United States District Court, D. Nevada
C. JONES United States District Judge
a consolidated employment action, primarily for die
collection of unpaid wages under the Fair Labor Standards Act
("FLSA") and Nevada law. Now pending before die
Court are competing motions for summary judgment. (Pls.'
Mot. Summ. J., ECF No. 81; Def.'s Mot. Summ. J., ECF No.
FACTS AND PROCEDURAL HISTORY
Reno Housing Authority (hereinafter "RHA") is a
municipal corporation established and operated to alleviate
housing shortages and provide affordable housing options
within the cities of Reno and Sparks and throughout Washoe
County, Nevada. RHA owns and manages 764 units of public
housing in multiple locations throughout Washoe County, and
offers subsidized housing to more than 2, 500 low income
families in die Reno-Sparks metropolitan area. (Jones Decl.
¶¶ 3-6, ECF No. 84-3.) At issue in this case are
five of the apartment complexes managed by RHA: Essex Manor,
Yorkshire Manor, Tom Sawyer Village, Silverada Manor, and
are five individuals who entered into "Live-In
Agreements" with RHA. Under these Agreements, Plaintiffs
received rent-free housing in exchange for undertaking the
responsibility to perform certain regular work within the
complexes they inhabited. From April 2010 until August 11,
2015, Plaintiff Joaquin Roces was the "live-in"
responsible for the Essex Manor and Yorkshire Manor
complexes, comprising 142 total housing units. (3:15-cv-408
Second Am. Compl. ¶ 6, ECF No. 54; Def.'s Mot. Summ.
J. 5.) From October 2007 until July 31, 2013, Plaintiffs Juan
and Judith Lopez were the live-ins at Tom Sawyer Village and
Silverada Manor, comprising 250 units. (3:15-cv-408 Second
Am. Compl. ¶¶ 7-8, ECF No. 54; Def.'s Mot.
Summ. J. 5.) And from August 2012 until May 2016, Plaintiffs
Jaime Villa and Melisa Chavez were the live-ins at Stead
Manor, comprising 96 units. (3:16-cv-441 Compl. ¶¶
6-7, ECF No. 1; Def.'s Mot. Summ. J. 5.)
the Agreements, the duties of a live-in are as follows: The
live-in must conduct a daily grounds inspection, paying
specific attention to exterior light fixtures, the security
of vacant housing units, and any vehicles or tenant activity
in violation of RHA rules and regulations. (Agreement ¶
2B, ECF No. 83-4.) The timing of me daily inspection is
flexible, however, and the live-ins are largely able to
decide when to complete it. (See Roces Dep.
89:22-90:16 (one inspection daily, any time between 6 a.m.
and 7 p.m.), 149:14-16 (one inspection daily, any time before
11 p.m.), ECF No. 87-1; Villa Dep. 113:13-114:4, ECF No. 92-1
(one inspection daily, at varying times of day, with one
"late" inspection over the weekend); Acosta Decl.
¶ 8, ECF No. 84-4 (one inspection daily, at the
live-in's convenience).) In conjunction with the daily
grounds inspection, the live-in must complete a vehicle log
report, and a building and grounds report (otherwise referred
to as a property inspection report), each of which are turned
in daily to RHA management. Incident reports may also be
necessary, depending on the circumstances. (Roces Dep.
165:3-167:6, ECF No. 87-1.) Also, in conducting the grounds
inspection, the live-in is expected to clean up the grounds
as needed, by, for example, shoveling snow, throwing away
trash or debris, clearing fallen tree branches, or picking up
stray toys left in common areas. (See Id. at
180:15-25; Agreement ¶ 2C.)
the live-in's central duty is to be RHA's on-site
"eyes and ears" outside of regular business hours.
To that end, live-ins are required to be "on-call"
to respond to emergencies every day from 6:00 p.m. to 7:00
a.m., and around the clock on weekends and holidays.
(Agreement ¶ 2A.) During their on-call hours, live-ins
must be "available to answer, respond to and take
appropriate action in a timely manner with respect to any
emergency call" received. (Id.) The Live-In
Agreement clearly permits live-ins to leave the premises
during on-call hours, but they must be reachable by telephone
and must remain "close enough to respond within no more
than fifteen minutes." (Id. at ¶ 2D.)
Live-ins are not required by the Agreement to fulfill any
affirmative duties during the on-call hours; rather, their
purpose is to be near enough to respond quickly to emergency
situations that may arise. Tenants experiencing an emergency
are supposed to dial an RHA telephone number or contact
Answer West-an answering service used by RHA for after-hours
calls-and then the message is relayed to the live-in. The
live-in is then expected to investigate the situation and
abate minor emergencies if possible. If unable to abate the
emergency, the live-in must report it to RHA's Asset
Manager so a decision can be made regarding how and when to
resolve the issue. (See, e.g., Jones Dep. 43:4-47:6,
ECF No. 86-1.)
