Lori Chavez-DeRemer v. NAB, LLCLori Chavez-DeRemer v. NAB, LLC
After a series of hired lawyers withdrew, default was entered against NAB for failing to obtain new representation. Brown and Trinh are now representing themselves. Brown filed several oppositions to the Secretary‘s summary-judgment motion, as well as her own motions to dismiss and for summary judgment. Trinh also filed a response, which the Secretary moves to strike as untimely. Brown separately objects to the magistrate judge‘s order granting Department
The net result of these myriad motions is the near-end of this case and one final opportunity for briefing on narrow damages issues. The Secretary‘s wage-and-hour claims result in a split judgment. I grant summary judgment in her favor for 2018, 2019, and 2021. But the record fails to establish that NAB or its employees qualified for the Act‘s coverage in 2020 or 2022, so I grant summary judgment in favor of the defendants on any wage-and-hour claims for those years.
That determination complicates a final damages calculation on the Secretary‘s wage-and-hour claims because the Secretary seeks damages for several NAB employees whose employment spanned both covered and non-covered time periods. The Secretary has shown that four employees who did not work at NAB in 2020 or 2022 incurred damages because of NAB‘s wage-and-hour violations, so it is undisputed that those employees are entitled to backpay. But for the rest, I deny the Secretary‘s motion as to the ultimate question of damages without prejudice to her filing a renewed motion setting forth the damages owed from violations that occurred between May 21, 2018, through December 31, 2019, and January 1, 2021, through December 31, 2021. I reserve my ultimate ruling on remedies until that motion is fully briefed.
I grant the Secretary‘s motion for summary judgment on her retaliation claim because she has shown without genuine dispute that Brown and Trinh engaged in retaliation when they directed NAB‘s employees to provide untrue information to Department investigators, forced them to sign independent-contractor agreements and obtain business licenses that altered the terms of their employment, and threatened legal action against a tech who spoke with
Preliminary Procedural Matters
A. The court accepts Trinh‘s late summary-judgment response but strikes Brown‘s second, untimely response.
1. Trinh‘s August 30, 2024, response is deemed timely.
Brown and Trinh have filed several versions of a response to the Secretary‘s motion for summary judgment. Brown initially filed three responses on behalf of Trinh, NAB, and herself.4 I struck those responses, reminded Brown that she may not file documents on behalf of other parties, advised her on the requirements for a summary-judgment opposition, and extended her deadline to August 22, 2024, to file another opposition that complies with those requirements.5 Brown filed a response by that extended deadline,6 but Trinh filed a separate response that was docketed on August 30, 2024.7
I retroactively apply to Trinh the deadline extension I afforded to Brown. In my prior order striking many of Brown‘s filings, I informed her that she may not file documents on behalf of other parties.12 Though Brown and Trinh were warned about this with respect to representing NAB, I acknowledge that they may not have understood the strict rules governing Brown‘s inability to assist Trinh in filing responses in this action until my August 1, 2024, order, which advised Brown and Trinh that they needed to file their own, separate responses.13 And I find that Trinh constructively filed her opposition by August 22, 2024, and served it on counsel by that date, though it was not docketed due to a document error. So I find good cause to retroactively grant Trinh an extension, I deny the Secretary‘s motion to strike, and I deem Trinh‘s response as timely filed.
On September 10, 2024, Brown filed a “response to plaintiffs motion to strike [Trinh‘s summary-judgment opposition] and reply to plaintiff‘s motion for summary judgment.”14 To the extent Brown argues against striking Trinh‘s response, I do not consider those arguments because she may not present arguments on another party‘s behalf and that issue has been mooted by my decision to consider Trinh‘s opposition. The remainder of Brown‘s “reply” to the Secretary‘s summary-judgment motion appears to be an unauthorized surreply. “Surreplies are not permitted without leave of court” and “motions to file a surreply are discouraged.”15 Brown did not first seek leave to file this document and I do not find good cause to allow her to do so, so I strike it and do not consider it.
