whether “anyone with th[e] knowledge of [the plaintiff’s] protected activity, because of the protected activity, affect[ed] in any way the decision to terminate [his] employment.”  Recommending a $1M verdict, the “jury found that [the plaintiff] had established his §1514A claim and that [the employer] had failed to prove, by clear and convincing evidence, that it would have fired [him] even if he had not engaged in protected activity.”  The court added $1.7M in attorneys fees and costs to the jury’s recommendation.   On appeal, the Second Circuit concluded that the plaintiff was required to show that the employer possessed a retaliatory intent.  Today, the Supreme Court reversed.

Unlike most federal employment statutes, SOX adopts the “burdens of proof set forth in section 42121(b) of title 49, United States Code”—a provision of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR 21).” Under that statute, “the whistleblower bears the burden to prove that his protected activity “was a contributing factor in the unfavorable personnel action alleged in the complaint.” 49 U. S. C. §42121(b)(2)(B)(i). If the whistleblower makes that showing, the burden shifts to the employer to show “by clear and convincing evidence” that it “would have taken the same unfavorable personnel action in the absence of ” the protected activity. §42121(b)(2)(B)(ii).”  This framework

originated in the Whistleblower Protection Act of 1989 (WPA), 5 U. S. C. §1221(e), which provides legal protection for whistleblowers within the civil service. The framework was meant to relieve whistleblowing employees of the “excessively heavy burden” under then-existing law of showing that their protected activity was a “‘significant’, ‘motivating’, ‘substantial’, or ‘predominant’” factor in the adverse personnel action, and it reflected a determination that “[w]histleblowing should never be a factor that contributes in any way to an adverse personnel action.” Congress then incorporated the easier-to-satisfy “contributing factor” framework into a series of similar whistleblower statutes that protect non[1]civil-service employees in industries where whistleblowing plays an especially important role in protecting the public welfare—including, as noted above, the airline industry (AIR 21) and the securities industry (Sarbanes-Oxley).

The Court then explained that

Section 1514A’s text does not reference or include a “retaliatory intent” requirement, and the provision’s mandatory burden-shifting framework cannot be squared with such a requirement. While a whistleblower bringing a §1514A claim must prove that his protected activity was a contributing factor in the unfavorable personnel action, he need not also prove that his employer acted with “retaliatory intent.”

                . . . .

An animus-like “retaliatory intent” requirement is simply absent from the definition of the word “discriminate.” When an employer treats someone worse—whether by firing them, demoting them, or imposing some other un[1]favorable change in the terms and conditions of employment—“because of ” the employee’s protected whistleblowing activity, the employer violates §1514A. It does not matter whether the employer was motivated by retaliatory animus or was motivated, for example, by the belief that the employee might be happier in a position that did not have SEC reporting requirements.

The Court rejected the employer’s argument that innocent employers will be held liable for adverse employment actions which were not motivated by retaliation or the protected conduct, such as when the employee’s protected conduct results in the biggest client to leave and the employee without any work to do:

The statute’s burden-shifting framework provides that an employer will not be held liable where it “demonstrates, by clear and convincing evidence, that [it] would have taken the same unfavorable personnel action in the absence of ” the protected behavior. 49 U. S. C. §42121(b)(2)(B)(ii). The right way to think about that kind of same-action causation analysis is to “change one thing at a time and see if the out[1]come changes.” Bostock, 590 U. S., at 656. The question is whether the employer would have “retain[ed] an otherwise identical employee” who had not engaged in the protected activity. Id., at 660. As the Federal Circuit has explained in the WPA context, the same-action analysis “does not require . . . that the adverse personnel action be based on facts ‘completely separate and distinct from protected whistleblowing disclosures.’”  . . . In that case, the correct inquiry was whether the employer would have taken the same action if it had learned of the contents of the employee’s protected disclosure through other means.  . . .. In UBS’s hypothetical, the relevant inquiry would be whether the employer still would have fired the employee if the client had left for some other reason. If so, it will have no trouble prevailing under the statute.

