Article Summary

Good faith complaints, even if mistaken, may form the grounds of a retaliation complaint if an employer discriminates against an employee for such a report. Judge Deborah K. Chasanow held that Sharon Randolph and Tami Thompson were protected when they made good faith complaints to the Maryland Department of Labor.

This article by TELG principal & general counsel Nicholas Woodfield was published by Employment Law Daily on December 1, 2010.

Originally published in:

DMD Extends FLSA’s Prohibition of Retaliation to Mistaken but Good Faith Complaints to a State Agency

By Nicholas Woodfield, Principal, The Employment Law Group®

In Randolph v. ADT Sec. Servs., Inc.,1 Judge Deborah K. Chasanow held that two commissioned sales representatives engaged in protected conduct under the Fair Labor Standards Act’s anti-retaliation provision2 when they complained to the Maryland Department of Labor, Licensing and Regulation (DLLR) about not receiving overtime pay and proper compensation for their sales even though they were compensated on a commissions-only basis.

When Plaintiffs Sharon Randolph and Tami Thompson were hired by ADT, they were told that they would be paid salary during training and then transition to 100 percent commission. Randolph and Thompson worked a minimum of 48 hours and 6 days per week after completing their training period, and upon receiving their first commission check the Plaintiffs complained to management, believing they were undercompensated for their sales. Management first promised to resolve any discrepancies with their compensation but later failed to follow through. Ultimately management advised Thompson that if she kept complaining, she “might get into trouble.”

Approximately two months later, the Plaintiffs realized that they were making less than minimum wage while working over 40 hours per week. The Plaintiffs believed they were entitled to minimum wages and overtime, and so the Plaintiffs complained to DLLR. The Plaintiffs reported that ADT had not paid them all that they were owed for their sales and that it failed to pay overtime. To support their claims, the Plaintiffs provided the DLLR with proof of their hours as well as information and documentation necessary to prove that ADT was not properly compensating them for their sales. The DLLR sent a letter to ADT on April 2, 2009, informing ADT of the complaint and announcing that an investigation was being opened.

On or about April 3, 2009, Thompson received a phone call from her manager and a human resources representative, accusing her of providing privileged information to the DLLR. ADT then suspended Thompson and Randolph. ADT next sent the Plaintiffs letters dated April 10, 2009, stating that they were terminated because they violated a confidentiality agreement by disclosing information about compensation plans, customers’ personal information, and confidential company information to the DLLR.

The Plaintiffs filed a complaint in the U.S. District Court for the District of Maryland, alleging that they were wrongfully discharged in violation of public policy3 and retaliated against in violation of the FLSA.4 ADT filed a motion to dismiss, setting the court up to answer a question of first impression in the Fourth Circuit: whether employees whose compensation is 100% sales commission based engaged in protected conduct under the FLSA’s anti-retaliation provision when they filed a complaint with a state agency based on their reasonable, good faith belief that they were illegally not being paid minimum wages and overtime.

As noted by Judge Chasanow, prior to Randolph, the closest a court in the Fourth Circuit has come this question is Kennedy v. Va. Polytechnic Inst. & State Univ.5, where Judge James C. Turk held that an employee engaged in protected conduct under the Equal Pay Act6 when she complained to the Virginia Human Rights Council and the Equal Employment Opportunity Commission.

According to Judge Chasanow, the Seventh Circuit is the only circuit to address this issue. In Sapperstein v. Hager,7 an employee complained to the Illinois Department of Labor, alleging that his employer failed to pay overtime and paid minors less than minimum wage in violation of the FLSA. Unbeknownst to the plaintiff, his employer’s gross annual sales were actually just below the $500,000 threshold for the FLSA’s minimum wage laws.8 The district court granted the employer’s motion to dismiss, ruling that since the employer was not subject to the FLSA, the employee was not protected by the statute’s anti-retaliation provision. On appeal, the Seventh Circuit held that an employee is protected whenever he files a good faith complaint with the appropriate authorities, regardless of whether the conduct reported is an actual violation of the FLSA.9

The protection of employees’ good faith yet mistaken complaints, as well as complaints to state agencies, is key to the enforcement of the FLSA and integral to carrying out Congress’s intent. As the Supreme Court observed in Mitchell v. Robert DeMario Jewelry, Inc.,10 section 215(a)(3) takes on a central role in the enforcement of the FLSA since the federal government does not directly oversee employers and rather “chose to rely on information and complaints received from employees seeking to vindicate rights claimed to have been denied.” Id at 292. With so much importance placed on protecting employees who make good faith complaints, employers should be wary of taking any retaliatory action against an employee and expect that courts will generally protect good faith complaints, even if mistaken.

1 Randolph, 701 F. Supp. 2d 740 (D. Md. 2010) (order denying motion to dismiss).

2 29 U.S.C. § 215(c)(3).

3 See generally Adler v. Am. Standard Corp., 291 Md. 31, 432 A.2d 464 (1981).

4 29 U.S.C. § 215(a)(3) provides that an employer may not “discharge or in any other manner discriminate against any 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…”

5 Kennedy, No. 7:08cv579, 2009 WL 1321691, at *3 (W.D. Va. May 12, 2009) (order granting in part and denying in part a motion to dismiss).

6 See 29 U.SC. §§ 206(d), 215(a)(3).

7 Sapperstein, 188 F.3d 852 (7th Cir. 1999)

8 29 U.S.C. § 203(s)(1)(A)(i)-(ii).

9 Sapperstein, 188 F.3d at 857.

10 Mitchell, 361 U.S. 288 (1960).