B. Brown and Trinh‘s evidence violates this court‘s procedural rules and cannot be relied upon by this court.
Brown has peppered the docket with several unauthorized filings and has failed to follow the rules of this court in submitting evidence to support her summary-judgment motion and oppose the Secretary‘s. The exhibits attached to her response clock in at more than 2,500 pages.16 She does not explain what those exhibits contain or how they show any disputed facts or facts that should be weighed in her favor. Instead, her response is littered with bald references to exhibits with no explanation about their relevance to the discrete legal issues to be decided at this stage in the proceedings. Many of the exhibits she attaches are interwoven with legal arguments that should have been included in her response brief. And even if her exhibits were
As the Ninth Circuit has noted when addressing similar briefing messes, “judges are not pigs, hunting for truffles buried in briefs.”18 Brown has been advised of the rules governing documents filed with this court and has been sanctioned with the striking of documents she‘s filed in the past.19 She has not learned from those admonitions. Pro se litigants like Brown must follow the procedural rules of this court and must endure the consequences of failing to do so.20
Even if I were to excuse the technical aspects of Brown‘s noncompliance, her filings are impossible to comprehend. Her motion baldly asserts legal conclusions without supporting them with any authenticated or likely-to-be admissible evidence. So I do not consider her evidence when ruling on the cross-motions for summary judgment. Because Brown is a defendant in this action, this is not necessarily fatal to her motion for summary judgment or her opposition to the Secretary‘s motion. But I do limit my consideration of evidence to that submitted by the Secretary with her motion, any legal arguments that Brown made within the bounds of her briefs, and the declaration that Trinh attached to her response brief because it was signed under penalty of perjury and sets forth facts based on Trinh‘s personal knowledge.21
When the Department of Labor began investigating NAB, it sent the business a cease-and-desist letter identifying NAB as a “potential litigant” and instructing it “not to destroy—or permit to be destroyed any records relating to the number of hours worked or other documents which the Department is seeking.”22 The Department simultaneously served a subpoena on NAB seeking “communications between [d]efendants and NAB workers, records related to training, and surveillance footage of the nail salon.”23 Trinh admitted that she “routinely deleted all non-family text messages on her phone from 2018 to 2022, including those related to the salon,” and Brown failed to take reasonable steps to preserve surveillance footage of the salon.24 So the Secretary moved for sanctions to cure any prejudice resulting from unavailable evidence.25
In December 2023, Magistrate Judge Elayna J. Youchah found that the Department was prejudiced by the defendants’ failure to preserve electronic evidence, and she imposed evidentiary sanctions on the defendants, precluding them from “disputing [the Department‘s] reconstruction of workers’ hours that could have been substantiated by the deleted video surveillance” and from “disputing the authenticity of the text messages that they have received from nonparties that include Trinh in the conversation.”26 Judge Youchah further concluded that the defendants failed to produce responsive documents in their native format and thus prohibited
