Plaintiffs Can Now Receive Emotional Distress Damages in Wage and Hour Retaliation Claims

​Jurors often feel empathy for plaintiffs in retaliation cases—which could get expensive for employers, now that emotional distress damages are available for retaliation claims under the Fair Labor Standards Act (FLSA). Plaintiffs' lawyers are more likely to file these types of claims, and anti-retaliation training consequently is more important than ever, particularly as jurors tend to be swift to find that managers acted out of retribution for FLSA claims.

"The stakes are getting higher," said Bryant McFall, an attorney with Ogletree Deakins in Dallas. He noted that earlier this year the 5th U.S. Circuit Court of Appeals joined the 6th and 7th circuits to hold that emotional distress damages can be awarded in FLSA retaliation claims. "The decision is significant because the 5th Circuit is viewed by many as a pro-business circuit. So, its decision to allow these damages will encourage plaintiffs in the 5th Circuit and other less business-friendly circuits to tack on a retaliation claim to underlying wage and hour claims." In addition, the emotional distress damages are not subject to damages caps as are those under federal discrimination law. "It definitely will increase the cost for employers in litigating and settling these types of claims," he said.

Good Intentions Gone Wrong

Sometimes managers don't intend to retaliate, but it's hard to prove that they weren't. Arlene Switzer Steinfield, an attorney with Dykema in Dallas, recalled one employer that had a supervisor who told an employee that the worker could be fired if a charge was filed. The supervisor admitted in a deposition that he made the statement not as a boss, but as a friend. The retaliation claim became "virtually indefensible," Steinfield said. "Despite friendship, if an employee gets fired, the employee will take it as a threat and evidence of retaliatory intent."

Inadvertent retaliation might crop up when a manager becomes particularly alert to time-tracking and pay practices for an employee who has lodged a wage and hour complaint with HR, noted Jeffrey Ruzal, an attorney with Epstein Becker Green in New York City. Suppose a manager in good faith creates a new, fail-safe way to account for all of the complaining employee's worktime, requiring him or her to record time on multiple platforms such as clocking in and out, plus a time sheet, and a daily e-mail. The new procedure might be so allegedly vexing for the worker that the employee leaves, claiming that the employer forced the worker out of the job. The manager's reaction to the original complaint may have been innocent, even conscientious, but now the employer will have to defend against a retaliation claim that could carry emotional distress damages.

Alternatively, a supervisor may subconsciously hold a grudge after an employee complains to HR, said Todd Shinaman, an attorney with Nixon Peabody in Rochester, N.Y.

The timing of when a decision is made can be important in retaliation cases. Steinfeld recalled a case where an employee told an employer that she was pregnant. The employer was able to show in an e-mail sent to a supervisor that the decision to lay her off was made four hours before she informed the employer of her pregnancy.

As for managers that intentionally retaliate, there should be zero tolerance for them acting outside the scope of their job description, Ruzal said. "Such behavior puts the employer at significant risk of liability and is disruptive and toxic to the workplace," he noted.

Anti-Retaliation Training

Training managers not to retaliate should be simpler under the FLSA than under discrimination laws because FLSA claims are less personal, McFall said. "The hurt feelings that a manager might suffer from being accused of discrimination are not as acute when accused of a wage and hour miscalculation," he said.

Allan Bloom, an attorney with Proskauer in New York City, said that as part of anti-retaliation training, the employer should:

• Consider whether managers need to be informed of an internal complaint, assuming the employee has not already volunteered this information.
  
• Instruct managers informed of the complaint of the company's no-retaliation policy.
  
• At the conclusion of an investigation into a wage complaint, inform everyone involved that there is to be no retaliation and encourage the complaining employee to come forward with any problems or issues.
  
• Ensure that every action taken against an employee who has filed a charge or lawsuit goes through the HR and legal departments.
  
• Have someone who is not the subject of the claim perform an independent investigation of any proposed adverse action against anyone who has filed a claim or complaint. Document the investigation and take no action unless it can clearly be supported by company policy.
  

Any prior pattern of poor behavior or performance should continue to be documented, Bloom said.

When disciplining supervisors who have shown retaliatory behavior, align the punishment to the nature of the retaliation and the history of prior bad acts by the managers, if any.

"At a minimum, I would think the employer would want to administer written counseling," he said. "In other cases, the employer might consider requiring the manager to attend one-on-one anti-retaliation training. In some cases, a last-chance warning or even immediate termination might be the most appropriate response."

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