Greathouse v. Jhs Security, Inc.: the Second Circuit Correctly Held That Intracompany Complaints to Employers Are Protected Under the Fair Labor Standards Act

• Publication year: 2022

50 Creighton L. Rev. 125. GREATHOUSE V. JHS SECURITY, INC.: THE SECOND CIRCUIT CORRECTLY HELD THAT INTRACOMPANY COMPLAINTS TO EMPLOYERS ARE PROTECTED UNDER THE FAIR LABOR STANDARDS ACT

GREATHOUSE V. JHS SECURITY, INC.: THE SECOND CIRCUIT CORRECTLY HELD THAT INTRACOMPANY COMPLAINTS TO EMPLOYERS ARE PROTECTED UNDER THE FAIR LABOR STANDARDS ACT

Julie Ryan-'18

I. INTRODUCTION

In Kasten v. Saint-Gobain Performance Plastics Corp.(fn1) the United States Supreme Court cleared up the issue of whether oral complaints, in addition to written complaints, were protected under the anti-retaliation provision of the Fair Labor Standards Act ("FLSA") by ruling in the affirmative.(fn2) Although the facts of Kasten involved an employee who made an oral complaint directly to his employer Saint-Gobain, the Supreme Court denied considering the legal question of intracompany complaint protection because the matter had not been raised on its own in the certiorari briefs.(fn3) Because the Supreme Court has never decided whether complaints made to employers are afforded protection under section 215(a)(3) of the FLSA, lower courts are left to determine that issue.(fn4) Circuits have split on the issue, but certain circuits support intracompany complaints under the FLSA.(fn5)

The United States Court of Appeals for the Second Circuit had long denied protection of intracompany complaints.(fn6) With the recent decision of Greathouse v. JHS Security, Inc.,(fn7) the Second Circuit changed its position on the matter in deciding that the FLSA anti-retaliation provision includes oral complaints to employers, as long as they are sufficiently clear and detailed for the employer to understand that the employee is asserting his or her rights under the provision.(fn8)

This Note will first state the facts and holding of Greathouse.(fn9) This Note will then provide background of the context surrounding the Second Circuit's recent decision in Greathouse, including discussion of the FLSA, a Second Circuit case abrogated in part by Greathouse, the decision of Kasten, and the United States Court of Appeals for the Eighth Circuit's decision to support intracompany complaints.(fn10) This Note will argue that the FLSA's anti-retaliation provision is ambiguous, requiring statutory interpretation.(fn11) Statutory interpretation demonstrates the FLSA's remedial purpose as a whole, which requires the anti-retaliation provision to be read broadly.(fn12) This Note will then argue that intracompany complaints should be protected as long as the notice requirement is satisfied, which is a position supported by administrative agencies, various sister circuits, and commentary in Kasten.(fn13) Finally, this Note will conclude that the Second Circuit correctly decided intracompany complaints to employers are protected under the FLSA.(fn14)

II. FACTS AND HOLDING

In Greathouse v. JHS Security, Inc.,(fn15) Darnell Greathouse brought an action against his former employer, JHS Security, Inc. ("JHS") and president and part-owner of JHS, Melvin Wilcox, under section 215(a)(3) of the Fair Labor Standards Act of 1938 ("FLSA") for retaliatory discharge.(fn16) Greathouse held a position as a security guard at JHS from September 2006 to October 2011.(fn17) During that time, Greathouse noticed he was being denied full and timely payment of wages and there were improper payroll deductions on his account.(fn18) Wilcox frequently assured Greathouse the payments would be forthcoming, but never followed through on those promises.(fn19) The United States District Court for the Southern District of New York found Wil-cox took advantage of Greathouse, as the position was Greathouse's first long-term job and real working experience.(fn20) On October 14, 2011, Greathouse finally made an oral complaint to Wilcox about not receiving wages for months.(fn21) In response, Wilcox stated he would pay Greathouse whenever he felt like it and then abruptly drew and pointed a gun at Greathouse.(fn22) Greathouse took that hostile interaction to mean that his employment with JHS was over.(fn23)