D. As to NAB, LLC, the Secretary‘s summary-judgment motion is construed instead as one for default judgment.
The Secretary seeks summary judgment against NAB, Brown, and Trinh. Because NAB has been defaulted, the proper procedure for the Secretary would be to seek default judgment under
Background
Defendant Asia Trinh is the sole owner of NAB, LLC d/b/a NAB Nail Salon d/b/a NAB Nail Bar, a Las Vegas, Nevada, business that provides beauty and nail services.29 Trinh‘s spouse and co-defendant Nicole Brown was tasked with managing the salon, its nail and eyelash technicians, and its front-desk staff.30 The front-desk employees were paid hourly and were
In 2019, the Department of Labor began investigating NAB for possible violations of the Fair Labor Standards Act‘s (FLSA) minimum-wage and overtime requirements.34 In May 2021, the Acting Secretary of Labor filed suit against NAB, Brown, and Trinh, alleging that they, as employers, violated four provisions of the FLSA:
- Failure to pay the minimum wage in violation of
29 U.S.C. §§ 206 and215(a)(2) (first claim for relief) and failure to pay overtime premiums in violation of§§ 207 and215(a)(2) (second claim for relief).35 The Secretary alleges that the defendants failed to pay minimum-wage and overtime to their nail techs, eyelash techs, front-desk staff, and Perez. She accuses the defendants of misclassifying NAB‘s nail and eyelash techs as independent contractors to “shift their costs as employers on to their employees” and avoid complying with the FLSA‘s wage-and-hour requirements.36 She also contends that NAB‘s hourly and salaried employees often worked over forty hours per week, but were not paid overtime premiums for that work.37 - Failure to keep adequate records documenting employee hours and pay in violation of
§§ 211(c) and215(a)(5) (third claim for relief).38 The Secretary alleges that the defendants “failed to keep time records that would adequately and accurately show” the hours NAB employees worked each day, the total hours worked each workweek, any deductions from employee wages, or the amount of wages paid.39 This messy recordkeeping, the Secretary alleges, impeded “the ability of NAB salon employees, and derivatively the Secretary of Labor, to detect, identify, and have notice of” NAB‘s wage-and-hour violations.40 - Retaliation against NAB‘s employees in violation of
§ 215(a)(3) (fourth claim for relief).41 The Secretary alleges that, after the Department began its investigation, the defendants retaliated against their employees by (1) “instructing [them] to sign and back-date contracts, and falsely inform[ing] them that the Department of Labor would fine NAB salon employees,” and (2) sending cease-and-desist letters “ordering NAB salon employees to stop speaking with third parties concerning NAB Nail Bar and advis[ing] the employees that the [d]efendants would be withholding wages due for past services to offset a claim for liquidated damages.”42
The Secretary seeks a permanent injunction against the defendants to prevent future FLSA violations, backpay and liquidated damages for NAB‘s underpaid employees, an order requiring the defendants to “issue a curative notice to their employees that rectifies their FLSA violations,” and an award of costs that the Secretary incurred by prosecuting this action.43
The Secretary moves for summary judgment on all four claims.44 She contends that there is no genuine dispute that the defendants misclassified NAB‘s nail and eyelash techs as independent contractors and failed to pay overtime and minimum wage to the techs, as well as NAB‘s other salaried or hourly employees. She also argues there is no genuine dispute that the defendants failed to keep adequate records and retaliated against employees who cooperated with the Department‘s investigation. Brown moves to dismiss and cross-moves for summary judgment, contending that she is not an employer for NAB, the Department cannot show that NAB qualifies for FLSA coverage, and NAB‘s techs are independent contractors.45 Brown also objects to the magistrate judge‘s order permitting the withdrawal of the Department‘s lawyer,
Discussion
A. The Secretary is entitled to summary judgment on her minimum-wage and overtime claims for violations occurring in 2018, 2019, and 2021, but the defendants are entitled to judgment for any alleged violations in 2020 and 2022.
