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The Employer Handbook Blog
When FLSA Retaliation Reaches Beyond the Direct Employer
Most people assume FLSA retaliation claims start and end with the employer on the worker’s W-2. Not so. The Ninth Circuit just widened the blast radius.
TL;DR: The Ninth Circuit held that a worker who files an FLSA lawsuit against one business can pursue a retaliation claim against a partner and manager who also oversees a related business and cuts off work opportunities there because of the lawsuit, even if the worker has no employment relationship with the second business. The worker must still prove they were an employee of at least one business under the economic realities test. The case was sent back to determine whether that requirement is met.
The Fallout After a Wage Complaint
The worker performed several shifts each week for one business and also accepted occasional paid opportunities at another. Both businesses shared the same individual as a partner and manager.
Six days after the worker filed an FLSA lawsuit alleging misclassification and wage violations at the first business, that shared partner–manager emailed the worker to cancel the upcoming work at the second business. In the email, he explained that the cancellation was directly tied to the lawsuit and that allowing the worker to perform at the second business could expose it to similar claims.
The worker amended the lawsuit to add a retaliation claim based on the cancellation. The district court dismissed it because the worker was not an employee of the second business. The worker appealed.
The Ninth Circuit Expands the Lens on Retaliation
The Ninth Circuit reversed and clarified how far FLSA retaliation liability can reach.
1. Retaliation liability can extend to related businesses and shared decisionmakers
An FLSA retaliation defendant does not need to be the worker’s employer. It is enough that the retaliator acted “indirectly in the interest of” the employer the worker complained about. When a business shares an owner or manager with another entity, and that person cuts off work because of an FLSA complaint, that action can satisfy the statute.
2. The worker still must prove employee status with at least one business
The FLSA protects employees, not independent contractors. Even though the worker’s misclassification claims were time barred, they can still attempt to prove employee status under the economic realities test. The Ninth Circuit sent the case back so the district court can determine whether the worker was an employee of the primary business.
The employment relationship does not need to exist with the retaliator or the second business. It must exist somewhere.
3. Canceling work to “protect” another business from wage liability can be retaliation
The shared partner–manager argued that canceling the work opportunity was necessary to limit risk at the second business. The Ninth Circuit rejected that rationale. Actions taken because of a wage complaint cannot be justified as attempts to avoid litigation.
If cutting off work would discourage a reasonable worker from exercising rights under the FLSA, a jury can treat it as retaliation.
Why This Matters to Employers and HR
1. Shared leadership means shared retaliation risk
Any business with overlapping owners, managers, or supervisors must assume that a reaction in one part of the structure can create liability across the rest of it.
2. Workers can pursue retaliation even if wage claims are time barred
A worker who missed the window to recover wages can still pursue an FLSA retaliation claim if they prove they were an employee under the economic realities test.
3. Retaliation can happen through denied opportunities, not just termination
Examples include:
- canceling scheduled shifts at a sister business
- refusing to loan a worker to another location
- removing a worker from a cross-entity project
- blocking supplemental work normally offered
- excluding a worker from overflow or occasional opportunities
These can all support a retaliation claim when tied to a wage complaint.
4. “Protecting the business” is not a defense
The Ninth Circuit made clear that trying to avoid legal exposure is not an excuse for actions motivated by an FLSA complaint.
The Bottom Line
When workers file wage complaints, retaliation liability does not stay inside the four walls of one business. It can follow shared owners, managers, or supervisors anywhere in the organization. Employers with multi-entity structures should ensure that anyone with influence over work opportunities understands that reacting to wage complaints by cutting off work is a direct path to FLSA retaliation claims.