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Circuit Courts Are Split on Applying the FLSA “Manager Rule”


Circuit Courts Are Split on Applying the FLSA “Manager Rule”

August 25, 2015

The extent to which employees who are responsible for investigating or resolving discrimination complaints are protected from retaliation is still up for debate. State and federal discrimination statutes prohibit retaliating against employees who engage in activity pursuant to the same statutes. If the countless managerial employees who routinely investigate discrimination complaints in the normal course of business are found not to be engaging in protected activity, then employers would be free to retaliate against employees who don’t “toe the party line.” However, if those employees are found to be engaging in protected activity, the universe of actionable retaliation claims could balloon. While there has been little case law on this issue — up until this month, only two circuit courts had considered the issue — two additional circuits recently weighed in.

In 2006, the Sixth Circuit held that a retaliation claim could not be defeated under Title VII — notwithstanding the fact that the plaintiff, who was an affirmative action official, may have had a contractual duty to advocate for women and minorities. Then, in an unreported decision in 2012, the Eleventh Circuit held that a manager did not engage in protected activity because her job responsibilities involved exactly the type of actions she took, so there was no evidence that she was asserting any rights under Title VII. In its decision, the Eleventh Circuit opted to borrow the “manager rule” from cases filed under the Fair Labor Standards Act (FLSA). In those cases, several circuit courts reasoned that if counseling and communicating complaints are part of a manager’s regular duties, then they must “step outside his or her role of representing the company” in order to engage in protected activity.

On August 3 and August 10, the Second and Fourth Circuits, respectively, weighed in. In DeMasters v. Carilion Clinic, the plaintiff was employed for five years as an employee assistance program (EAP) consultant. As part of his employment, DeMasters was contacted by a Carilion employee (referred to as Doe) who had been referred to EAP. After hearing Doe’s story, DeMasters opined that Doe was a victim of sexual harassment and, with Doe’s permission, reported the harassment to Carilion’s Human Resources department.

After investigating the complaint, Carilion terminated the harasser. However, Doe again contacted DeMasters because of hostility from co-workers aligned with the harasser. After Carilion’s HR department refused DeMasters’ offers to coach ways to handle the harassment, Doe again contacted DeMasters to report that the co-worker behavior was worsening. In response, DeMasters told Doe and Carilion’s HR department that he felt it was mishandling Doe’s complaints. Unbeknownst to DeMasters, Doe filed an EEOC complaint, and eventual civil action, against Carilion. After Doe’s case settled, DeMasters was terminated for acting “contrary to the employer’s best interests,” failing to take the “pro-employer side,” and leaving it “in a compromised position.”

After filing his own EEOC complaint alleging retaliation, DeMasters filed suit in the U.S. District Court for the Western District of Virginia. The district court, however, dismissed the complaint, primarily on the grounds that none of DeMasters’ activity constituted protected oppositional conduct. It also held that the so-called “manager rule” prevented an employee whose job responsibilities included reporting discrimination claims from seeking protection under Title VII’s anti-retaliation provision. On August 10, 2015, the Fourth Circuit reversed, holding that “the ‘manager rule’ has no place in Title VII jurisprudence.” Instead, it held that “the proper test for analyzing oppositional conduct requires consideration of the employee’s course of conduct as a whole.”

The Fourth Circuit explained its rationale for applying the manager rule to claims of retaliation under the FLSA, but not similar claims under Title VII. The FLSA’s anti-retaliation provision prohibits discrimination against an employee “because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or is about to testify in any such proceeding….” The court explained further: “In contrast, Title VII makes it unlawful for an employer to discriminate against an employee ‘because he has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing.’” Based on the wording of the statutes, the Fourth Circuit reasoned that the protections afforded by Title VII are far broader than those afforded by the FLSA. In addition, the Fourth Circuit noted that “Supreme Court precedent also militates against restricting the scope of Title VII’s anti-retaliation provision, which has been held to provide broad protection from retaliation.”

Only one week earlier, the Second Circuit noted in a footnote in Littlejohn v. City of New York, “…we decline to adopt the manager rule here. The manager rule’s focus on an employee’s job duties, rather than the oppositional nature of the employee’s complaints or criticisms, is inapposite in the context of Title VII retaliation claims.”

While this issue is far from settled, it has been decided in the Second, Fourth, and Sixth Circuits in favor of employee protection and in the Eleventh Circuit in favor of limiting employer liability. As there is a split amongst the Circuits, the Supreme Court is likely to be called upon to decide this issue. The 2014 EEOC Enforcement and Litigation data reflects that retaliation claims account for almost half of all EEOC claims filed nationwide. Therefore, the scope of what is enough to trigger liability for retaliation is crucial when assessing the legal landscape for employers. 

For more information on this new statute, or for assistance updating employment policies and procedures, please contact a member of the Goldberg Segalla Employment and Labor Practice Group.