August 11, 2015, Joaquin Roces filed a collective action
complaint against RHA alleging failure to pay wages and
overtime in violation of the FLSA and Article 15, Section 16
of die Nevada State Constitution ("the Minimum Wage
Amendment" or "the MWA"). (3:15-cv-408 Compl.,
ECF No. 1.) His complaint alleged mat Mr. Roces worked 153
hours a week for RHA (40 during regular business hours and
113 on call) without hourly compensation, and further alleged
that his unit's maximum rental value is $600, resulting
in an effective wage rate of $0.92 per hour. On September 29,
2015, Juan and Judith Lopez joined in Mr. Roces's
wage-and-hour allegations, and Mr. Roces added individual
claims of FLSA retaliation, discrimination and retaliation
under Nevada law, and tortious discharge in violation of
public policy. (3:15-cv-408 Am. Compl., ECF No. 16.) On
January 26, 2016, the Court denied Plaintiffs' motion to
circulate a notice of me pendency of collective action under
me FLSA to putative class members, holding that Plaintiffs
failed to make "substantial allegations mat they are
similarly situated to the putative class members as victims
of a single decision, policy, or plan." (Order, ECF No.
37.) Then on June 25, 2016, Jaime Villa and Melisa Chavez,
represented by the same attorneys as the other three
Plaintiffs, filed a separate action alleging the same
wage-and-hour claims. (3:16-cv-441 Compl., ECF No. 1.) On
September 19, 2016, the actions were consolidated under me
first-filed case number.
parties have now moved for summary judgment.
must grant summary judgment when "the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). Material facts are those which may affect
the outcome of the case. See Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). A dispute as to a
material fact is genuine if there is sufficient evidence for
a reasonable jury to return a verdict for the nonmoving
party. See Id. A principal purpose of summary
judgment is "to isolate and dispose of factually
unsupported claims." Celotex Corp. v. Catrett,
477U.S. 317, 323-24 (1986).
determining summary judgment, a court uses a burden-shifting
scheme. The moving party must first satisfy its initial
burden. "When the party moving for summary judgment
would bear the burden of proof at trial, it must come forward
with evidence which would entitle it to a directed verdict if
the evidence went uncontroverted at trial." C.A.R.
Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d
474, 480 (9th Cir. 2000) (citation and internal quotation
marks omitted). In contrast, when the nonmoving party bears
the burden of proving the claim or defense, the moving party
can meet its burden in two ways: (1) by presenting evidence
to negate an essential element of the nonmoving party's
case; or (2) by demonstrating that the nonmoving party failed
to make a showing sufficient to establish an element
essential to that party's case on which that party will
bear the burden of proof at trial. See Celotex
Corp., 477 U.S. at 323-24.
moving party fails to meet its initial burden, summary
judgment must be denied and the court need not consider the
nonmoving party's evidence. See Adickes v. S.H. Kress
& Co., 398 U.S. 144 (1970). If the moving party
meets its initial burden, the burden then shifts to the
opposing party to establish a genuine issue of material fact.
See Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). To establish the
existence of a factual dispute, the opposing party need not
establish a material issue of fact conclusively in its favor.
It is sufficient that "the claimed factual dispute be
shown to require a jury or judge to resolve the parties'
differing versions of the truth at trial." T. W.
Elec. Serv, Inc. v. Pac. Elec. Contractors Ass 'n,
809 F.2d 626, 631 (9th Cir. 1987). In other words, the
nonmoving party cannot avoid summary judgment by relying
solely on conclusory allegations unsupported by facts.
See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir.
1989). Instead, the opposition must go beyond the assertions
and allegations of the pleadings and set forth specific facts
by producing competent evidence that shows a genuine issue
for trial. See Fed. R. Civ. P. 56(e); Celotex
Corp., 477 U.S. at 324.
summary judgment stage, a court's function is not to
weigh the evidence and determine the truth, but to determine
whether there is a genuine issue for trial. See
Anderson, 477 U.S. at 249. The evidence of the nonmovant
is "to be believed, and all justifiable inferences are
to be drawn in his favor." Id. at 255. But if
the evidence of the nonmoving party is merely colorable or is
not significantly probative, summary judgment may be granted.
See id. at 249-50. Notably, facts are only viewed in
the light most favorable to the non-moving party where there
is a genuine dispute about those facts. Scott v.
Harris, 550 U.S. 372, 380 (2007). That is, even where
the underlying claim contains a reasonableness test, where a
party's evidence is so clearly contradicted by the record
as a whole that no reasonable jury could believe it, "a
court should not adopt that version of the facts for purposes
of ruling on a motion for summary judgment."
Statute of Limitations
Court will first address the statute of limitations issue
relevant to the complaint of Juan and Judith Lopez. It is
undisputed mat the Mr. and Mrs. Lopez terminated their
contract with RHA as of July 31, 2013, and this action was
filed on August 11, 2015. (Lopez Dep. 70:21- 22, ECF No.
89-2.) Under Nevada law, a two-year statute of limitations
applies to actions for unpaid minimum or overtime wages. NRS
608.260; Perry v. Terrible Herbst, Inc., 383 P.3d
257, 262 (Nev. 2016) (holding that claims arising under the
MWA are subject to a two-year statute of limitations).
