Labor & Employment Law Daily Wrap Up, WAGE-HOUR—OVERTIME—11th Cir.: Domestic service worker revives FLSA claims against Miami couple and their business, (Jan 31, 2025)

By Jason Albright, J.D.

The plaintiff performed various services for the couple, including shining their boat.

A domestic service employee for a Miami couple who own a securities business called Lafise Corporation will get a second shot at showing that he was entitled to unpaid overtime pay and that the business qualifies as his joint employer under the FLSA, the Eleventh Circuit found. Given inconsistent testimony and conflicting documentation regarding the employee’s hourly rate, the parties also could not agree on his overtime rate, and both were unresolved questions of fact. In addition, the employee introduced evidence that he performed some services for the business and that it, along with another financial services company owned by the couple, prepared and issued the employee’s semi-monthly paychecks (Guevara v. Lafise Corp., No. 22-13383 (11th Cir. Jan. 30, 2025)).

Domestic service employee. The plaintiff worked for the couple as a domestic service employee for more than a decade. He performed various services in their Miami home, such as cleaning the terrace, shining their boat, washing their cars, dropping them off and picking them up from the airport, and going grocery shopping. He also did maintenance work for their family members.

Lafise and Latin American Financial Services, Inc. The couple own Lafise and Latin American Financial Services, Inc. (LAFS), conglomerates that operate financial institutions across Latin America.

Occasionally, the employee provided services for Lafise, which included painting its office space, distributing brochures, and delivering documents. Additionally, he communicated with Lafise employees often, and Lafise and LAFS prepared and issued the semi-monthly paychecks he received for all work he performed.

No written agreement. The employee and the couple did not have a written employment agreement detailing his responsibilities, but they did have a verbal understanding regarding the duties he was expected to perform. Pursuant to the oral agreement, the couple paid him $1,365.88 on a biweekly basis, and he worked at least 57 hours a week.

Differing base and overtime understandings. The parties could not agree on whether the $1,365 represented a salary or an hourly wage. The employee and the couple thus presented different base and overtime rate numbers and theories to support their respective positions.

No prior records. The couple admitted that, prior to the employee’s lawsuit, they did not keep records breaking down the number of hours he worked each week or his exact hourly or overtime rates. His semi-monthly paystubs also did not reflect his hourly rate or the number of hours he worked each week. The “Description” section of his paystub did, however, say “Salary.”

Same weekly amount. Nevertheless, the couple paid the employee the same weekly amount—$682.94—irrespective of whether he was absent, worked less than 57 hours, or worked more. And only after he filed suit did they state that his hourly rate was $9.62 for 40 hours of work each week with an overtime rate of $14.43 for the 17 hours of work he performed beyond 40.

Handwritten notes. The couple pointed to handwritten notes as the only thing in writing that set forth an overtime rate. Moreover, from late August 2020 until the employee quit in March 2021, the couple reduced his weekly pay to $384.80 to reflect an hourly rate of $9.62 for 40 hours a week.

Employee’s understanding. According to the employee, he understood his pre-August 2020 bi-weekly paychecks of $1,365.88 to represent a regular salary, with his base hourly rate being $11.68. He further testified that he was not paid an overtime hourly rate, but rather his hourly pay was “around $11.”

Set of notes. The couple proffered a set of notes, hand-written by one of them, that showed they paid him $15 an hour for time he worked above 57 hours a week during the first half of 2018.

His note from December 2019. Although the employee denied that he expected to be paid $15 an hour for any overtime worked within his 57-hour workweek, and he denied that he ever wrote a $15 hourly overtime rate on their handwritten notes, the couple also proffered notes handwritten by him that showed a week in December 2019 during which he worked 16.5 hours over his 57-hour workweek and was owed $585 for the time.

In any event, the employee maintained that he was paid a salary and not by the hour, and that he was paid the same regardless of the actual hours worked.

Lawsuit. In September 2020, the former employee filed a putative class action against the couple, Lafise, and LAFS, alleging they underpaid him for his overtime work. After a failed mediation, the parties moved for summary judgment.

District court’s first order. In its first opinion and order, the district court ruled that the employee was not covered by the FLSA through either enterprise or individual coverage. It found that he never worked for Lafise, and it determined that his job duties also did not support individual coverage under the FLSA.

