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Roces v. Reno Housing Authority

United States District Court, D. Nevada

March 27, 2018

JOAQUIN ROCES et al., Plaintiffs,
v.
RENO HOUSING AUTHORITY, Defendant.

          ORDER

          ROBERT C. JONES United States District Judge

         This is 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. 82.)

         I. FACTS AND PROCEDURAL HISTORY

         Defendant Reno Housing Authority[1] (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 Stead Manor.

         Plaintiffs 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.)

         Under 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.)

         Surely, 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."[2] (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.)

         On 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.

         The parties have now moved for summary judgment.

         II. LEGAL STANDARDS

         A court 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).

         In 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.

         If the 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.

         At the 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." Id.

         III. ANALYSIS

         a. Statute of Limitations

         The 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. 101.)

         With 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) (citations omitted).

         Plaintiffs 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.

         RHA does not argue the contrary.

         However, 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 correct?
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.

         In 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.[3] 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.

         Because 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 the FLSA.

         Of 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.

         This 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.

         The 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.

         Here, 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.

         b. FLSA Wage Claims

          The 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 assumption.

         The 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[4] 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).

         Here, 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.

         i. Whether RHA is entitled to a wage offset based on the reasonable cost of providing lodging

         1. 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.)

         Section 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 employee.

29 C.F.R. § 531.33(a) (emphasis added).

         Indeed, 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 Administrator:

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.

         These 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.

         Regulations 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.").

         Accordingly, 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).

         2. Whether Plaintiffs' lodging was "customarily furnished" (29 C.F.R. § 531.31)

         Plaintiffs 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.)

         The 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 Section 203(m).

         3. Whether Plaintiffs' acceptance of the lodging was "voluntary and uncoerced" (29 C.F.R. § 531.30)

         Plaintiffs 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.

         In 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 concluded:

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).

         Further, 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.

         Here, 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 uncoerced.

         Here, 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 Dep. 55:21-57:1.)

         Further, 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. 99:6-100:2.)

         Lastly, 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.

         Accordingly, 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.

         4. Whether Plaintiffs' lodging complied with federal, state, and local law (29 C.F.R. § 531.31)

         Next, Plaintiffs argue that their lodging did not comply with Nevada law, because "lodging in lieu of wages is illegal" in Nevada.

         In the 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.

         Here, 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 "substandard").

         Therefore, 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.

         5. Whether Plaintiffs' lodging was provided primarily for their benefit (29 ...


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