Verbal Complaint About Unpaid Overtime & Minimum Wages Are Protected by the Fair Labor Standards Act

The U.S. Supreme Court decided that both verbal and written complaints by an employee about violations of the Fair Labor Standards Act (“FLSA”) are considered protected conduct under the anti-retaliation provisions of the law. These complaints typically relate to an employee not getting paid overtime or not getting paid anything for hours worked. The decision is Kasten v. Saint-Gobain Plastics Corporation, March 22, 2011.

The decision was based on the following language from the FLSA, Sec. 215(a)(3):

[An employer may not] discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to [the Act], or has testified or is about to testify in such proceeding, or has served or is about to serve on an industry committee.

Lower-level Supervisor’s Discriminatory Motive Can Violate Civil Rights

On March 1st, 2011, the U.S. Supreme Court decided that a lower-level supervisor’s discriminatory motive in proposing disciplinary measures against an employee can form the basis for liability under the anti-discrimination laws in employment like Title VII of the Civil Rights Act of 1964 and the Uniformed Services Employment and Reemployment Act of 1994 ( USERRA ). This is known as a Cat’s Paw theory of liability for employment discrimination, as the lower-level supervisor proposes disciplinary action against an employee for an improper motive but the decision-maker may not have a discriminatory motive but relies upon the lower-level supervisor’s recommendation. While the actual decision-maker lacks a discriminatory motive, the decision is still tainted by the lower-level supervisor’s discriminatory motive. As long as the lower-level supervisor’s act, which was motivated by an unlawful discriminatory motive, is the proximate cause of the adverse action, like termination or a suspension, then the employer may be held liable for a violation.

This analysis can also apply to make discriminatory performance reviews that result in adverse action like termination, suspension, failing to promote, actionable where the reviewing supervisor gives negative remarks out of an unlawful discriminatory motive.

In Staub, the issue was related to an employee’s military leave, and the decision was made under the USERRA law, but the Supreme Court also discussed how the law would be applied in other areas of employment discrimination claims.

Credit Reports Are Used in HAMP Mortgage Modifications to Verify Monthly Expenses

To qualify for a Home Affordable Modification Program ( HAMP ), a home loan / mortgage servicer must consider your monthly expenses, according to the Handbook for Servicers of Non-GSE Mortgages, version 3.0, of December 2, 2010. One method the servicer will use to verify your monthly expenses is your credit reports / consumer reports from Experian, Equifax or Trans Union.

An excessive amount of monthly debt showing on your credit reports may cause you trouble in qualifying for the HAMP modification under the eligibility requirements. So you want to make sure that your credit reports are accurate, in that your credit reports do not contain any inaccurate accounts, inaccurate balances, or inaccurate payment information.

When preparing to apply for a HAMP modification to your home mortgage, it would be helpful to request your credit reports from Experian, Equifax and Trans Union to review them for any inaccuracies. If inaccuracies appear on your credit reports, you can dispute them. By correcting your credit reports before you apply for the HAMP modification, you may save yourself some time, energy and headaches by avoiding a servicer finding you ineligible for the modification based on inaccurate credit reports.

You can request your credit reports at www.annualcreditreport.com, which is set up for the purpose of each consumer getting his or her free annual credit reports from Experian, Equifax and Trans Union once every 12 months. If you already got your free credit report, you can still purchase a consumer disclosure through this site.

For more information on disputing inaccurate information on your credit reports, you can visit our website at www.wis-celc.com.

Credit Reporting Once You Enter a HAMP Trial Mortgage Modification When You Were Current on the Mortgage Before the Trial Period

If you enter a modification of your mortgage through the Home Affordable Modification Program ( HAMP ), it affects how the loan is reported to the consumer reporting / credit reporting agencies. According to the MHA Handbook v. 3.0, if the borrower was current with payments prior to the trial period, and you, as the borrower, make all your trial period payments on time, the servicer of the loan must report you as current during the trial period by marking the Account Status as “Account Status 11.” The servicer must also report a Special Comment Code “AC”, which indicates “Paying under a partial or modified payment agreement.” The servicer must then also report the modification when it is completed.