The district court further found that, even if he could raise an FLSA claim, the record supported the couple’s contention that the employee was fully compensated for all his overtime hours. The court adopted the couple’s testimony that they generally paid him $9.62 an hour with an overtime rate of $14.43 an hour.

Reconsideration granted in part, summary judgment, and appeal. The employee moved for clarification and/or reconsideration, which the district court granted in part and denied in part. It first ruled that he did qualify under the FLSA’s individual coverage as a “domestic service employee” under 29 C.F.R. § 552.99. However, the district court never addressed whether Lafise was a “joint employer.” Even so, the district court still rejected the employee’s FLSA claim. It relied on the hourly pay calculations from its first order, specifically discounted his deposition testimony as “inherently self-interested,” and found his testimony contradicted his handwritten notes.

Viewing the legal question of how much weight to accord the employee’s testimony as a matter of first impression, the district court held that “[W]here the only evidence in support of a plaintiff’s claim is the plaintiff’s own sworn statements (affidavit or deposition testimony), which are undermined by the plaintiff’s prior writings, the plaintiff cannot survive summary judgment.”

The employee timely appealed.

Individual coverage and regular rate. The Eleventh Circuit first found that, although the district court correctly held that the employee was eligible for overtime under the FLSA’s individual coverage as a domestic service employee, it erred by granting summary judgment in favor of the couple because a genuine dispute existed regarding the employee’s regular hourly rate and, therefore, his overtime rate.

The parties agreed that he worked an average of 57 hours a week, which necessarily meant that he had 17 hours of overtime each week. See 29 U.S.C. § 207(a)(1). However, they disagreed about his hourly rate. He claimed that the couple paid him an hourly rate of approximately $11.98 from May 2004 through May 2020, and an hourly rate of $11.68 from May 2020 through July 2020. During depositions, however, one of the couple testified that they paid him an hourly rate of “$9.46 more or less,” whereas the other testified they paid him an hourly rate of $9.60. Then, in their Statement of Undisputed Material Facts, the couple maintained his hourly rate was $9.62.

The couple also did not maintain contemporaneous records to document the actual hourly rate, and the employee’s paystubs did not include the hours worked for each pay period. Given the inconsistent testimony and conflicting documentation regarding his hourly rate, the parties also could not agree on his overtime rate. In short, “The actual pay rate is a question of fact that must be resolved under the FLSA’s requirements,” observed the appeals court. It accordingly reversed the district court’s grant of summary judgment for the couple on the FLSA overtime claim.

Joint employer. Turning to the joint employer analysis, which the Eleventh Circuit observed looks ultimately to “whether, as a matter of ‘economic reality,’ the hired individual is ‘economically dependent’ upon the hiring entity,” the appeals court found that remand was again appropriate. The employee had introduced evidence that he performed some services for Lafise and evidence that Lafise and LAFS prepared and issued his semi-monthly paychecks. And despite this evidence, in its first order and opinion, the district court found that the employee “never worked for, nor received any compensation from, Lafise Corp.[,]” and held that he was not eligible for overtime pay under FLSA enterprise coverage. In its second opinion, in turn, the district court never revisited the issue of whether he was jointly employed by Lafise. Instead, it only addressed the employee’s standing to bring an FLSA claim under the statute’s individual coverage. Indeed, according to the Eleventh Circuit, in both its opinions, the district court failed to provide a sufficient explanation to support its ruling regarding whether Lafise was a “joint employer” under the FLSA. Remand for explicit application of the joint employer test was thus appropriate.

The case is No. 22-13383.

Judge: Abudu, N.

Attorneys: Jamie H. Zidell (Law Offices of J.H. Zidell) for Armando Banegas Guevara. Richard Courtney McCrea, Jr. (Greenberg Traurig) for Lafise Corp. Eric Hernandez (Foley & Lardner) for Latin American Financial Services, Inc.

Companies: Lafise Corp.; Latin American Financial Services, Inc.

MainStory: TopStory WageHour Overtime CoverageLiability EmployeeStatus AlabamaNews FloridaNews GeorgiaNews GCNNews