The U.S. Court of Appeals for the Fourth Circuit ruled on January 31, 2008, that the filing of a fraud lawsuit against a former employee constituted actionable retaliation under the Fair Labor Standards Act (“FLSA”).  The opinion can be read here — Darveau v. Detecon, Inc., No. 06-2092.

After his separation from employment, Darveau entered into a separation agreement with his former employer, Detecon, Inc.  The release did not cover FLSA claims.  Darveau filed a federal court lawsuit against Detecon alleging that he was not exempt from overtime under the FLSA.  Shortly thereafter, Detecon filed a state court lawsuit against Darveau alleging fraud in connection with a pre-termination transaction.  Darveau amended his federal court complaint to add a claim of retaliation under the FLSA.  The district court dismissed all of Darveau’s claims on summary judgment.

On appeal, the Fourth Circuit affirmed the dismissed of Darveau’s overtime claim, but reversed the dismissal of the retaliation claim.  The Court found that the filing of the overtime complaint was objectively reasonable at the time it was filed and therefore Darveau had engaged in protected activity.  Relying on recent Supreme Court precedent in Title VII retaliation cases, the Court then found that the filing of the lawsuit constituted “adverse action” against Darveau.  Accordingly, the Court remanded the case to the district court.

This case is a logical consequence of the Supreme Court’s decisions in Robinson v. Shell Oil Co., 519 U.S. 337 (1997), and Burlington N. & Santa Fe Ry. Co. v. White, 126 S.Ct. 2405 (2006), where it extended the anti-retaliation provisions of Title VII beyond workplace-related or employment-related retaliatory acts and harm.  As with employment-related “retaliatory acts,” the mere filing of a charge of discrimination or lawsuit does not automatically cloak the employee with immunity from legitimate action by the employer.  Nevertheless, employers should pay close attention to how its decisions to take action against such an employee might be viewed by a jury.