Therefore, the Lopezes' failure to commence an action on
or before July 31, 2015, is fatal to their state-law claims.
Plaintiffs have conceded as much in their response to
RHA's summary judgment motion. (Resp. 30 n.39, ECF No.
respect to the Lopezes' federal-law claims, the FLSA has
a two-year statute of limitations for claims of unpaid
minimum or overtime wages unless the employer's violation
was "willful, " in which case the statute of
limitations is extended to three years. 29 U.S.C. §
255(a); Flores v. City of San Gabriel, 824 F.3d 890,
895 (9th Cir. 2016), cert, denied sub nom. City of San
Gabriel, Cal. v. Flores, 137 S.Ct. 2117 (2017). "A
violation of the FLSA is willful if the employer knew or
showed reckless disregard for the matter of whether its
conduct was prohibited by the FLSA." Chao v. A-One
Med. Servs., Inc., 346 F.3d 908, 918 (9th Cir. 2003)
(brackets and quotation marks omitted) (citing McLaughlin
v. Richland Shoe Co., 486 U.S. 128, 133 (1988)). In
assessing willfulness, "merely negligent" conduct
is not enough, see McLaughlin, 486 U.S. at 133, and
a court "will not presume that conduct was willful in
the absence of evidence, " Alvarez v. IBP,
Inc., 339 F.3d 894, 909 (9th Cir. 2003),
aff'd, 546 U.S. 21 (2005). "An
employer's violation of the FLSA is 'willful'
when it is on notice of its FLSA requirements, yet takes no
affirmative action to assure compliance with them."
Flores, 824 F.3d at 906 (citation omitted). However,
the "failure to seek legal advice, alone, without prior
notice of the alleged FLSA violation does not prove
willfulness." Mohammadi v. Nwabuisi, 171
F.Supp.3d 545, 550 (W.D. Tex. 2016), aff'd, 673
Fed.Appx. 443 (5th Cir. 2017). "The plaintiff bears the
burden of proof on the issue of willfulness for statute of
limitations purposes." Parada v. Banco Indus. De
Venezuela, C.A., 753 F.3d 62, 71 (2d Cir. 2014)
seem to argue that RHA's conduct was willful in this case
because: (1) RHA conceived, implemented, and perpetuated the
live-in program for several years without inquiring whether
the program was legal under the FLSA; (2) RHA received
complaints from Plaintiffs that should have put it on notice
of FLSA compliance issues; and (3) live-ins provide great
value to RHA by performing duties that are of the same nature
as duties typically inherent in an employment relationship.
(See Resp. 29-32, ECF No. 101.) Of course, the
purpose of the live-in program is to kill two birds with one
stone: maintain a "management presence" on the
premises after hours while saving RHA the expense of
additional staffing. To that end, the program offers a
valuable benefit to both parties. The live-ins save money in
the form of rent (which they would have to pay but for the
Agreement), and RHA saves money in the form of wages (which
it would have to pay but for the Agreement). Certainly, if
the live-in program did not exist, RHA would have to bring in
additional employees or independent contractors to perform
the same functions.
does not argue the contrary.
the fact that a live-in's duties would otherwise be
completed by an employee is not alone sufficient to put RHA
on notice that the live-in program implicates the FLSA.
Indeed, former Executive Director David Morton, who
established the live-in program, testified that he simply did
not view the live-in arrangement as an employment-type
relationship that would be subject to FLSA requirements:
Plaintiffs' Counsel: Why did you create the live-in
program? Mr. Morton: Because I thought it would be a very
useful and helpful way of ensuring that our residents lived
in complexes where they felt comfortable after-hours.
Q: The live-in program, the live-in is not - I understand you
don't believe that the person is an employee; is that
A: That is correct.
Q: Why do you believe that person is not an employee?
A: Because they had a lease, a rental agreement that clearly
spelled out their duties in return for the apartment.
(Morton Dep. 30:8-20, ECF No. 85-1.) In fact, other than two
sections specifying the live-in's duties and certain days
of the year on which the live-in would not be required to
perform them, the Live-In Agreement reads much like a
standard lease. (See Agreement, ECF No. 83-4.) For
example, Section 1 contains RHA's promise to permit the
tenant to occupy a particular unit, free of rent. Section 4
specifies that the Agreement will create a tenancy at will.
Section 5 institutes a five-day notice period for a
termination by either party, and provides that such notice,
if given by RHA, will also represent a five-day notice of
eviction in accordance with Nevada law. Section 7 imposes
various rules and use restrictions that are common in
residential lease agreements, such as a restriction on
assignments and subleases, an obligation to abide by
applicable housing codes affecting health and safety, and
prohibitions on waterbeds and barbecues.