Thereafter, Greathouse filed a complaint in the district court, alleging penalty claims under the FLSA and New York Labor Law ("NYLL")(fn24) for missing and improper wage deductions as well as a claim for retaliatory discharge.(fn25) When neither defendant appeared nor filed an answer, the clerk of the court entered a certificate of default against both, and subsequently, the district court ordered default judgment be entered against the defendants.(fn26) The Magistrate Judge's Report and Recommendation ("Report") granted damages for Greathouse on a number of his claims, yet, under the precedent of Lambert v. Genesee Hospital,(fn27) denied damages as to the anti-retaliation claim because Greathouse had merely made a complaint to his employer.(fn28)

Greathouse filed objections to the damage computations, denial of retaliation damages, and the attorney fee computation of the Report.(fn29) Greathouse's argument for retaliation damages was based on a comparison to Brock v. Casey Truck Sales, Inc.,(fn30) in which the plaintiffs filed a complaint with the Department of Labor ("DOL") asserting their FLSA rights.(fn31) The plaintiffs in Brock obtained a judgment against the employer, which subsequently fired them for refusing to discharge the employer's obligation to pay the judgment award.(fn32) Greathouse also objected to the denial of retaliation damages under NYLL, citing law stating that Lambert did not apply to state law retaliation claims.(fn33)

The United States District Court for the Southern District of New York adopted the Report with the exception of the amount of liquidated damages and number of workweeks unpaid.(fn34) The district court determined that Greathouse's reliance on Brock was unconvincing because there was no formal complaint filed with a government agency and no judgment obtained as there had been in Brock.(fn35) Thus, the district court adopted the recommendation of denial of damages for the anti-retaliation claim under the reasoning of precedent cited by the magistrate.(fn36) The court acknowledged that Lambert does not apply to state law retaliation claims under NYLL, but determined that because Greathouse did not request damages for the claim, the state law retaliation claim was ineligible for review as it presented a new argument.(fn37)

Greathouse appealed the district court's determination as to the anti-retaliation claims to the United States Court of Appeals for the Second Circuit.(fn38) On appeal, Greathouse argued that the United States Supreme Court decision, Kasten v. Saint-Gobain Performance Plastics Corp.,(fn39) abrogated Lambert such that intracompany complaints are protected under the FLSA anti-retaliation provision.(fn40) Greathouse reasoned that due to Kasten's ruling, the provision was open to interpretation and thus open to input from relevant administrative agencies such as the DOL and the Equal Employment Opportunity Commission ("EEOC").(fn41) Greathouse further argued that the Second Circuit abrogated its decision of Lambert in decisions post-Kasten.(fn42) Greathouse noted that Lambert differed from decisions of other circuits relating to the interpretation of the FLSA retaliation provision.(fn43) Finally, Greathouse argued that intracompany complaints serve policy concerns of empowering affected employees in taking a stand against adverse payroll incidents, thereby limiting a work culture of non-reporting as well as benefitting the employer in dealing with complaints before issues escalate into large lawsuits down the road.(fn44) JHS argued that Kasten did not abrogate Lambert because the Supreme Court merely considered yet refused to address the validity of intracompany complaints, thereby casting no doubt on the precedent of the Second Circuit.(fn45)

The Second Circuit held that the FLSA anti-retaliation provision includes intracompany complaints, as long as they are sufficiently clear and detailed so that any employer could understand both (1) their content and context and (2) that the employee is asserting and calling for protection of rights under the provision.(fn46) The Second Circuit determined that the provision's language, filed any complaint, could have more than one meaning so as to open the phrase to statutory interpretation.(fn47) This determination was based on the statement in Kasten that the provision's language may be open to competing interpretations as well as the statute's use of the word filed, suggesting a broad reading under the reasoning of Kasten that any complaint is not narrow in scope.(fn48) The Second Circuit also based its reasoning on (1) the statute's absence of words indicating a formal versus informal filing or location where the complaint must be filed and (2) the context within the statute where the phrase 'instituted any proceeding' following 'filed any complaint' would be an extraneous if both meant only triggering adjudication.(fn49) Based on the analysis that the provision is ambiguous and implies communication in general, the Second Circuit looked into the statutory purpose and interpretations by relevant administrative bodies.(fn50) The Second Circuit determined intracompany complaints are supported by the FLSA's remedial purpose of fostering protective environments in which employees could make complaints without fear of economic retaliation.(fn51) Finally, the Second Circuit determined that the...