1. The elements of an FLSA wage-and-hour claim.
The “principal purpose of the FLSA is to ‘protect all covered workers from substandard wages and oppressive working hours.‘”47 “Because the FLSA is a remedial statute, it must be interpreted broadly”48 and “construed liberally in favor of employees.”49 For the FLSA‘s wage-and-hour provisions to apply to a business and its workers, the plaintiff must first show that (1) the workers qualify as “employees” under the Ninth Circuit‘s economic-realities test and (2) the business entities and individuals sued meet the FLSA‘s definition of “employers.”50
Because the FLSA‘s reach is national, the plaintiff must also establish that the defendant business or its employees engaged in interstate commerce. A plaintiff can meet this burden in one of two ways: she can show that (1) “the employee is engaged in [interstate] commerce (individual coverage)” or (2) “the employer is an enterprise engaged in [interstate] commerce
Once those threshold elements are met, the plaintiff must establish that the defendant employers indeed failed to pay their employees the minimum wage (currently set at $7.25) to prove liability under
The Secretary moves for summary judgment on her wage-and-hour claims, arguing that there is no genuine dispute that the defendants are employers under the FLSA and that all their workers—including the nail and eyelash techs that Brown labels as independent contractors—are employees entitled to the Act‘s protections.57 She also contends that NAB is an enterprise
2. The first element for wage-and-hour liability is established because NAB‘s nail and eyelash techs are employees, not independent contractors.62
To determine whether a person is an “employee” covered by the FLSA‘s wage-and-hour provisions, the Ninth Circuit instructs courts to consider several factors:
(1) the degree of the alleged employer‘s right to control the manner in which the work is to be performed; (2) the alleged employee‘s opportunity for profit or loss depending upon his managerial skill; (3) the alleged employee‘s investment in equipment or materials required for his task, or his employment of helpers; (4) whether the service rendered requires a special skill; (5) the degree of permanence of the working relationship; [and] (6) whether the service rendered is an integral part of the alleged employer‘s business.63
This list is not exhaustive and “[n]either the presence nor the absence of any individual factor is determinative.”64 Rather, courts must evaluate the “circumstances of the whole activity” and determine whether, “as a matter of economic reality, the individuals ‘are dependent upon the business to which they render service.‘”65 “Economic realities, not contractual labels, determine employment status for the remedial purposes of the FLSA.”66 So an employer‘s labeling of its workers as independent contractors carries no weight.67
a. NAB controlled the manner in which its nail and eyelash techs performed their work.
The Secretary has met her burden to show that there is no genuine dispute that Trinh and Brown controlled almost every aspect of the work that NAB‘s techs performed. Trinh set the salon‘s operating hours as 9:00 a.m. to 11:00 p.m. Monday through Saturday and 9:00 a.m. to
Trinh and Brown also managed the techs’ schedules and assigned them to 7-12-hour shifts, during which the techs provided services to customers assigned to them by front-desk staff.72 The techs were assigned to shifts based on the salon‘s needs.73 Even if techs did not have any clients scheduled, they could not leave the salon during their shifts.74 If they wanted to run errands or if they were going to be late, had to leave early, or wanted time off, they had to get permission from Brown.75 Brown denied day-off requests based on staffing needs,76 threatened to give customers to other techs if the assigned tech was running late,77 and “punish[ed]” techs who took time off by taking away their dedicated nail stations—which resulted in fewer
NAB also required the techs to attend trainings on various services to “make sure [the techs] were doing them the way [Trinh] wanted them done” and to prevent the techs from wasting expensive resources that NAB supplied for those services.82 Attendance at these trainings was mandatory: Brown told techs that if they were even two minutes late, they would be required to repeat the entire session.83 The techs were also required to pass a test after the training “in order to get [their] check[s] released.”84
Brown and Trinh further supervised the techs’ work through their near-constant presence at the salon and through video surveillance. Brown monitored the techs using cameras placed
b. Profit opportunities for techs were dependent on Trinh‘s preferences and NAB‘s set pricing, rather than their own skills.
The undisputed evidence also shows that the techs had no independent control over their ability to earn a profit, and they had to rely instead on NAB for customers and commissions. Several techs explained that they did not bring their own clients with them to NAB.88 Instead, the front desk received appointment requests from customers by phone or through NAB‘s website and assigned the appointments to techs who were scheduled to be at the salon at that time.89 Appointments were managed through the MindBody application, which each tech was required to install on her phone and use to track bookings.90 Brown and Trinh often moved those
NAB also set the prices for all of the services that the techs provided.95 Laminated menus listed each service and its exact price, and techs were not permitted to deviate from those prices.96 If a customer requested an unlisted specialty service, Brown or Trinh instructed techs on how much they should charge and would “intervene if they thought [the techs] didn‘t charge
NAB also controlled how the techs were paid. When a tech finished a customer‘s appointment, the tech would input the service she performed in the MindBody app and send a message to the front-desk receptionist using another app called Crew.99 Front-desk personnel would then enter that service and the pre-populated price and take payment.100 Techs did not take payment directly from customers.101 After the salon closed each evening, the front-desk employee on duty would populate an excel spreadsheet with the total amount the salon had collected per tech.102 The spreadsheet would automatically calculate the commission that a tech would receive from each service—60% of the charge, with NAB keeping the remaining 40%—
Brown and Trinh would also deduct any commissions earned from customers who complained about the service they received.105 For those customers, Trinh and Brown wouldn‘t allow the first tech to salvage her work; they would instead assign a different tech to fix the customer‘s nails free of charge, then they gave the second tech the full commission from the first tech‘s work.106 And if a tech received too many complaints, Brown or Trinh would “end up firing them after a few weeks or months.”107 NAB‘s control over the techs’ relationships with their customers strongly supports the notion that NAB‘s profits—not the techs’ profits—guided decision-making at the salon.
