Resident managers lose Fair Labor Standards Act appeal

When employees live on the job - literally - they are subject to employment agreements as to how their work hours will be calculated.

The 4th U.S. Circuit Court of Appeals has held that such agreements will be honored so long as they are reasonable and take into account all the relevant facts of the employee's job.

The decision affirms a grant of summary judgment to Donald B. Heslep Associates Inc. in a would-be class action for overtime pay under the Fair Labor Standards Act.

Heslep operates a chain of facilities under the trade name Blue & Gray Self-Storage. Appellants Edna and Angelo Garofolo were former resident managers of a Blue & Gray facility on Rte. 360 in Midlothian, Va., from 1998 until July 2003.

The Garofolos lived in an apartment above the office. In a suit filed in federal court in Richmond, Va., they claimed they regularly worked more than 40 hours a week from October 2000 to July 2003.

While the Fair Labor Standards Act guarantees employees at least time-and-a-half for actual hours worked in excess of 40 hours, the 4th Circuit noted, it does not prohibit reasonable provisions of contract or custom governing the computation of work hours where precisely accurate computation is difficult or impossible.

That provision comes from a Department of Labor regulation implementing the law, 29 C.F.R. Section 785.23.

Ultimately, an agreement reached pursuant to section 785.23 is binding if it is reasonable in light of 'all of the pertinent facts' of the employment relationship, Judge Allyson K. Duncan wrote for the panel last week.

The Garofolos had such an agreement with Heslep - one the court found to be iron-clad.

The agreement established that 40 hours was a reasonable estimate of the time required for the job. It provided for regular review as to the reasonableness of that estimate, and promised overtime pay for hours in excess of 40.

The Garofolos failed to request overtime on a single occasion during the period in which they sought recovery, explaining that they did so just once - in July 1999. They received overtime pay but a manager told them it didn't look good.

That was not a sufficient basis to question the reasonableness of the agreement, Duncan wrote. Nor were the estimates of overtime work that Edna Garofolo prepared retroactively in 2003, in which she calculated the hours the facility was open and deducted times she and her husband were off the premises.

Section 785.23 establishes a presumption that employees residing on the employer's premises are not working the entire time they are on the premises, the court noted.

Finally, the lower court was not required to make any finding regarding the actual number of hours the Garofolos worked before determining that the agreement was reasonable, the 4th Circuit held.

Imposing such a requirement would defeat the purpose of section 785.23, Duncan wrote. The regulation contemplates situations in which it is difficult, if not impossible, to determine the exact amount of time worked.

WHAT THE COURT HELD

Case:

Garofolo v. Donald B. Heslep Assocs. Inc., 360 West, US4th 04- 1822. Published. Opinion by Duncan, J. Filed April 22, 2005.

Issue:

Did the lower court err in granting summary judgment for an employer in a suit by resident managers for overtime under the Fair Labor Standards Act?

Holding:

No; affirmed. A Department of Labor regulation implementing the law, 29 C.F.R. Section 785.23, allows for reasonable contracts governing the computation of work hours where precise computation is difficult. The plaintiff/appellants offered no evidence to show that the agreement was unreasonable.

Counsel:

David Raymond Simonsen, Jr., Richmond, for appellants. Daniel Scott Gordon, Richmond, for appellees.

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