The "avoidable consequences" doctrine in overtime cases. Are you kidding me?

The Avoidable Consequences Doctrine

Some lawyers in my law firm attended a legal education program this week that included a corporate defense attorney arguing for a Faragher-Ellerth approach to the Federal overtime law. The argument is that employers should be able to avoid the consequences of violating the Fair Labor Standards Act if the employees did not report violations of the Act to the employer. The burden of knowing the overtime law and complying with it should be shifted to the employees.

Its understandable that corporations would want to try to lift the “Faragher-Ellerth defense” from sexual harassment law and apply it to overtime cases. The words “Faragher-Ellerth” have become a shorthand generic phrase that means employees must report violations of the law to the company before the company has any liability for violating the law. This means that we can expect that we will soon be hearing defense attorneys arguing the defense in our overtime negotiations.

The Legal Education Version of the Gong Show.

One of my pet peeves is that too many lawyers—and judges, I suspect—don’t actually read the law that they are citing. My first instinct when I heard the argument that Faragher-Ellerth applies to overtime cases was to laugh. If the lawyers who listened to the presentation had actually read the Supreme Court’s opinions in Faragher and Ellerth, they would have laughed the lawyer advocating for applying it to the Fair Labor Standards Act off the stage. They would have heard a large gong then seen a hook on the end of a long stick pull the speaker off the stage. My second instinct was to be concerned, because too many people fail to read what the law actually says.

What the Supreme Court Actually Said in Faragher and Ellerth.

Burlington Indus., Inc. v. Ellerth, 524 US 742 (1998), and Faragher v. City of Boca Raton, 524 US 775 (1998) were two different Title VII sexual harassment cases decided by the United States Supreme Court on the same day. In those cases, the Supreme Court wrestled with the idea of why a company should be responsible for the sexual harassment by the company’s supervisors of the company’s employees. Sexual harassment is not a part of any supervisor’s job duties or done in furtherance of the company’s business. Why should a company be responsible for the sexual activities of its supervisors? The Court applied agency law to Title VII sexual harassment cases to explain when and why a company can be held responsible for sexual harassment.

The Supreme Court held that whenever sexual harassment by a supervisor culminates in a tangible employment action—such as a loss of wages—the company will automatically be responsible for the sexual harassment.

Why the "Avoidable Consequences Doctrine" or "Faragher-Ellerth Defense" Can Not Apply to the Fair Labor Standards Act.

Paying employees their wages and complying with the Fair Labor Standards Act is the business of every company with employees. It cannot even be compared to the sexual motivations of supervisors.

The Court created affirmative defenses that apply only when sexual harassment does not involve tangible employment actions. The Supreme Court said that even though sexually harassing employees is not part of the job of supervisors, companies must anticipate that sexual harassment happens. Employers must take action to prevent harassment.

To establish the defense, the employer must prove first, that it took reasonable steps to ensure that supervisors do not sexually harass employees, and second, that the employee unreasonably failed to take advantage of the corrective and preventive opportunities provided by the company to prevent or correct the harm.

The reasoning of the Faragher and Ellerth decisions cannot form the basis for an employer defense to the Fair Labor Standards Act. The FLSA involves the loss of tangible job benefits and complying with the FLSA involves wages only. The Faragher-Ellerth decisions provide a defense for the company when supervisors are pursuing non-work related activities (like sexual harassment) when they do not affect tangible employment benefits.

Gong!





The author is an attorney at Barrett & Farahany, LLP, representing employees in Atlanta, Georgia.