If the loan is not reported in this manner on your credit reports, the reports are inaccurate and you can submit a dispute relating to the mortgage entry. Your credit report should not reflect that you were late, delinquent, that the loan is a charge off, or otherwise indicate that you did not pay the loan on time or according to the modification.

If you were current at the time the trial period began, but you had some late payments in the past, that late payment history on your credit report is not affected by the modification, so any actual late payment notations would not be altered simply because of the HAMP modification.

Credit Reports Are Used In HAMP Mortgage Modification Applications to Verify Principal Residence

Your credit reports are typically obtained by the company servicing your mortgage loan if you apply for a Home Affordability Modification Program ( HAMP ). The credit report is used under HAMP mortgage modifications during the application process to verify your eligibility for the HAMP modification. The credit report is used to verify the borrower’s principal residence, ensuring that the loan relates to a mortgage on your principal residence.

HAMP Supplemental Directive 09-07 contains the requirement that the loan is one “secured by a one-to-four property, one unit of which is the borrower’s principal residence.” Supplemental Directive 10-01 tells servicers of loans to use a credit report to confirm that the property securing the mortgage is the borrower’s principal residence.

Therefore, if you are preparing to apply for a HAMP modification to your home mortgage, you may be well served by obtaining your consumer reports from Experian, Equifax and Trans Union beforehand to ensure that each consumer reporting agency accurately reflects your home as your primary residence. If the reports are inaccurate, you can send the credit reporting agencies disputes to correct the information. You can also obtain these reports from www.annualcreditreport.com, which you are entitled to a free annual credit report every 12 months from each credit reporting agency. Otherwise, you may have to pay a small fee to get your current credit reports. This may save you some time, work and headaches in trying to explain any discrepancy that arises after you make the application.

Why You Should Not Request A Consumer Report Online

Many people ask me, How do I get a copy of my free credit report? I frequently tell people that you can get one free copy of your credit report from each credit reporting agency once every 12 months. Then I am asked, Should I order it online? I always discourage online ordering except when there is an immediate need to review the report. Why? Continue reading, as an online request for your credit report can cause unintended consequences to a consumer.

The FTC required the 3 major credit reporting agencies, known as consumer reporting agencies under the law, to set up www.annualcreditreport.com for consumers to request a free copy of their consumer file or consumer report as many call it from each agency. When you visit the site, it gives you the option to click to get your report, meaning you can order it online. So why shouldn’t you use the online ordering? Several reasons.

1. When you try using the online ordering system, it is confusing. You are directed out to each agency, then you have to return and get redirected. In the process, each agency is trying to sell you its credit monitoring, credit insurance and other products, including a copy of the other agencies’ reports in an all-in-one credit report format. There is much debate over whether you should buy any of these fee based services. Also, the all-in-one report is not a true consumer disclosure to you, as it is in a different format and does not include the same information you would get when the agency must provide you with your consumer file. Since you are not getting a true consumer file, your rights under the law are not the same simply because you elected to order an all-in-one credit report online rather than get through the confusing and difficult process of going back and forth through the electronic maze.

2. These online ordering systems, in a less than conspicuous manner, typically attempt to force you into mandatory arbitration for any violation of your rights related to the reports you obtain. They have opt-out provisions, but you have to be knowledgeable enough and attentive enough to catch the mechanism for opting out and it is an additional burden placed on you. As a result, you may unknowingly waive your rights to have any violations of your rights heard by a trial court and jury.

Bottom line for most consumers is that requesting your free annual credit report should be accomplished by getting the paper ordering form and sending it in by mail. As a result, you won’t get any solicitations for services you may not want or need, you won’t inadvertently waive any rights you have and you will get a true consumer disclosure from which all your legal rights will be available. This form is available at www.annualcreditreport.com and also at the website for the Consumer & Employment Law Center of Wisconsin, www.wis-celc.com.