reality, there is no evidence in the record of circumstances
sufficient to put RHA on notice that it needed to inquire
further into whether the live-in program was in compliance
with the FLSA. See 29 C.F.R. § 578.3(c)(3). The
mere nature of the program and governing Agreement is not
enough. Whether Plaintiffs became employees of RHA by virtue
of their Live-In Agreements is a complex question of law and
fact-murky waters that even the attorneys in this case have
thus far declined to wade into. Mr. Morton testified that he
believed RHA was entering into lease agreements with its
live-ins, not employment agreements. There is certainly some
nuance to the arrangement: Was RHA agreeing to provide free
housing as an alternative to paying wages, or to accept
certain specified services as an alternative to collecting
rent? In Mr. Morton's mind, it was the latter. Plaintiffs
have not offered any evidence to contradict Mr. Morton's
testimony, and the Court does not believe a reasonable juror
could conclude that his interpretation of the Live-In
Agreement was so unreasonable as to support a claim of
willful violation of the FLSA.
the parties' have not addressed it, the Court need not
resolve the ultimate question of whether the Live-In
Agreement created an employment-type relationship to which
the FLSA applies. Nor does the Court need to answer the more
difficult and fact-based question-assuming the Agreement did
not create a relationship governed by the FLSA-of whether an
employment relationship arose at any subsequent time by
virtue of the level of control RHA may have exercised over
Plaintiffs. The Court need only determine whether there is
sufficient evidence that RHA was on notice that it had
possible FLSA obligations and failed to take affirmative
steps to ensure compliance. Mr. Morton's uncontradicted
deposition testimony establishes that RHA believed it was
entering into lease agreements with its live-ins under which
the requirement of paying rent would be substituted by the
lessee's agreement to provide certain services. No
reasonable juror could find that RHA's failure to inquire
into its possible FLSA obligations under what it determined
to be a lease agreement was unreasonable, much less in
reckless disregard for whether its conduct was prohibited by
course, the Ninth Circuit has found that an employer's
implementation of a new pay policy may itself be enough to
put the employer on notice of a need to inquire into FLSA
compliance. See, e.g., Flores, 824 F.3d at 906.
However, according to the cases the Court has found, such a
conclusion has only been reached where the employment nature
of the relationship was already established, i.e., where the
employer knew the FLSA applied to the relationship. In
Flores, for example, the Ninth Circuit affirmed the
district court's finding of willfulness where it was
"undisputed that the [employer] failed to investigate
whether its exclusion of cash-in-lieu of benefits payments
from the regular rate of pay complied with the FLSA at any
time following its initial determination that the payments
constituted a benefit." Id. However,
Flores is not similar to this case. The employer in
Flores was clearly on notice that its benefits
payments needed to conform to FLSA requirements. Here, it was
not at all clear to RHA that the FLSA even entered into the
equation. Accordingly, the Court finds the mere nature of the
relationship created by the Live-In Agreement was not enough
to put RHA on notice of any possible FLSA requirements.
leaves only Plaintiffs' assertion that complaints they
made to RHA while acting as live-ins were sufficient to give
rise to RHA's obligation to inquire further into its FLSA
compliance. Two of the Plaintiffs-Mr. Roces and Mrs.
Lopez-claim they lodged complaints with RHA management
regarding their compensation. (See Roces Dep.
145:10-146:8, ECF No. 87-1; Roces Dep. Vol. II 92:8-93:15,
ECF No. 88-2; Judith Lopez Dep. 62:3-63:14, ECF No. 89-2.)
First, however, Mr. Roces's alleged complaints are not
relevant to the timeliness of the Lopezes' FLSA claims.
Plaintiffs' evidence establishes that Mr. Roces first
complained about his compensation approximately six months
prior to his termination. (Resp. 3, ECF No. 101.) This places
his first complaint in or around early 2015. Mr. and Mrs.
Lopez resigned from the live-in position in July 2013. Even
if the complaints of Mr. Roces were sufficient to put RHA on
notice of a possible FLSA violation, such notice came far too
late to serve as a basis for establishing a willful violation
of the Lopezes' FLSA rights.
only other complaint was made by Mrs. Lopez herself, who
testified that after a difficult night of dealing with a
fight between tenants, which necessitated the presence of the
Reno Police Department (a "night of hell"), she
asked RHA Asset Manager Walter Dixon, "When are we going
to get paid for this job?" In reply, Mr. Dixon laughed
and said, "You're not management." (Judith
Lopez Dep. 62:3-63:14.) She never brought up the subject
again. (Id. at 64:16-22.) The Court finds that such
an ambiguous and casual comment as this-which is inadequate
not only to communicate the substance of a wage complaint but
even to convey that the employee is raising a serious
issue-is not sufficient to put an employer on notice of a
possible FLSA violation. Mrs. Lopez's comment constitutes
far less evidence of willfulness than has been rejected in
other cases. For example, in Ikossi-Anastasiou v. Bd. of
Supervisors of Louisiana State Univ., 579 F.3d 546 (5th
Cir. 2009), a Louisiana State University professor alleged
willful violations of me Equal Pay Act (a part of the FLSA)
on the basis that (1) her salary records showed she was paid
less than many of her male colleagues, and (2) she filed
formal grievances in 1995 and 1998 expressing dissatisfaction
with her salary and requesting her pay be adjusted upward to
match that of her male colleagues. The Fifth Circuit found
this was "not enough to raise a fact question as to
whether LSU knew or recklessly disregarded that its pay scale
was prohibited by the FLSA." Id. at 553. In so
concluding, the court stated: "[Plaintiff] has not
provided evidence that LSU actually knew that the pay
structure violated the FLSA, or that LSU ignored or failed to
investigate [plaintiffs] complaints. Without more evidence,
[plaintiffs] allegations of willfulness cannot survive the
summary judgment stage." Id.
