Increased Complexity with FLSA Compliance

8/18/2011

By Mark Corey, CPA

In a March 2011 decision, the Supreme Court added another layer of complexity for employers trying to comply with the anti-retaliation provisions in the Fair Labor Standards Act (FLSA).

The FLSA was designed to establish a minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in federal, state, and local governments. However, the FLSA does not cover all employment practices such as requiring "vacation, holiday, severance, or sick pay; meal or rest periods, premium pay for weekend or holiday work; pay raises or fringe benefits; or a discharge notice, reason for discharge, or immediate payment of final wages to terminated employees" (US Dept of Labor Website). Each state's Department of Labor should be consulted for provisions covering these employment practices.

In this case, the Supreme Court concluded that the anti-retaliation provisions of FLSA were extended to cover oral as well as written complaints of violations of the act. The case is Kasten v. Saint-Gobain Performance Plastics Corp., U.S. Sup. Ct., Dkt. No. 09-834, 3/22/11. In Kasten an employee orally complained to company officials about a violation of FLSA using the company's internal procedures. The employee was terminated a short time later in what he claimed was retaliation for making the complaint.

The court held that as long as the complaint was "sufficiently clear and detailed so that a reasonable employer would understand it, in light of both content and context, as an assertion of rights protected by the statute" then either an oral or written complaint was sufficient under the Act. Otherwise, the Court held, the intent of the Act would be undermined by having the narrow requirement of a written complaint triggering the requirements of the Act. The Supreme Court noted that agencies charged with enforcement of the act should be free to use "hotlines, interviews, and other oral methods to receive complaints. In addition, it would discourage using informal workplace grievance procedures to secure compliance with the FLSA."

As an employer, this adds another complexity to compliance with the FLSA. After consultation with your legal counsel, a review of your policies and procedures for compliance with FLSA may prevent any violations and the imposition of potentially serious penalties.