The fact that a tech‘s work is based in part on specialized skill may weigh in favor of an independent-contractor label.108 But NAB dictated how those skills would be performed. Trinh provided training on the way that NAB preferred services to be done and unilaterally determined whether a tech had the requisite skill for specific services.109 Techs were not permitted to take on work that they believed they were skilled enough to perform if Trinh disagreed with their
c. The techs purchased some permanent tools, but NAB supplied most materials required for their specialized services and heavily invested in advertising the techs’ work.
The record also establishes without genuine dispute that, while the techs were required to supply some of their own reusable tools like nail drills, cuticle clippers, and UV gel lights, the salon provided most of the materials like nail polish, polish remover, and eyelash extensions.111 NAB also provided supplies for special services, like CBD oil for specialty pedicures and sugar scrub, hot stones, and foot and leg masks for deluxe pedicures.112 Some techs noted that NAB deducted daily cleaning fees and other service fees from their paychecks.113 Brown also set a charge of about 1% of every service a tech performed to cover a portion of the supplies, but “no one at NAB tracked what supplies” the techs actually used.114
NAB provided the salon space and service stations for the nail techs to use and a designated room for eyelash services.115 The techs were not required to pay “booth rent” to use their nail stations,116 but those hired after the Department of Labor began its investigation were
The investment factor also weighs in favor of finding an employee relationship. The techs did not spend any of their own money for advertising.118 Rather, Brown and Trinh spent substantial amounts of money advertising the salon and the techs’ services.119 Trinh and Brown also expended significant capital into the business generally, while the techs did not.120 Some were required to spend money obtaining business licenses, but Brown and Trinh told them that they would be reimbursed for the cost and some were, though others were not.121 Overall, the investments made by NAB far outweigh those made by the techs, both in size and scope.122
d. NAB maintained long-standing working relationships with its techs and made them sign non-compete agreements.
The Department‘s regulations counsel that the permanence factor “weighs in favor of the worker being an employee when the work relationship is indefinite in duration, continuous, or
The techs who provided declarations worked at NAB for varying amounts of time. Many techs worked at NAB for about 1–2 years, though some were employed for only a few months.126 The techs also were not hired on a finite or project-specific basis, as the evidence suggests that techs were hired for an indefinite duration and assigned shifts in a manner indicative of a permanent employment relationship. Although Brown forced techs to sign an “independent-contractor” agreement in August 2019, the terms of that document had the opposite effect she likely intended because it included non-compete and non-solicitation clauses,127 evincing the intention for her employees to work exclusively for NAB. This factor weighs in favor of finding an employee relationship.
The final factor weighs heavily in favor of an employment relationship because the techs’ services are not merely an integral part of NAB‘s business, their work is the mainstay of the salon‘s existence. By failing to answer requests for admission, Brown and Trinh both admit that NAB is, first and foremost, a beauty-services business.128 And Trinh affirmed that the primary goal of NAB‘s business is to provide beauty services, explaining that NAB “specialize[s] in nails, pedicure, lashes, microblading, permanent makeup . . . and eyelash tinting [and] waxing.”129 That business could not function without nail and eyelash technicians to perform those services.130 Brown‘s late-in-the-game insistence that NAB is merely a booth-rental business is not supported by competent evidence and is negated by the defendants’ admissions and Trinh‘s deposition testimony. So this factor also weighs in favor of finding that NAB‘s techs were employees.