Plaintiffs have not proffered evidence that RHA intentionally
violated the FLSA or recklessly disregarded its provisions.
Therefore, the Lopezes' FLSA wage claims are subject to a
two-year statute of limitations, and are time-barred.
FLSA Wage Claims
Court next turns to the merits of Plaintiffs' claims for
unpaid wages under the FLSA. Because the parties' motions
assume an employment relationship between RHA and Plaintiffs,
the Court's analysis will be based on the same
FLSA expressly permits employers to offset a portion of their
federal minimum wage obligation with the reasonable cost of
board, lodging or other facilities customarily furnished to
employees. 29 U.S.C. § 2O3(m). Under the statute, the
Secretary of Labor is "authorized to determine the fair
value of such board, lodging, or other facilities for defined
classes of employees and in defined areas, based on average
cost to the employer or to groups of employers similarly
situated, or average value to groups of employees, or other
appropriate measures of fair value." Id. To
claim the benefit of the offset, the employer must meet
certain requirements: (1) the lodging must be regularly
provided by the employer or similar employers, 29 C.F.R.
§ 531.31; (2) the employee's acceptance of the
lodging must be voluntary and uncoerced, 29 C.F.R. §
531.30; (3) the lodging must be furnished in compliance with
all applicable federal, state, and local law, 29 C.F.R.
§ 531.31; (4) the lodging must be provided primarily for
the benefit of the employee rather than the employer, 29
C.F.R. § 531.3(d)(1); and (5) the employer must maintain
and preserve records substantiating the cost of furnishing
the lodging, 29 C.F.R. § 516.27(a).
Plaintiffs assert, for various reasons, that RHA is not
entitled to claim any offset based on the lodging provided to
Plaintiffs, and therefore Plaintiffs must be paid at least
minimum wage for all hours worked. Plaintiffs further argue
that they must be compensated not only for hours of actual
work, but for all hours during which they were required to be
on call. Of course, RHA counters that it is entitled to an
offset of its reasonable costs in providing lodging and that
Plaintiffs' on-call time is non-compensable.
Whether RHA is entitled to a wage offset based on the
reasonable cost of providing lodging
RHA's failure to petition the Administrator
Plaintiffs argue first that RHA is not entitled a wage offset
under Section 203(m) because RHA failed to petition the
Administrator of the DOL's Wage and Hour Division
("the Administrator") for a determination of the
reasonable cost of providing lodging to Plaintiffs. This
failure, Plaintiffs contend, is fatal to RHA's claim of
offset. RHA does not dispute that it did not petition the
Administrator for a determination of reasonable cost. (Resp.
4, ECF No. 99.)
203(m) reads: "'Wage' paid to any employee
includes the reasonable cost, as determined by the
Administrator, to the employer of furnishing such
employee with board, lodging, or other facilities, if such
board, lodging, or other facilities are customarily furnished
by such employer to his employees" (Emphasis added.) The
Section also provides that the Secretary of Labor is
authorized to make determinations of the "fair
value" of the board, lodging, or other facilities
furnished by an employer in lieu of wages. According to the
federal regulations interpreting Section 203(m), the
Administrator may, "[u]pon his motion or upon the
petition of any interested person, ... determine generally or
particularly the 'reasonable cost' to an employer of
furnishing any employee with board, lodging, or other
facilities, if such board, lodging, or other facilities are
customarily furnished by the employer to his employees."
29 C.F.R. § 531.4(a). However, this is not the only
permissible way to determine reasonable cost under the
regulations, and employers are expressly allowed to make such
determinations in accordance with specific instructions
provided within the same set of regulations:
Section 3(m) directs the Administrator to determine "the
reasonable cost * * * to the employer of furnishing * * *
facilities" to the employee, and in addition it
authorizes him to determine "the fair value" of
such facilities for defined classes of employees and in
defined areas, which may be used in lieu of the actual
measure of the cost of such facilities in ascertaining the
"wages" paid to any employee. Subpart B contains
three methods whereby an employer may ascertain whether any
furnished facilities are a part of "wages" within
the meaning of section 3(m): (1) An employer may
calculate the "reasonable cost" of facilities in
accordance with the requirements set forth in §
531.3; (2) an employer may request that a determination
of "reasonable cost" be made, including a
determination having particular application; and (3) an
employer may request that a determination of "fair
value" of the furnished facilities be made to be used in
lieu of the actual measure of the cost of the furnished
facilities in assessing the "wages" paid to an
29 C.F.R. § 531.33(a) (emphasis added).
29 C.F.R. § 531.3 explains to an employer how exactly to
make the determination of reasonable cost where such employer
is not already subject to a determination by the
Except whenever any determination made under § 531.4 is
applicable, the "reasonable cost" to the employer
of furnishing the employee with board, lodging, or other
facilities (including housing) is the cost of operation and
maintenance including adequate depreciation plus a reasonable
allowance (not more than 5 1/2 percent) for interest on the
depreciated amount of capital invested by the employer:
Provided, That if the total so computed is more than the fair
rental value (or the fair price of the commodities or
facilities offered for sale), the fair rental value (or the
fair price of the commodities or facilities offered for sale)
shall be the reasonable cost. The cost of operation and
maintenance, the rate of depreciation, and the depreciated
amount of capital invested by the employer shall be those
arrived at under good accounting practices.
