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When employees sue you, resist temptation to sue them, too

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in Employment Law,Human Resources

by Abigail Crouse, Esq., Gray Plant Mooty, Minneapolis

“Can’t we sue them for this?” That’s the sentiment many employers express after being on the receiving end of a lawsuit that they think is based on untrue facts. Although it is never satisfying to be told “that wouldn’t be a good idea,” this is generally the right answer for various reasons.

First, any such counterclaim is unlikely to be successful unless there is a strong factual basis for the counterclaim.

Second, when faced with a lawsuit, it is important to determine an overall litigation strategy and theme early in the case. A decision to sue an employee may detract from an otherwise strong defense.

Third, a lawsuit or a counterclaim that is filed against an employee because the employer is angry about being sued may be considered retaliatory—and may, in and of itself, lead to additional liability.

Countersuit may be retaliation

In Burlington Northern & Santa Fe Railway Co. v. White (548 U.S. 53, 2006), the U.S. Supreme Court held that the standard for evaluating whether an employer’s action is retaliatory is whether a reasonable employee would have found the action materially adverse, meaning that the action might dissuade “a reasonable worker from making or supporting a charge of discrimination.”

Several courts have held that an employer’s counterclaim or lawsuit against an employee may be the basis for a retaliation claim.

The case of Darveau v. Detecon (515 F.3d 334, 4th Cir., 2008) involved an officer of a consulting company who sued his employer, claiming it had violated the Fair Labor Standards Act (FLSA) by failing to pay him overtime. About two weeks later, the employer filed a separate lawsuit against the employee in state court, alleging fraud.

The employee then amended the complaint in his FLSA lawsuit to add a claim that the employer’s lawsuit constituted unlawful retaliation under the FLSA.

The employee’s original FLSA claim was dismissed because the court found he was an exempt employee and was not entitled to overtime. However, the 4th Circuit allowed the retaliation claim to proceed. The court reasoned that an employee asserting a retaliation claim under the FLSA need only allege that his employer engaged in an adverse action that might dissuade a reasonable worker from making or supporting an FLSA complaint. Because the employee alleged such an action (i.e., that his employer filed a lawsuit against him alleging fraud with a retaliatory motive and without a reasonable basis in fact or law), the court held that he had stated an actionable FLSA retaliation claim.

Similarly, in Torres v. Gristede’s Operating Corp. (628 F. Supp.2d 447, S.D.N.Y., 2008), the court held that the defendants’ conduct in filing “frivolous and unworthy counterclaims” against employees who had filed an FLSA collective action was unlawful retaliation.

Threat is also retaliation

Other courts have held that threatening to bring a lawsuit or claims against an employee may also be unlawful retaliation.

In one case, an employer sent a letter to a former employee who had filed a discrimination lawsuit against the employer. The employer’s letter demanded that the former employee cease and desist from misappropriating trade secrets and the employee’s new employer was copied on the letter.

Based on the letter, the employee asserted a new claim against the employer for unlawful retaliation.

The court denied the employer’s motion for summary judgment on that claim because the act of sending the cease-and-desist letter could be deemed a materially adverse action that could form the basis of a retaliation claim. (Hertz v. Luzenac, 2010 U.S. Dist. Lexis 125351, DC CO, 2010)

The bottom line

Not all claims or threatened claims against employees will lead to successful retaliation claims and not all courts agree that filing legal claims against an employee can be the basis of a retaliation claim.

The First Amendment protects the rights of individuals and companies to seek redress in courts, and if there is a strong basis in fact for a counterclaim and the claim was not inspired by a retaliatory motive, an employer may prevail.

Nonetheless, it is important for employers to be very thoughtful and cautious before threatening or bringing a claim against an employee who has filed an employment lawsuit. Such claims may be appropriate in certain circumstances. In many cases, however, the best strategy will be to forget them and to build a strong defense against the employee’s original claim.

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Abigail Crouse is a principal at the law firm of Gray Plant Mooty and practices in the areas of employment law and higher education law. Contact her at (612) 632-3044 or abigail.crouse@gpmlaw.com.

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