As both lawyers and non-lawyers understand, overtime wages customarily are paid in cash, notwithstanding that the definition of “wages” under the FLSA incorporates “board, lodging, or other facilities.” 29 U.S.C. § 203(m). Employers providing non-monetary benefits to employees sometimes argue that such benefits are “facilities” within the meaning of the statute and thus should be credited against compensation owed under the Act, as exemplified by the recent decision of Judge David Bramlette in Newsom v. Carolina Logistics Servs., Inc., 2012 U.S. Dist. LEXIS 132759, 14-15 (N.D. Miss. Sept. 17, 2012).
In Newsom, Plaintiff and a supervisor reached an agreement wherein Plaintiff would punch out and then clean Defendant’s warehouse in exchange for a “banana box of food.” Several successive supervisors ratified the arrangement. Later, Plaintiff sued to recover overtime pay for the unrecorded hours spent cleaning the warehouse. Defendant argued that Plaintiff was an independent contractor when performing these additional services (which argument the Court rejected), and, separately, that the banana box compensated Plaintiff for his work. The Court also rejected this latter argument on summary judgment, finding that a prerequisite to claim a wage credit under § 203(m) was not clearly satisfied (specifically in this case whether the type of non-monetary compensation in question, the box, was “customarily furnish[ed] to employees” as compensation by the defendant). The court, however, did not rule out the possibility of an offset to any overtime due based on the value of the banana box.
Newsom serves as a cautionary tale regarding the potential liability that can arise from “arrangements” reached between rogue managers and employees outside the scrutiny of HR, legal and upper management.