Changing Overtime Policy May Constitute Retaliation

Changing Overtime Policy May Constitute Retaliation

They say that everything is bigger in Texas.  That now may be true for the risk that an employer’s change to its overtime policies will result in a claim filed by an employee alleging retaliation in violation of the Fair Labor Standards Act (“FLSA”).  That increased risk stems from a ruling by the Texas Court of Appeals for the Fourteenth District in January 2017.  In that case, Tooker v. Alief Independent School District, the appellate court ruled that a change in the employer’s stated overtime policy constituted a materially adverse employment action.

Such a ruling may appear very startling at first blush, as it could suggest that employers run the risk of a lawsuit simply by making changes to their overtime policies – even though such changes often are mandated by changes in the law or the need to curb abusive overtime.  But the policy change in this case applied only to that specific employee, Rosemary Tooker.  Moreover, Alief Independent School District (“School District”) made that change only after Tooker filed the lawsuit (which initially alleged other claims).  Accordingly, the risk of such lawsuits against other employers may be lower if employers take appropriate precautions.

Tooker started working for the School District in the Maintenance Department as an Energy Manager Assistant in 1986.  Over the course of her career there, she filed two complaints alleging gender discrimination (the second one she filed after other employees had complained that she had created a hostile work environment).  In both her complaints, Tooker alleged that the School District was paying her less than male coworkers for providing comparable services.

In Tooker’s lawsuit against the School District, which she filed in January 2013, she alleged violations of the Texas Commission on Human Rights Act, the Family and Medical Leave Act, the Texas Whistleblower Act, and unpaid overtime in violation of the FLSA.  Without expressly saying so, the appellate decision suggests that Tooker amended her petition to allege retaliation in violation of the FLSA sometime after February 22, 2013.  According to Tooker’s allegations, that is when the School District gave her a memo directing her “not to work any overtime unless specifically asked to do so by” two specific supervisors.

The Harris County District Court ruled that Tooker did not have enough evidence to proceed to trial on any of her claims and granted the School District’s motion for summary judgment.  However, the Lone Star State’s Court of Appeals saw things differently.  Although the appellate court agreed that Tooker’s other claims could not proceed, it reversed and remanded the dismissal of her claim alleging retaliation in violation of the FLSA.

The FLSA makes it unlawful to retaliate “against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding” to recover allegedly unpaid overtime compensation.  In order to prevail on such a claim, an employee first must show that: (1) she participated in an activity that is protected under the FLSA; (2) her employer subjected her to an adverse employment action; and (3) there is some causal link between the protected activity and the adverse action.

It was clear to the courts that Tooker had enough evidence to show that she had engaged in protected activity, since she had filed a lawsuit alleging unpaid overtime compensation.  However, the trial court found that Tooker had failed to show that the School District had taken any materially adverse employment action against her.  Frequently it is difficult to know if a certain personnel decision rises to the level of a materially adverse employment action.

Some decisions, such as demotions and discharges, clearly fall within that category.  On the other hand, assigning new job duties or a new work location, or many other workplace decisions may or may not.  The U.S. Supreme Court ruled in 2006 that adverse employment actions are not necessarily limited to decisions like firings or demotions.

Instead, the high court said that an employee can maintain a retaliation claim by showing that she was subjected to something less severe than a reasonable employee nonetheless would have found to be materially adverse.  Under that standard, a personnel decision is materially adverse if it could dissuade a reasonable employee from engaging in the protected activity.

It was clear to the courts in Tooker’s case that she had engaged in protected activity by filing a lawsuit in January 2013 alleging unpaid overtime in violation of the FLSA.  While the lower court saw no materially adverse employment action set forth in Tooker’s allegations, the appellate court found one in the February memo directing her “not to work any overtime unless specifically asked to do so by” her supervisors.  That memo threatened that any failure to follow its instructions “will be viewed as insubordination and/or misconduct” which would result “in disciplinary action up to and including a recommendation for termination.”

The Court of Appeal observed that, prior to receiving the memo, Tooker was allowed to work overtime so long as any supervisor approved it.  The memo, however, changed the overtime policy for Tooker by requiring her to obtain approval from two specific supervisors.  Moreover, the appellate court was concerned that, if Tooker failed to comply with this new policy, she faced the risk of a recommendation for discharge.

Given such circumstances, the Court of Appeals concluded that the memo could suffice as a materially adverse employment action.  It said that “a reasonable employee, who had worked overtime in the past and been compensated for it, [may] have found [the] memorandum to be materially adverse conduct due to [its] change in policy, apparently only as to that one employee, from a requirement of prior approval to a requirement that [one of two particular supervisors] specifically ask the employee to work overtime.”

The School District also argued on appeal that Tooker had not demonstrated any causal link between her lawsuit alleging unpaid overtime and the issuance of the memo.  The appellate court rejected that argument by reasoning that the memo was issued “less than a month after Tooker” filed her claim alleging unpaid overtime.  The court explained that, “[w]hile temporal proximity is not determinative, close timing between the employee’s protected activity and the adverse employment action may provide a causal link … in a retaliation claim.”

Employers routinely enforce policies requiring employees to obtain supervisory approval before working overtime.  Those policies frequently call for discipline against employees who violate the overtime-approval rule.  Employers should not conclude from this case that is unlawful or risky to enact or enforce such policies (albeit while keeping in mind that even employees who violate such policies must be paid for their overtime hours).  The takeaway from this case is that enforcement must be applied consistently, and it cannot be imposed in one way against most employees and in a different way against an employee who has engaged in protected conduct.

Contributor: Brendan J. Begley, Attorney at Law | Weintraub Tobin