On balance, the authenticated, admissible evidence shows no genuine dispute that NAB‘s nail and eyelash techs were treated as employees, not independent contractors. Brown‘s opposition to this conclusion isn‘t supported by any admissible or relevant facts to the contrary. So I conclude that the Secretary has established without genuine dispute that the FLSA‘s minimum-wage and overtime provisions cover all of NAB‘s employees.
In their summary-judgment briefing, Brown and Trinh attempt to convince the court that they should not be considered “employers” of NAB‘s workers. Trinh declares that she is “an independent contractor who operates as a nail technician at NAB LLC” and she has “never held any managerial, administrative, or decision-making responsibilities within the company.”131 And Brown states in her summary-judgment motion that she “was a W-2 employee in 2018 and 2019” for the company, not a business owner.132 The Secretary disagrees, arguing that regardless of what Brown and Trinh choose to call themselves now, their actions at the salon during the relevant years demonstrate that they are employers subject to FLSA liability in this action.133
a. The FLSA defines “employer” broadly.
The FLSA defines “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee . . . .”134 “[T]he definition of ‘employer’ under the FLSA is not limited by the common law concept of ‘employer,’ but is to be given an expansive interpretation in order to effectuate the FLSA‘s broad remedial purposes.”135 An individual who “exercises control over the nature and structure of the employment relationship, or economic control over the relationship, . . . is an employer within the meaning of the [FLSA], and is
b. Brown and Trinh easily meet that broad definition of “employer.”
Brown and Trinh‘s conclusory labelling of themselves as a mere manager and nail tech, respectively, are belied by all the evidence, which demonstrates that they jointly handled every aspect of NAB‘s business.139 Trinh testified at her deposition that she is NAB‘s sole owner who also works there as a nail tech.140 She financed construction of the salon when it opened,141 set the salon‘s hours,142 had prospective techs audition for her before getting hired,143 and exercised
4. The Secretary has satisfied the interstate-commerce requirement for FLSA coverage during the years 2018, 2019, and 2021, but not 2020 or 2022.
The FLSA‘s minimum-wage and overtime provisions apply to an employee “who in any workweek is engaged in commerce or in the production of goods in commerce” (known as individual coverage) “or is employed in an enterprise engaged in commerce or in the production of goods for commerce” (known as enterprise coverage).151 The Secretary contends that there is no genuine dispute that NAB and its employees satisfy both the enterprise and individual theories of coverage because NAB is an enterprise engaged in interstate commerce with sales
a. NAB qualifies for enterprise coverage in 2018, 2019, and 2021.
An enterprise that qualifies its workers for FLSA coverage is defined as one that “has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person” and “whose annual gross volume of sales made or business done is not less than $500,000 . . . .”153 Enterprise coverage applies to “all employees within the stream of commerce of . . . goods [that have traveled in interstate commerce], even if their own participation remains purely intrastate.”154 Brown contends that neither the interstate-commerce prong nor the $500,000 threshold for enterprise coverage has been met in this case.155
i. NAB‘s employees handled goods that traveled in interstate commerce.
To satisfy the interstate-commerce prong of enterprise coverage, the Secretary relies on NAB‘s use of two web-based apps headquartered in California—Crew and MindBody—to communicate with employees, schedule appointments, and take payments.156 She also presents evidence that some of the products NAB used were manufactured in Mexico, Germany, and
ii. NAB earned $500,000 in annual sales in 2018, 2019, and 2021.
