Labor & Employment Law Daily Wrap Up, WAGE-HOUR—MINIMUM WAGE—N.D. Ill.: Factual disputes over employer, employee status precluded summary judgment on innkeepers’ claims, (Apr 1, 2026)

By Tulay Turan, J.D.

The fact that the married couple worked at the inn for five years weighed in favor of employee status.

A married couple that performed the primary work at a bed and breakfast for five years, even after their one-year agreement governing their monthly rate expired, can proceed to trial on their FLSA minimum wage and overtime claims, a federal district court in Illinois ruled. Factual disputes regarding whether the inn’s owners were employers and the innkeepers were employees under the FLSA existed. In addition, the court denied the owners’ motion for summary judgment on the couple’s state wage and breach of contract claims (Leigh v. Camp Zest, 22-cv-06119 (N.D. Ill. Mar. 30, 2026)).

In 2015, the owners of Makanda Inn entered into an agreement with a married couple to operate the inn. The owners would pay the husband a $2,000 monthly rate to manage the inn with his wife’s assistance for a year, with the possibility of additional compensation based on the inn’s performance.

Duties. The couple lived on site while working at the inn and handled various innkeeper duties such as guest reservations, food shopping and preparation, cooking and serving guests, and overall maintenance of the property. When the agreement expired after a 12-month term, they continued living and working at the inn. In January 2021, the owners terminated their relationship with the couple.

Complaint filed. Thereafter, the innkeepers sued the inn and its owners, alleging a failure to pay minimum wage and overtime under the FLSA, failure to pay minimum wage and overtime under the Illinois Minimum Wage Law (IMWL), violation of the Illinois Wage Payment and Collection Act (IWPCA), and breach of contract. The owners filed this motion for summary judgment on all counts.

Threshold issues. Because the parties disputed whether the owners were subject to the FLSA’s requirements, the court first addressed three threshold issues, including whether the Makanda Inn or the employees were covered under the FLSA, whether the owners were employers, and whether the innkeepers were employees rather than independent contractors. The court found there were triable issues of fact on the first two issues. It also found the innkeepers were employees. Thus, it denied the owners’ motion for summary judgment on the FLSA minimum wage and overtime claims.

Individual coverage. The innkeepers did not dispute that the owners were not a covered enterprise under the FLSA. Instead, the couple argued they were protected under the FLSA as covered individuals. The court found factual issues remained as to whether their activities were sufficiently engaged in interstate commerce to qualify them as covered individuals.

The innkeepers’ transaction reports showed they regularly ordered business cards and branded merchandise from a national wholesaler, linens from a Pennsylvania supplier, bath soaps from a New Jersey vendor, and cleaning supplies from a Minnesota retailer. They also purchased online digital advertisements on various websites to attract customers both in and out of state. The Makanda Inn’s phone records also showed they regularly communicated with out-of-state customers. Thus, the factual issues as to whether they were covered individuals precluded summary judgment on this issue.

Employer. Likewise, the court denied the owners’ motion for summary judgment on the issue of their individual liability because there were significant disputes over material facts as to whether they were employers under the FLSA. Applying economic reality test factors, the court held the record precluded a finding at this stage as to whether the owners could hire and fire the innkeepers. The parties disputed the factual circumstances around how the owners engaged the innkeepers to begin working at the Makanda Inn. The parties also disputed how the owners terminated their relationship with the couple.

Control of daily work. A triable issue of fact also existed regarding the owners’ degree of control and supervision over the innkeepers. The innkeepers pointed to instances where they sought approval from the owners or where one of the owners directed them to perform certain tasks. For example, the owner emailed the couple to “hold off until” they “come down in a few weeks” in response to a proposed decoration. In another email, the owner directed the couple to “run a 1099 report and send” it to him so he could pass it to his accountant.

Moreover, the court said, the economic reality of the innkeepers’ routine daily work at the Makanda Inn, including handling reservations, housekeeping, and cooking, might not require close daily supervision by an employer.

Rate and method of payment. The final factor the court addressed regarding the employer issue was compensation. Although the owners argued there was no evidence they established the rate and method of payment, one owner admitted he participated in the drafting of the August 2015 contract, which determined the innkeepers’ pay and the parameters of their work at the inn. Also, the parties disputed whether the terms of the agreement continued to apply to the couple’s ongoing work at the inn and the circumstances around the “incentive compensation” for which they might have been eligible. Thus, the factual issues as to the owners’ status under the FLSA also precluded summary judgment.

Economic realities of work. Turning to the issue of whether the innkeepers met the definition of employees under the FLSA, the court found the economic realities of their work sufficiently supported classification as employees.

Control. The court found that, as previously noted, emails between the couple and the owners showed the couple sought approval before performing certain tasks, and the owners directed them to perform other tasks. This factor supported the theory that they were employees.

Opportunity for profit or loss. In addition, the innkeepers’ lack of opportunity for profit or loss weighed in favor of finding they were employees rather than independent contractors. The court explained that an independent contractor “risks loss of an investment and has the opportunity to increase profits through managerial discretion.” Here, the innkeepers did not invest anything in the inn and any reduction in earnings due to poor performance from the inn was a “loss of wages, and not of an investment.”

Relative investment. Likewise, there was no dispute the couple never had to personally invest in Makanda Inn. The record also showed that when the inn bank account ran low, the owners deposited funds into the account. Thus, this factor also supported their classification as employees.

Special skill. The court next explained that when an individual’s work requires special skill, that individual is more likely to be an independent contractor. Here, the couple handled customer inquiries, booked reservations at the inn, purchased online ads, performed bookkeeping and budgeting for the business, carried out housekeeping tasks, and cooked and served food to guests. The court found that although this work might be difficult and demanding, it did not require special skill.

Permanence of the working relationship. The next factor, more than any other, according to the court, weighed heavily in favor of employee status. The court noted that “the more permanent the relationship, the more likely the worker is to be an employee.” The undisputed facts here showed the couple worked at the inn exclusively for a period of five years.

Integral part of business. Turning to the last factor of the economics reality test, the court found the couple performed the primary work of the inn. The undisputed facts showed they were responsible for handling customer inquiries, reservations, cooking for guests, cleaning, and restocking supplies to fulfill their duties as innkeepers.

Thus, the court found the innkeepers were employees and denied the owners’ motion for summary judgment on the FLSA claims.

State-law claims. The court next denied the owners’ motion for summary judgment on the IMWL and IWPCA claims for the same reasons as their FLSA claims.

Breach of contract. Finally, the court denied the owners’ motion for summary judgment on the breach of contract claim because, regardless of whether the innkeepers were employees under the FLSA, the parties disputed whether the exact terms of the 2015 agreement continued to bind the parties after 2016.

The case is No. 22-cv-06119.

Judge: Blakey, J.

Attorneys: Bradley K. Staubus (Esposito & Staubus) for Malcolm Leigh and Loraine Leigh. Alexandra Nicole Prejzner (Huck Bouma) for Camp Zest, Inc. dba Makanda Inn & Cottages, Gregory Wellman, and Shauna Wellman.

Companies: Camp Zest, Inc.; Makanda Inn & Cottages

Cases: WageHour MinimumWage Overtime StateLawClaims IllinoisNews