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A federal appeals court has reversed a lower court ruling and reinstated a retaliation charge filed by a risk manager who charged she was terminated for complaining on behalf of an underpaid worker.
LeAnn Starnes, a risk manager at Denton, Texas-based Daybreak Venture L.L.C., which operates Texas nursing homes, complained to the firm’s human resources director at the request of a co-worker whose husband was a maintenance worker at the firm that he was not being paid for his travel time or overtime, according to the Feb. 24 ruling by the 5th U.S. District Court of Appeals in New Orleans in LeAnn Starnes v. Michael G. Wallace et al.
About a year later, in November 2011, the co-worker complained to the HR director directly, requesting $68,700, according to the ruling. The following month, Daybreak finally settled its dispute with the maintenance worker for $40,000.
Ten days later, Daybreak laid off five employees, including Ms. Starnes and her co-worker. But one of the five employees had already accepted another position with a different company, and two other employees were soon rehired, leaving only Ms. Starnes and the colleague without jobs.
Both women filed suit on charges including retaliation under the Fair Labor Standards Act. The U.S. District Court in Sherman, Texas, dismissed Ms. Starnes’ case, and Ms. Starnes appealed. Meanwhile, the co-worker reached a settlement with the firm.
A three-judge panel unanimously reinstated Ms. Starnes’ retaliation charge. The ruling said to assert a right in these cases, an employee must “step outside of his normal job role and assert a right adverse to the company.”
Although the District Court concluded Ms. Starnes’ conduct did not involve stepping outside her role as risk manager, “there is a genuine dispute about whether reporting FLSA violations was part of Starnes’ duties,” said the ruling.
The District Court had also dismissed her case on the basis that more than a year had elapsed between her initial complaint and her termination.
“That ruling is consistent with the closeness our case law requires when proximity between the protected activity and adverse action alone is being sued to establish causation,” said the ruling.
However, the ruling added, “the termination occurred just ten days after Daybreak paid $40,000 to resolve the problem Starnes raised.
“The time when funds have gone out the door may be when the retaliatory impulse is strongest,” said the ruling, which reinstated Ms. Starnes’ retaliation claim as well as her request for emotional damages.
The case was remanded for further proceedings.
A federal appeals court on Thursday reinstated a whistleblower retaliation suit filed by Navigator Group Inc.’s former chief risk officer, who claimed she was fired after warning the insurer that certain misrepresentations about its investment risk models were illegal and constituted shareholder fraud.