provisions clearly indicate that the Administrator, in
interpreting Section 203(m), did not intend to impose upon
employers an obligation to petition the Administrator for a
determination of reasonable cost as a prerequisite to
claiming the wage offset permitted by the statute.
such as these are generally accorded substantial deference.
Chevron, U.S.A., Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 843-844 (1984) ("If
Congress has explicitly left a gap for the agency to fill,
there is an express delegation of authority to the agency to
elucidate a specific provision of the statute by regulation.
Such legislative regulations are given controlling weight
unless they are arbitrary, capricious, or manifestly contrary
to the statute"). Here, the statute provides that the
Administrator is to make determinations of the reasonable
cost of furnishing employees with board, lodging, or other
facilities. However, the statute does not provide guidance to
the Administrator regarding how such a determination should
specifically be made. In filling that gap, the Administrator
permitted employers, subject to strict guidelines, to make
their own determinations of reasonable cost where, as here,
there has been no prior determination by the Administrator.
The Court cannot conclude that these regulations are
arbitrary or contrary to the statute. Further, Plaintiffs
have cited no case law to support their argument that the
failure to petition the Administrator for a determination of
reasonable cost works as an absolute bar to a claim of
offset. In fact, the relevant case law suggests the opposite
conclusion. See, e.g., Estanislau v. Manchester
Developers, LLC, 316 F.Supp.2d 104, 107-08 (D. Conn.
2004) ("The clear implication of the two regulations is
that while the Administrator may make a determination, he/she
need not do so.").
the Court rules that RHA's failure to petition the
Administrator does not prevent it from claiming the wage
offset available to it under Section 2O3(m).
Whether Plaintiffs' lodging was "customarily
furnished" (29 C.F.R. §
next argue that RHA may not take the Section 2O3(m) offset
because their lodging was not "regularly provided"
by RHA within the meaning of the 29 C.F.R. §531.31.
Plaintiffs base their argument on two facts: first, that RHA
does not provide lodging to its other, non-live-in employees;
and second, that no other known housing authority within the
United States provides lodging to employees under a similar
live-in program. (Mot. Summ. J. 14-15, ECF No.81.)
Court is not persuaded. Again, Plaintiffs do not cite any
case law supporting their position. And neither the language
of the statute nor the applicable regulations support so
strict a requirement that employers must provide lodging to
all of their employees, regardless of the disparate
duties associated with different positions, in order to take
any credit against wages based on the reasonable cost of such
lodging. The far better reading of the statute and
regulations-and the reading endorsed in the July 10, 1963 DOL
Opinion Letter submitted by RHA-is that it suffices to
provide such lodging, regularly and indiscriminately, to all
of a particular class of employee. In its Opinion Letter, the
Wage and Hour Division advised that lodging satisfies the
requirement of being "customarily provided" where
the employer (Northern Gas Company) provided such lodging
consistently, over a period of four years, to a single
employee designated as "master mechanic." (ECF No.
110-3 at 3.) In so opining, Division stated: "The fact
that the employer does not customarily furnish houses to all
of his employees does not warrant a contrary
conclusion." The Court agrees. Here, RHA has
consistently provided free lodging to all live-in tenants
over the course of approximately 28 years. Under these
circumstances, the Court rules as a matter of law that the
lodging for which RHA claims a wage offset was
"customarily provided" within the meaning of
Whether Plaintiffs' acceptance of the lodging was
"voluntary and uncoerced" (29 C.F.R.
argue that their acceptance of free lodging in lieu of wages
was not voluntary because they were not able to choose
between lodging and wages as compensation for doing the job
of a live-in, and were not able to choose whether to reside
in the lodging specified by RHA. (Mot. Summ. J. 16-18, ECF
No. 81.) Federal regulations require that an employee's
choice to accept lodging as compensation in lieu of wages
must be voluntary and uncoerced. 29 C.F.R. § 531.30.
1981, the D.C. Circuit had occasion to interpret the meaning
of "voluntary and uncoerced" in circumstances
sufficiently similar to those presented here. Lopez v.