To be sure, the contributing-factor framework that Congress chose here is not as protective of employers as a motivating-factor framework. That is by design. Congress has employed the contributing-factor framework in contexts where the health, safety, or well-being of the public may well depend on whistleblowers feeling empowered to come forward. This Court cannot override that policy choice by giving employers more protection than the statute itself provides.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Rejects Conclusory Allegations in Complaint of Racial and Retaliation Discrimination and Harassment

 Last week, the Sixth Circuit affirmed the dismissal of a racial discrimination, harassment and retaliation claim against a university. Ogbonna-McGruder v. Austin Peay State University, No. 23-5557 (6^th Cir. Jan. 30, 2024).   First, the Court found that discrete acts of discrimination rarely constitute a hostile work environment claim.  Second, it found that four acts over more than 30 months were not sufficiently severe or pervasive enough to constitute harassment.  Third, her retaliatory harassment claims failed for the same reasons, even if the burden of proving retaliation is lower than discrimination.  Fourth, her discrimination claims failed because she failed to allege that they were motivated by her race or that she was treated differently than anyone who was similarly situated from her. “[O]ur circuit has repeatedly held that a retaliatory hostile work environment claim must include evidence that the harassment was severe or pervasive.”

According to the Court’s opinion, the plaintiff taught university classes for more than a decade when the university decided to divide her department.  She was unhappy with a number of decisions made about her reassignment, including her classes, her performance evaluations and the location of her office, etc.  When she appealed some of these decisions, she was told that a decision had been wrong, but denied that they were not racially motivated.  She filed an EEOC Charge and later filed suit for discrimination, harassment and retaliation.  The trial court dismissed her complaint for failure to state an actionable claim.

The Court agreed that the plaintiff had failed to sufficiently allege severe or pervasive harassment based on a number of employment actions taken against her over a 30 month period:

First, the district court correctly found that the allegations of discrete acts of discrimination could not be characterized as part of the hostile work environment claim. The Supreme Court has explained that under Title VII, a plaintiff may bring a claim alleging that either (1) an employer engaged in “discrete discriminatory acts” such as “termination, failure to promote, denial of transfer, or refusal to hire”; or (2) the employer’s “repeated conduct” created a hostile work environment. . . . Because the two claims are “different in kind,” we have consistently held that allegations of discrete acts may be alleged as separate claims, and as such “cannot properly be characterized as part of a continuing hostile work environment.” . . .

 . . . . Her allegations that she was denied the opportunity to draft a grant proposal and teach summer courses, received low evaluations, was replaced by a white adjunct professor, and was reassigned to teach public management courses represent discrete acts that could perhaps support separate claims of discrimination or retaliation under Title VII.

 . . .

But even viewing those allegations [of four incidents] as a whole, [Plalintiff] did not sufficiently allege facts from which we may infer that the harassment she experienced was severe or pervasive. Courts consider the totality of circumstances in determining the severity and pervasiveness of alleged harassment, including “the frequency of the discriminatory conduct; its severity; whether it [was] physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interfere[d] with an employee’s performance.”  . . . Notably, the alleged harassment must be both objectively and subjectively severe and pervasive to be actionable. Id. at 21–22. Allegations of “simple teasing, . . . offhand comments, and isolated incidents (unless extremely serious)” do not suffice. . ..

             . . . As an initial matter, those events occurred over a period of approximately two and a half years—that is too infrequent to demonstrate that her workplace was “permeated with” ridicule and insult. . . . And defendants’ comments about her teaching abilities and qualifications, while undoubtedly offensive, are not sufficiently serious to constitute severe harassment.  . . .  Moreover, she did not allege that the harassment was physically threatening. Her conclusory assertions that defendants’ actions “unreasonably interfered with [her] work performance,” without alleging supporting factual allegations, is insufficient for purposes of a motion to dismiss.  . . . Because she failed to plausibly allege severe or pervasive harassment, the district court did not err in dismissing her race-based hostile work environment claim.