Identity Theft in Auto Loans is Down

Good news. The Financial Crimes Enforcement Network, part of the U.S. Department of Treasury, reports after a recent study that conscientious automobile dealer staff and finance companies are helping to reduce fraudulent vehicle loans obtained through identity theft. Although suspected cases of identity theft are on the rise since 2004, fraudulent auto loans due to identity theft appear to be declining significantly. The SCE and attributes the significant decline to the new Red Flag Rules of the Fair Credit Reporting Act to deal with identity theft. The study notes that credit card fraud continues to be the biggest problem in terms of identity theft crimes. The full report is available at www.fincen.gov/news_room/nr/html/20101015.html, and it is titled "Identity Theft-Trends, Patterns, and Typologies Reported in Suspicious Activity Reports (SARs) Filed by Depository Institutions."

Identity Theft in Auto Loans is Down

Good news. The Financial Crimes Enforcement Network, part of the U.S. Department of Treasury, reports after a recent study that conscientious automobile dealer staff and finance companies are helping to reduce fraudulent vehicle loans obtained through identity theft. Although suspected cases of identity theft are on the rise since 2004, fraudulent auto loans due to identity theft appear to be declining significantly. The SCE and attributes the significant decline to the new Red Flag Rules of the Fair Credit Reporting Act to deal with identity theft. The study notes that credit card fraud continues to be the biggest problem in terms of identity theft crimes. The full report is available at www.fincen.gov/news_room/nr/html/20101015.html, and it is titled "Identity Theft-Trends, Patterns, and Typologies Reported in Suspicious Activity Reports (SARs) Filed by Depository Institutions."

New Whistle-blower Protection in Food Safety Bill S 510

The U.S. Senate passed a bill on November 30, 2010, that passed into law will impose stricter food safety standards and more authority to the Food & Drug Administration to regulate tainted food. Included in the Food Safety Modernization Act, Senate Bill 510, at Section 402, are protections for employees of an entity engaged in the manufacture, processing, packing, transporting, distribution, reception, holding or importation of food. The protections of the proposed law will protect an employee that has:

  1. Provided, caused to be provided, or is about to provide or cause to be provided to the employer, the Federal Government, or the attorney general of a State information relating to any violation of, or any act or omission the employee reasonably believes to be a violation of any provision of this Act or any order, rule, regulation, standard, or ban under this Act, or any order, rule, regulation, standard, or ban under this Act;
  2. Testified or is about to testify in a proceeding concerning such violation;
  3. Assisted or participated or is about to assist or participate in such a proceeding; or
  4. Objected to, or refused to participate in, any activity, policy, practice, or assigned task that the employee (or other such person) reasonably believed to be in violation of any provision of this Act, or any order, rule, regulation, standard, or ban under this Act.

Where the employee has made one of the protected disclosures, the employer may not in any manner discriminate against the employee with respect to the compensation, terms, conditions or other privileges of employment. This provision will likely include protection against adverse actions similar to other non-retaliation laws which prohibit termination of employment, suspension, demotion, pay cuts, denial of promotion, rejection of employment upon application, and the like when such actions are motivated in substantial part by the protected disclosure.

The remedies provided include injunctive relief (an order to stop the unlawful retaliation), reinstatement, back pay with interest, special damages, attorney’s fees, litigation costs, and expert witness fees.

The procedure to file a complaint for a violation of this proposed law requires filing with the Occupational Safety and Health Administration (OSHA) within 180 days of the retaliatory act. OSHA must then conduct an investigation and can order relief. The OSHA order is then subject to appeal by either party to an administrative law judge with the Department of Labor, whose order can then be appealed to an appeals review board, whose order can then be appealed to the federal district courts.

The House of Representatives passed a similar bill earlier this year, H.R. 2749. The two bills must now be reconciled and voted on again. The consolidated bill should pass in 2011.