Duraclean Journal of Marketing, Management and Technical Topics

Favorable FLSA Decision for Employers... But Tread Lightly

From the Management Association of Illinois

by Lisa Calloway, JD, SPHR, Vice President/General Counsel


The Seventh Circuit Court of Appeals (covering Illinois, Indiana and Wisconsin) recently ruled that an employee who failed to commit his Fair Labor Standards Act (FLSA) complaints to writing could not move forward with his case. Kasten v. Saint-Gobain Performance Plastics Corporation, 7th Cir., June 29, 2009).

Kevin Kasten was employed by Saint-Gobain Performance Plastics Corp., located in Portage, Wisconsin. Saint-Gobain had a policy requiring hourly employees to use a time card to swipe in and out of time clocks located in the plant.

During 2006, Mr. Kasten received three disciplinary notices (one verbal and two written) for failing to adhere to the time clock policy. The third notice, which was issued in November 2006, was accompanied by a one-day suspension. With the third notice, Mr. Kasten was warned in writing that "[t]his was the last step of the discipline process" and if another violation occurred, further discipline (including termination) could result. Mr. Kasten signed each notice, acknowledging that he read and understood them.

Finally, on December 11, 2006, Mr. Kasten was terminated for failing to swipe his time card for the fourth time.

Mr. Kasten claimed that from the period of October through December, 2006, he repeatedly complained to his supervisors and HR that the time clock was in a location that prevented employees from being paid for time spend putting on their required personal protective equipment (PPE). Specifically, he argued that the location of the time clock meant that he and his co-workers had to don their PPE and then clock in; thus they were not paid for the donning of their equipment.

Mr. Kasten filed suit claiming the following section of the FLSA was violated:

“[It] shall be unlawful for any person…to discharge or in any manner discriminate against any employee because such employee has filed a complaint…”

29 U.S.C. Section 215(a)(3).

The court found that Mr. Kasten had not engaged in protected activity as he had not “filed a complaint” regarding the time clock location. His verbal complaints, which the company denied had been made, were not sufficient to trigger the protections of Section 215(a)(3). In order for the statute to be triggered, the complaints had to be written. In sum, it is likely that the court would have permitted Mr. Kasten to proceed with his claim if he had filed a written complaint with his supervisors or HR.

It is noteworthy that the Sixth, Eighth and Eleventh Circuit courts have ruled that such verbal complaints are deemed filing a “complaint” and sufficient to trigger the protection of the FLSA. Also, the Secretary of Labor, in an amicus brief in this case, argued that the FLSA retaliation provision should be read broadly to include such verbal objections.

The Kasten case is, however, one in a growing trend of FLSA and wage and hour violation cases. Employers must pay attention to these cases and adjust policies and practices to comply.

The other day, I opened an e-mail alert from a labor and employment law research site that sends me periodic updates. Six of the eight substantive stories were on FLSA actions, all of which involved class actions. The class action lawsuit is a plaintiff attorney’s dream. Moreover, the FLSA has become the perfect forum in which to bring such actions. Take the following example:

Employer improperly fails to pay one employee one hour of overtime per day x 5 days a week = 5 hours

5 hours @ $9.00 hour = $45

x 1 ½ (the overtime pay rate) = $67.50 per week

x 50 weeks/year = $3,375

x 2 years (the statute of limitations on a FLSA claim, although the Department of Labor can go back three years for “willful violations”) = $6,750

x number of employees = ?

+ attorneys’ fees = ? (this is by far the largest expense in the calculation and it is generally an unknown number until after the litigation is concluded.)

+ liquidated damages (equal to the amount of back pay), court costs and fines of up to $1,000 per violation. Willful violators may be criminally prosecuted and fined up to $10,000 per violation.

So, in sum, these can be very costly lawsuits. If a plaintiff’s attorney petitions for and wins class action status, then the costs rise exponentially.

What the Kasten case teaches employers is that written complaints, no matter how cryptic, must be taken seriously and investigated immediately. Moreover, an employer that has a written complaint procedure, extending to all complaints and requiring that complaints be made in writing, will further protect itself against such actions.

Labels: employees, Labor Relations, Legal