Rodriguez, 668 F.2d 1376, 1380 (D.C. Cir. 1981). The
court first discussed two cases in which district courts had
denied employer credits for board and lodging, based on the
employers' failure to obtain voluntary and uncoerced
agreements to the employment arrangements. See Marshall
v. Intraworld Commodities Corp., No. 79 C 918, 1980 WL
2097, at *4 (E.D.N.Y. June 9, 1980) ("The claimant had
no other place to live and no choice but to accept the food
and facilities provided to him."); Marshall v. New
Floridian Hotel, Inc., No. 77-1028-CIV, 1979 WL 1991, at
*11 (S.D. Fla. Aug. 29, 1979) ("Defendants have failed
to provide their employees with an option to receive in cash
the amounts attributed and claimed as a credit by defendants
for meals, lodging or other facilities."). The court
then went on to state:
The tests enunciated in Intraworld and New
Floridian Hotel may have been appropriate under the
factual circumstances considered by the courts in those
cases. We think a somewhat different approach is necessary,
however, in a case such as this one, involving a live-in
domestic service employee. Where, as here,
"living-in" is an integral part of the job, the
elements of voluntarism and coercion take on different
meanings than those suggested in Intraworld and
New Floridian Hotel. Implicit in the courts'
decisions in each of those cases was a finding that
"living-in" was not a necessary condition of
employment. However, in the present case, appellants
were concededly seeking to employ a "live-in"
housekeeper and babysitter when they hired appellee. If
appellee understood this when she accepted the job, and if
her acceptance of the job was voluntary and uncoerced, then
it is idle to inquire whether her initial acceptance of board
and lodging was voluntary and uncoerced. Appellee had no
choice but to accept the lawful "live-in" condition
if she desired the job.
Lopez, 668 F.2d at 1380. The court continued its
analysis by finding the plaintiff-appellee did voluntarily
enter into her employment relationship, observing that she
both fully understood the arrangement and had deliberate
personal reasons for accepting it. Id. Finally,
while recognizing that an initially voluntary employment
arrangement may at some point become coercive, the court
In reconsidering this case, the District Court may deny a
credit to appellants for board and lodging for part of the
employment period only if it finds that appellee would
have left the job but for the coercive conditions imposed
upon her by appellants. Any finding that appellee was
unable to leave the job, however, must be attributable to
restrictive actions taken by her employers. To hold
otherwise would be to ignore the fact that "living-in
" was an integral part of appellee's job.
Id. at 1380-81 (emphasis added).
in December 2015, the Wage and Hour Division issued guidance
to its regional administrators and district directors,
instructing that the Division "will normally consider
the lodging as voluntarily accepted by the employee when
living at or near the site of the work is necessary to
performing the job." (Field Assistance Bulletin No.
2015-1 at 3, ECF No. 100-2.) In the Bulletin, the Division
cited both Lopez, discussed above, and Brock v.
Carrion, Ltd., 332 F.Supp.2d 1320 (E.D. Cal. 2004). In
Brock, the court based its finding of voluntariness
on the fact that the plaintiff signed the employment
agreement and never actually asserted that he was coerced
into doing so. Id. at 1324 n.3.
there is no question that "living at or near the site of
the work is necessary to performing the job" of a
live-in tenant. It is undisputed that an integral function of
a live-in is to be the "eyes and ears of
management" outside of regular business hours. This
requires live-ins to be on call (i.e., "on premises or
close enough to respond within no more than 15 minutes")
from 6:00 p.m. to 7:00 a.m. every night, and for twenty-four
hours a day on weekends and holidays. (See Agreement
§ 2, ECF No. 83-4.) Mr. Morton testified that the
purposes of the live-in position are to ensure management
knows what is happening on the property after hours, to deal
with emergency situations that arise after hours, and to
maintain a presence on-site that will help tenants feel more
comfortable after hours. (See Morton Dep. 30:8-32:2,
ECF No. 85-1.) All of these purposes are best served by a
live-in tenant, especially considering that the job requires
the employee to be on call for more than sixty consecutive
hours each weekend. As was the case in Lopez, RHA
was concededly seeking to hire "live-in" employees
when it hired Plaintiffs. Therefore, as in Lopez, if
Plaintiffs understood the live-in requirement when they
accepted the job, and if their acceptance of the job was
voluntary and uncoerced, then it is idle to inquire whether
their initial acceptance of lodging was voluntary and
there is no evidence to suggest that Plaintiffs'
acceptance of the live-in position was involuntary or
coerced. Again, all the evidence points in the other
direction. All of the Plaintiffs testified that they fully
understood the Agreement prior to entering into it, and fully
deliberated whether the arrangement would be beneficial to
them prior to accepting it. (See Resp. 10-17, ECF
No. 99.) Mr. Roces actively sought after the live-in
position, understood the work he would be expected to do and
how he would be compensated, and even testified regarding his
initial acceptance of the Agreement: "[I]t was my
decision to sign or not." (Roces Dep. 70:10-71:20, ECF
No. 87-1.) Subsequently, being fully aware of what the
live-in position entailed, Mr. Roces renewed his one-year
Agreement four times. (Id. at 52:2-14.) Mr. and Mrs.
Lopez also voluntarily accepted the Agreement, after
initially feeling free to decline the opportunity. (Judith
Lopez Dep. 49:18-50:6, ECF No. 89-2.) RHA contacted the
Lopezes when the live-in position became available. After
first turning it down, the Lopezes later proactively pursued
the position by reaching out to RHA. (Id.) They also
renewed their Agreement five times. (Id. at
71:20-23.) Finally, Mr. Villa and Ms. Chavez voluntarily
accepted the Agreement as well, after discussing the
opportunity with one another. Both saw it as "a good
opportunity" to save money, and Ms. Chavez testified:
"[O]ur dream was to buy a house, have our credit score
fixed." (Villa Dep. 56:15-21, ECF No. 92-1; Chavez Dep.
