A Wyoming accountant worked for a nonprofit drug rehabilitation center for 9 years. After negative reviews and many complaints about her lack of interpersonal skills, she was fired. Like many angry former employees, she sued.

What happened. "Melissa," the business manager, kept the books, monitored accounts payable and receivable, and dealt with auditors for Peak Wellness Center in Laramie County. Part of her responsibility was to ensure that Peak’s use of federal and state grant money was used in accord with generally accepted accounting principles.

Over the years, Melissa complained often to her boss, the center director, about what she said were improper invoices or payments, her coworkers, and other matters. Management felt there was no cause for her complaints, and she was repeatedly downgraded for her unpleasant personality and unrelenting criticism.

Finally, management had had enough and fired her in January 2009. Melissa went to court, charging that Peak had committed fraud with government money, that it had broken its contract with her, and that it had "deducted" from her salary by charging her paid time off (PTO) bank for early departures or late arrivals. That last charge, she claimed, violated her exempt status under the Fair Labor Standards Act (FLSA).

A judge in federal district court ruled entirely in Peak’s favor, and Melissa appealed to the 10th Circuit, which covers Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming.

What the court said. Appellate judges looked first at Melissa’s whistleblower charge under the federal False Claims Act (FCA)—she claimed Peak had fired her to retaliate against the charge she was about to file. All judges could find was one memo from the center’s IT director to Melissa’s boss, saying it appeared Melissa might file an FCA charge. But the memo was very general, and judges didn’t believe Peak took it seriously, so retaliation did not seem to have played a role in her termination.

Furthermore, FLSA is very clear that employers may deduct exempt employees’ absent hours from their accrued vacation or PTO banks without violating wage and hour laws. Finally, judges couldn’t find any truth to the idea that Peak had violated Melissa’s employment contract—if she actually had one. So they, like the district judge, ruled entirely for the employer. McBride v. Peak Wellness Center, U.S. Court of Appeals for the 10th Circuit, No. 11-8037 (2012).

Point to remember: Management at Peak had wisely documented their problems with Melissa’s performance and personality, so they were able to show the courts evidence of their legitimate, unbiased reasons for firing her.