While the Court agreed that there was a lower standard of proving retaliation compared to discrimination, this did not save her retaliatory harassment claim because, as discussed above, she failed to allege sufficiently severe or pervasive behavior necessary for the harassment part of her claim.  “[O]ur circuit has repeatedly held that a retaliatory hostile work environment claim must include evidence that the harassment was severe or pervasive.”

When the employer argued that her discrimination claim was untimely -- because the alleged acts took place more than 300 days before her EEOC charge was filed -- she apparently did not make any legal argument to the contrary.  Accordingly, her claim was deemed abandoned on appeal.  Nonetheless, the Court also observed that she failed to allege that any of the discrete acts were motivated by racial animus and to allege that she was treated worse than anyone similarly situated to her.  “]H]er conclusory statement that [the employer] treated her poorly “because of her race” is insufficient for purposes of a motion to dismiss.”

Similarly, when the employer challenged her retaliation claim as untimely, she made no legal arguments in opposition.  Accordingly, her claim was deemed abandoned.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Rejects Employer's Honest Belief Defense Where It Did Not Investigate Until After Termination

Yesterday, the Sixth Circuit unanimously reversed an employer’s summary judgment on an Ohio disability discrimination claim and rejected its honest belief defense on the grounds that it did not make a reasonably informed and considered decision.  Fisher v. Airgas USA LLC, No. 23-3286 (6^th Cir. 1/31/24).  The plaintiff had been taking legal hemp to help with pain and nausea from his cancer treatment.  However, although he told his employer that this might have caused a false positive test for marijuana (and there was evidence that he tested positive for THCA and not TCH), it did not investigate or discuss this with the testing laboratory until after it fired him.  Because it did not investigate the matter or tell the lab about his hemp use until after his termination, it did not make a reasonably informed and considered decision, which is necessary to rely on the honest belief doctrine.   Moreover, because it did not even discuss the issue with the lab until after his termination, they could not rely on that conversation to support their honest belief defense.  It only matters what they knew before he was fired.

According to the court’s opinion, the plaintiff was diagnosed with liver cancer a month after he was hired.  After working successfully for about a year, he was granted a medical leave for surgery and treatment.  Upon returning to work, he experienced pain and extreme nausea and began taking small amounts of hemp, without informing his employer, whose policy did not ban its use.  He was then randomly selected for a drug test, which indicated that he tested positive for marijuana.   He requested a repeat test, explaining for the first time that his hemp may have caused a false positive.  The employer obtained a re-test of the same sample, but did not tell the lab about his use of hemp.  The employer also did not ask the lab if hemp would cause a false positive.  In the meantime, the plaintiff contacted the lab’s MRO, who said he had tested positive for THCA, not THC.  The employer fired him anyway.  It later contended that when it contacted the lab’s CMO (after the plaintiff’s discharge) that it was told that he tested positive for THC.  However, the CMO’s affidavit says otherwise -- that he only tested positive for THC.  Nonetheless, the employer refused to reinstate him.

The plaintiff filed suit for disability discrimination.  The trial court granted the employer’s summary judgment motion based on the honest belief rule, but the Court of Appeals reversed.

[The plaintiff] expressly raised with [the employer]—specifically for purposes of his retest— the question whether his hemp usage had caused his sample to test positive for marijuana. Yet [the employer] did nothing to investigate that possibility—even though doing so would have been as easy as sending an email to [the lab] flagging that possibility. [The employer] therefore has not established— as a matter of law, as necessary for summary judgment—that it made a “reasonably informed and considered decision.”

In addition, for purposes of the honest belief rule, the employer could not rely on alleged conversations with the lab -- disputing that hemp could have caused a positive THC test -- because those conversations were not held until after the plaintiff’s employment had been terminated.

