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Former employees can sue for retaliation, too

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Until recently, courts generally have ruled that retaliation applies only to current employees. But thanks to a recent 4th Circuit Court of Appeals decision, which covers North Carolina employers, it’s now clear that former employees can sue for post-discharge actions when their claims involve the Fair Labor Standards Act (FLSA).

There’s a strong message for managers here: They must resist the temptation to do anything that might adversely affect a former employee who has been terminated. Something as simple as a poor reference or a negative comment to a prospective employer can be retaliation. Remind supervisors and managers to leave well enough alone when a troublesome employee leaves. Tell them to refer any inquiries on former employees to HR, and, if necessary, then offer only neutral comments about their former subordinates.

Bottom line:
Vindictiveness doesn’t pay.

Recent case: Larry Darveau was an officer in a small telecommunications firm. He handled sales in exchange for a $150,000 salary, plus commission. When the company terminated him, Darveau accepted $50,000 in severance and agreed not to sue for unpaid commissions. He did not, however, release any potential FLSA claims.

Darveau sued, alleging he should have been classified as an hourly employee. He asked the court to award him unpaid overtime pay. Then Darveau’s former employer sued him, alleging he had fraudulently concealed a canceled contract to boost his annual bonus. In response, Darveau added a retaliation claim to his lawsuit, arguing that the employer’s lawsuit was frivolous and amounted to illegal retaliation for his FLSA lawsuit.

The 4th Circuit Court of Appeals tossed out Darveau’s overtime lawsuit, ruling that he had been an exempt employee engaged in active management. But the court rejected the employer’s request to dismiss the retaliation claim. The employer had argued that the FLSA retaliation provision covers only current employees, not former ones. It reasoned that retaliation must involve an adverse employment action, something that would be impossible if the individual no longer worked for the company.

The court disagreed. It wrote that “former employees require … protection because they often need references from past employers, they may face retaliation from new employers who learn they have challenged the labor practices of previous employers….” The court let the lawsuit continue—Darveau now can try to show that the lawsuit against him was intended to punish him for filing the overtime lawsuit. (Darveau v. Detecon, No. 06-2092, 4th Cir., 2008)

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