Sunday, February 3, 2008

Appeals court allows ex-employee's retaliation caim to proceed based on the filing of a lawsuit against an employer

Retaliation cases continue to be one of the hot button employment law issues. This term, the Supreme Court has agreed to hear three separate retaliation cases. (See Retaliation Cases Hit High Court En Masse). Not to be outdone, the Ohio Supreme Court has handed down several important retaliation decisions in the past few months, including one which held that an employer's lawsuit against an employee who has engaged in protected activity is not retaliation if the employer has an objective basis for filing the lawsuit. On the issue of brining a lawsuit against an employee, I have cautioned, "The decision of whether to file a claim against an employee or ex-employee is not an easy one, and should not be undertaken without careful thought, a clear strategy of the goals to be achieved, and consideration of whether those goals are worth the risk of defending against a likely retaliation claim or the perception in court that the counter-suit is merely retaliatory." These words ring more true than ever after last week's decision by the 4th Circuit in Darveau v. Detecon, Inc., which permitted an employee's retaliation claim based on a lawsuit filed by the employer.

Larry Darveau filed a complaint against his former employer employer, Detecon, seeking compensation for unpaid overtime under the Fair Labor Standards Act. Two weeks later, Detecon filed an action against Darveau, alleging fraud arising out of a sales contract whose termination Darveau allegedly hid to meet his goal for an annual bonus. In response, Darveau amended his own complaint to include a retaliation claim, contending that Detecon's lawsuit constituted retaliation under the FLSA in violation of 29 U.S.C. § 215(a)(3). That section 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." Because Darveau's complaint alleged that Detecon filed its lawsuit with a retaliatory motive and without any reasonable basis in fact or law, he stated a proper reclaim and the district court improperly dismissed the retaliation claim.

Detecon argued that it could not retaliate against Darveau because he was no longer its employee when it filed its lawsuit against him. The 4th Circuit roundly rejected that position:

Somewhat surprisingly, Detecon contends that looking to the Supreme Court's Title VII jurisprudence in this FLSA case will generate the "anomalous result" of extending protection from retaliation to former employees who no longer enjoy the substantive protections of the FLSA. Yet in Burlington Northern, the [Supreme] Court rejected this very argument in the Title VII context, observing that Title VII's anti-retaliation provision serves a different purpose than its substantive provisions and that such "differences in ... purpose ... remove any perceived 'anomaly.'" The more unfortunate anomaly would be if an employee’s underlying FLSA claim could be brought after he quit, but the employee's protection from retaliation ended when the employee stepped beyond the employer's doorstep. ... There is nothing in the language or history of [the FLSA] to indicate that Congress intended to penalize dissatisfied employees who voluntarily leave an employer by thereafter denying them the protections of [the Act]. There is every reason to conclude precisely the contrary.

This case reminds us that retaliation does not end when employment ends, because an employee can be chilled from exercising protected rights long after he or she leaves one's employ. It also underscores the myriad legal problems that companies potentially face when choosing to pursue a claim, meritorious or not, against a current or former employee.