28:12-29:24, ECF No. 94-1.) The live-in arrangement was a
chance to achieve those goals. After their first year as
live-ins, Mr. Villa and Ms. Chavez continued in the position
for another three years. (Villa Dep. 108:14-109:14; Chavez
there is no indication mat Plaintiffs would have resigned
from the live-in position but for coercive conditions imposed
upon them by RHA. See Lopez, 668 F.2d at 1380. To
the contrary, the Lopezes, Mr. Villa, and Ms. Chavez all
eventually resigned from the position of their own free will,
and Mr. Roces acknowledged that he could have quit at any
time, for any reason, simply by giving five days' notice.
(See Judith Lopez Dep. 73:20-74:16 (moved out to
live with daughter and help daughter pay her bills); Villa
Dep. 105:8-107:9 (moved out to provide children with more
space and different living experience); Roces Dep.
the Court notes that the case law Plaintiffs rely upon is
inapposite. In their Motion, Plaintiffs cite to
Intraworld and New Floridian Hotel, the two
cases discussed in Lopez. (Mot. Summ. J. 16-18, ECF
No. 81.) However, as the court observed in Lopez,
"[i]mplicit in the courts' decisions in each of
those cases was a finding that 'living-in' was not a
necessary condition of employment." 668 F.2d at 1380. In
their Reply, Plaintiffs cite to Cuevas v. Bill Tsagalis,
Inc., 149 Ill.App.3d 977 (1986), an Illinois state court
case in which the court did not make a voluntariness
determination. Rather, the court ultimately held that the
employer was unable to substantiate its estimate of the
reasonable cost of providing meals to its employees.
Id. at 986.
the Court finds that "living in" was a necessary
part of the live-in position at RHA, and that Plaintiffs have
not adduced any evidence of coercion, neither in the initial
signing of their Agreements, nor in their subsequent
retention of the position. On this basis, the Court rules as
a matter of law that Plaintiffs' acceptance of their
lodging was voluntary and uncoerced.
Whether Plaintiffs' lodging complied with federal, state,
and local law (29 C.F.R. § 531.31)
Plaintiffs argue that their lodging did not comply with
Nevada law, because "lodging in lieu of wages is
illegal" in Nevada.
Wage and Hour Division's guidance Bulletin of December
17, 2015, several examples are given of lodging that is not
eligible for a Section 203(m) wage credit by virtue of being
"in violation of any Federal, State, or local law,
ordinance, or prohibition." (Field Assistance Bulletin
No. 2015-1 at 3-4, ECF No. 100-2.) Such examples include
lodging that is substandard or not authorized for residential
use, or for which necessary occupancy permits have not been
obtained. These examples accord with the Court's
understanding of the regulations, and also demonstrate the
error in Plaintiffs' argument on this factor. The
regulations require that the lodging itself comply with state
law, not that lodging in general be a permissible form of
compensation under state law. Of course, qualifying for a
wage credit under the FLSA is not dispositive of whether any
similar credit may be taken under Nevada law; that is an
entirely separate question. An employer may well violate
state wage-and-hour laws while fully complying with the FLSA.
Plaintiffs have not alleged that the lodging they were
provided was itself deficient or unlawful in any way.
Furthermore, they have not cited any case law to support the
argument that their lodging would be "in violation of
state law" under the FLSA simply because state law does
not permit the same in-kind compensation permitted by the
FLSA. And the case law the Court has found strongly suggests
that the purpose of 29 C.F.R. § 531.31 is merely to
ensure that the lodging provided in lieu of wages meets
minimum standards for safe, healthful, and lawful housing
conditions pursuant to all applicable laws and ordinances.
See, e.g., Balbed v. Eden Park Guest House,
LLC, 881 F.3d 285, 291 n.4 (4th Cir. 2018) (remanding
case for district court to determine whether employer
violated county code by failing to obtain a permit to use a
cellar for sleeping); Garcia v. Frog Island Seafood,
Inc., 644 F.Supp.2d 696, 710-12 (E.D. N.C. 2009)
(employer failed to have migrant housing inspected prior to
occupancy, in violation of state law); Archie v. Grand
Cent. P'ship, Inc., 86 F.Supp.2d 262, 270 (S.D.N.Y.
2000) (lodging without beds did not meet state requirements
for overnight lodging for the homeless); Castillo v.
Case Farms of Ohio, Inc., 96 F.Supp.2d 578,
638-40 (W.D. Tex. 1999) (employer took unauthorized
deductions for housing where the lodging provided was
Plaintiffs have failed to make any relevant allegation with
respect to the illegality of their lodging, within the
meaning of 29 C.F.R. § 531.31.
Whether Plaintiffs' lodging was provided primarily for
their benefit (29 ...