A woman sued her former employer, a small family-owned bed and breakfast in Maryland, for violating the Fair Labor Standards Act (FLSA) by failing to pay her minimum wage for all hours worked.
When the family business hired the plaintiff as its innkeeper in July 2015, the parties signed a written agreement stating that she would work seven hours per week serving breakfast to guests; 22 hours per week cleaning guest rooms and common areas; to check in guests "as necessary" from 4:00 p.m. to 9:30 p.m.; and close the inn at 10:00 p.m. In addition, she was required to answer phones, take reservations, reply to emails, and manage the inn's social media.
In return, the family employer would pay her $800 per month and provide her with lodging and breakfast. The employer alleges that it paid her enough for 29 to 40 hours of work per week by providing her $800 in cash wages and lodging valued at $850 to $1800 per month, which it calculated based on the price paid by guests at the inn.
The employee innkeeper alleges that, despite the contract's stipulations, she actually worked 100 hours per week without a day off. She further alleges that the family employer cannot count her lodging as compensation, because it did not keep records of the actual costs of providing her the lodging.
The innkeeper filed her lawsuit in January 2017 and quit shortly thereafter.
The district court granted the family employer's motion for summary judgment stating that the written contract constituted a "reasonable agreement" and exempted it from other FLSA requirements.
However, the Fourth Circuit Court of Appeals recently overturned the lower court's decision. It found that the employer did need to maintain records of the cost of providing the lodging, which it failed to do. The family employer used the market value, which includes profit, in calculating the value of the lodging. Federal law requires that profit not be included.
The lower court must now consider the actual value of the lodging, as well as how many hours the innkeeper actually worked, to determine whether or not the agreement was reasonable. In particular, it must determine whether she was "engaged to wait" or "waiting to be engaged" during check-in times—the employer must compensate her for all hours that she was "engaged to wait." United States Court of Appeals for the Fourth Circuit No. 17-1187 Maryam Balbed, Plaintiff - Appellant, v. Eden Park Guest House, LLC; Etty Bela Mukendi; Bruno Mukendi; Trezila Mukendi, Defendants - Appellees, ca4.uscourts.gov (Jan. 25, 2018).