Hunton Employment & Labor Perspectives

For years, there has been nearly universal agreement among the courts that managers do not engage in “protected activity” for retaliation claim purposes under most employment laws when they raise concerns about compliance issues in the regular course of performing their job duties. The traditional reasoning held that a manager whose job includes evaluating and/or reporting compliance issues, and who does so in furtherance of his or her job duties, should not become cloaked in anti-retaliation protection for merely doing the job he or she is employed to do. Instead, to engage in protected activity, the manager must step outside his or her role as a manager and become adversarial to the employer. The so-called “manager rule” has been consistently used by courts to reject retaliation claims under various employment statutes by human resources professionals and supervisors who report employment-related compliance issues related to other employees.

In Rosenfield v. Globaltranz Enters., Inc., No. 13-15292, decided on December 14, 2015, the Ninth Circuit Court of Appeals delivered the manager rule a major blow, holding that, at least in the context of an FLSA retaliation claim, managers should not be held to a different, higher standard than other employees. The plaintiff in Rosenfield was employed as GlobalTranz’s Human Resources Director. Throughout her tenure, she complained to management that the company was not in compliance with the FLSA. She provided copies of the FLSA on some occasions, along with specific explanations as to why she believed a large number of employees were misclassified. The Director documented those concerns in a written communication to her boss, and five days later, her boss fired her. The Director sued and, among other theories, claimed that the company terminated her in retaliation for raising FLSA compliance concerns.

GlobalTranz argued that the Director had not “filed any complaint” for FLSA retaliation protected activity purposes because, as the Human Resources Director, her duties included raising such concerns. Though the district court agreed with GlobalTranz’s argument, the Ninth Circuit did not. The Ninth Circuit reasoned that the Director’s position as a manager was not dispositive of her claim, and it refused to hold the Director to a different protected activity standard than any other employee. Instead, the Ninth Circuit held that, regardless of what type of employee is at issue, the FLSA retaliation analysis focuses on whether the employer had “fair notice” that the plaintiff-employee had “filed a complaint under the FLSA.” According to the court, the fair notice inquiry is fact- and context-specific, and though an employee’s position and duties factor into that inquiry, it is not the only factor. On the facts before the court, the Ninth Circuit held that a reasonable juror could have concluded that the Director had engaged in FLSA-protected activity due to the consistency with which she complained about the FLSA compliance issues over time and because her boss actually claimed that he had the ultimate authority over FLSA compliance issues, thus making it more likely that the Director was actually stepping out of her normal role in making the complaints.

As the dissenting judge in Rosenfield noted, rather than creating a uniform test for all employees, the Rosenfield standard arguably gives supervisors more (not equal) protection than regular employees because a supervisor can potentially engage in protected activity by simply doing his or her job, whereas a non-supervisor employee must become adversarial to the employer by stepping outside of his or her job and making the complaint. Thus, the Rosenfield standard puts employers in a tough situation. Employers want to encourage managers and human resources professionals to bring compliance issues to light because, many times, they are best-suited to notice and/or remedy the issues. However, employers must recognize that, by incentivizing such reporting, employers are also likely increasing the number of individuals who have protected status under the FLSA and other employment laws with anti-retaliation provisions if the holding of Rosenfield is expanded to apply in other employment law contexts.