Your Code of Conduct Encourages Employees to Report Violations. Are You Listening?

I remember reading the U.S. Supreme Court’s decision in Kasten v. Saint-Gobain  while I was practicing employment law at a private law firm.   Back then, I was focused on what the decision meant for employers.   I wasn’t reading the case through the lens of a compliance and ethics officer, so I didn’t hone in on the role of the employer’s code of ethics and business conduct until I recently reread the case.

Kasten is a Fair Labor Standards Act (“FLSA”) case.  The FLSA sets forth employment rules concerning minimum wages, maximum hours, and overtime pay; it contains a statutory provision that prohibits retaliation against employees who report a FLSA violation.

In Kasten, the employee alleged that his employer unlawfully retaliated against him after he repeatedly orally complained to his employer about unlawful timeclock locations.  It appears that the employee cited the employer’s code of ethics and business conduct as supporting justification for his complaints. It appears that the company’s code of ethics and business conduct (like many codes of conduct) obligated every employee to report suspected violations of any applicable law of which the employee becomes aware.

The employee alleged that he expressed his concerns over the placement of the timeclocks to his shift supervisor, his lead operator, human resources, and the operations manager. The employee alleged that this activity caused the company to discipline him and ultimately dismiss him.   [Note, in a separate legal action, a court held that the placement of the timeclocks violated the FLSA.]

The employer, however, denied that the employee made any significant complaints about the timeclock locations.  Rather, the employer alleged that it dismissed the employee because he failed to record his comings and goings on timeclocks.

While the sole issue that the U.S. Supreme Court decided in Kasten was whether an oral complaint in violation of the FLSA is protected conduct under the act’s anti-retaliation provisions, this case also highlights the need to vigilantly listen for employees who might be reporting a violation of the company’s code of conduct.  In Kasten, the U.S. Supreme court ultimately held that oral complaints are sufficient to trigger anti-retaliation protections, stating that to hold otherwise would prevent the effectiveness of things like hotlines, interviews, and other oral methods of receiving complaints, all of which are components of effective compliance and ethics programs.

Just Ethics & Chill Takeaway

Employers should listen carefully to their employees to discern whether what they are hearing could amount to an oral complaint related to violations of law, regulation, or internal policy.