[The employer] counters that [the lab’s] Chief Medical Officer . .. . told [it] that hemp could not have caused [the plaintiff’s] positive tests. But that confirmation came after [it] fired [him], not before. And the only facts that matter for purposes of the honest-belief rule are those that were before the employer “at the time” it fired its employee.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Affirms Employer's Summary Judgment in Discrimination and Retaliation Case Where Plaintiff Had No Evidence of Pretext

 Two weeks ago, the Sixth Circuit affirmed an employer’s summary judgment on a supervisor’s claim that he had been demoted and his position had been eliminated on account of his European race and prior complaints of discrimination.  Browning v. Franklin Precision Industry, Inc. No., 23-5406 (6th Cir. Dec. 5, 2023).   The Court found that he could not prove that the employer’s explanation was pretextual because he had admitted that his was not the only position eliminated, that he had failed to comply with certain policies, that he had been counselled about prior conduct and had been demoted prior to his position being eliminated.  It also did not help that he had no documentation to prove that he had engaged in protected protestations of unlawful discrimination before he filed a Charge of Discrimination following his demotion. 

According to the Court, the plaintiff alleged that the Japanese employees of his employer made inappropriate jokes about his weight and European heritage and racist comments about African-American employees.  He also alleged that he had reported to HR multiple times about the refusal of management to permit him to promote African-American employees.  However, there was no documentation of any such complaints.   Prior to his alleged mistreatment, a female temporary worker complained that he made her uncomfortable when, for instance, he invited her to dinner alone to thank her for her work.  Although he denied he had acted inappropriately and he claimed that HR found no merit in her complaints, he was suspended for three days.  He was also counseled for leaving work prior to when a manufacturing defect had been remedied for a major customer.  He also admittedly refused to clock in an out pursuant to a new policy.  He was offered a demotion, which he ultimately accepted, but filed a Charge of Discrimination a few weeks later.  A few months after that, most employees were furloughed with the COVID pandemic.  Although the company eventually began to recall employees to work, it was determined that it would be more cost effective to outsource some positions, including that of the plaintiff.  He filed suit alleging discrimination and retaliation.    The trial court dismissed the claims on summary judgment. 

The court agreed that he could not show a prima facie case of retaliation or discrimination.  Although he engaged in protected activity by complaining about discriminatory comments, he could not show that his complaints motivated his demotion, furlough or ultimate termination because there was no evidence that any of the decisionmakers knew about his protected conduct:

However, as the district court found, [he] failed to present credible evidence that decisionmakers at FPI were aware of his complaints, or that his protected activities led to his demotion and termination.  . . .  Stated differently, [he] failed to establish that the protected activity and adverse employment action were causally connected.

Even if the plaintiff had complained to the decisionmakers, he could not show that their justification for the employment actions was pretext for unlawful discrimination or retaliation: “FPI provided legitimate reasons for its adverse employment decisions. The company maintains that it demoted [him] because he behaved inappropriately toward a temporary worker, failed to comply with timekeeping policies, and exhibited poor leadership skills.”

He does not dispute that he routinely failed to comply with company timekeeping policies and, on one occasion, left members of his team to handle a production crisis. Instead, [he] contends that his less-than-exemplary record did not justify the company’s decision to demote him. But as the district court correctly held, [he] cannot prove pretext by arguing that he thinks FPI made the wrong choice. . . . Instead, [he] was required to show that FPI’s “reasons [were] false [and] that retaliation was the real reason for the adverse action.” . . .

Moreover, [he] presented no evidence at the summary judgment stage or on appeal to rebut FPI’s stated reasons for his furlough and termination. To the contrary, [he] concedes that he was not the only person in his department who was furloughed, or whose position was eliminated to save costs in the aftermath of the COVID-19 pandemic.

                . . ..

[He] failed to establish that unlawful discrimination motivated FPI’s decision to demote, furlough, and fire him.  . . .  As explained above, it is undisputed that [he] regularly failed to clock in and out, and that he left his team after a major production issue. His argument that those errors did not warrant demoting him are insufficient to establish pretext. And [he] did not provide any evidence suggesting that FPI used the COVID-19 pandemic as a cover-up for discrimination when it furloughed and fired him.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.