To establish enterprise coverage for the FLSA‘s wage-and-hour provisions, the Secretary must also show that NAB‘s annual sales amount to “not less than $500,000.”160 Brown claims that NAB never made annual sales reaching $500,000, so the FLSA does not apply to her business.161 She attaches financial records that she says “substantiate this claim, clearly demonstrating that NAB, LLC does not meet the minimum revenue requirement necessary for FLSA applicability.”162 Those documents are unauthenticated, and I do not consider them for
The Secretary acknowledges that NAB‘s books were messily kept during this timeframe and relies on a combination of IRS documents, NAB sales reports, and reports from the MindBody app to show that NAB made at least $500,000 during the five years in which she contends NAB was violating the FLSA. For the years 2018, 2019, and 2021, the Secretary has met that burden. NAB‘s reporting from the MindBody app for 2018 shows sales of $903,555.67, and NAB‘s 2018 payroll journal indicates that $573,475.74 of that total was remitted to techs.164 NAB‘s documentation supports that, in 2019, its techs were paid $500,988.04 between January and October, suggesting that NAB‘s gross sales were much higher than the $500,000 threshold that year.165 And in 2021, NAB reported to the IRS that the salon received $571,512.00 in gross receipts and sales.166 So because the record shows without genuine dispute that NAB‘s annual sales exceeded $500,000 in 2018, 2019, and 2021, the Secretary has met her burden to show that NAB was an enterprise covered by the FLSA during those years.
iii. The Secretary fails to show that NAB exceeded $500,000 in 2020 or 2022.
The record of NAB‘s 2020 and 2022 sales reveals a different picture. The Secretary relies on two documents to argue that the threshold is met for 2020: a 2020 IRS form reflecting $483,653 in gross receipts or sales and NAB‘s “master tech payout” Excel spreadsheet that,
But 2020 was not a normal year. The COVID-19 pandemic and associated social-distancing policies disrupted brick-and-mortar businesses to such an extent that it would be difficult, if not impossible, to guess at a nail salon‘s average sales during that year. Brown suggests (and some of the Secretary‘s evidence supports a finding that) NAB had to close in March 2020 because of the pandemic and didn‘t reopen until “around May 2020.”169 And the three-month period that the Secretary relies on spans from January to March 2020, before the pandemic disrupted businesses like NAB‘s. There‘s no indication in the record that NAB continued to rake in the same amount in sales after it reopened in May. Considering these circumstances and construing the evidence in the light most favorable to the defendants as I
b. NAB‘s employees don‘t qualify for individual coverage in 2020 or 2022.
The conclusion that NAB doesn‘t qualify for enterprise coverage in 2020 and 2022 doesn‘t end the court‘s inquiry. The FLSA‘s minimum-wage and overtime provisions also apply to “employees who in any workweek [are] engaged in commerce or the production of goods for commerce.”171 The test for individual coverage is stricter than that for enterprise coverage.172 The Supreme Court has explained that the “engaged in commerce” language used to define individual coverage is limited to work that is directly related to commerce, whereas the enterprise-coverage language has a broader reach.173 So to evaluate whether an employee qualifies for individual coverage, the court must determine “whether the [employee‘s] work is so directly and vitally related to the functioning of an instrumentality or facility of commerce as to
Perhaps recognizing that NAB‘s use of web-based apps and products that originated out-of-state is insufficient to establish individual coverage, the Secretary relies solely on the employees’ use of the apps to demonstrate that they engaged in interstate commerce.176 She claims that every tech used the MindBody and Crew apps daily “to book clients, view their schedules, and communicate with NAB staff regarding customer payments.”177 The Secretary reasons, with no meaningful analysis, that “the internet is an instrumentality of commerce” and that “[a]n employee is covered by the FLSA individually if the employee ‘regularly use[s] the
Practically speaking, none of NAB‘s employees engaged in interstate commerce in a manner that could be described as “vitally related to the functioning of an instrumentality” of commerce. The work of these employees was quintessentially local. The Secretary‘s evidence reflects that NAB‘s techs used the apps almost exclusively to view their schedules—a passive activity—and communicate with co-workers who were often just feet away from them at the salon—a purely local activity. The techs didn‘t even schedule their own appointments through the apps but, even if they had (and as the front-desk workers surely did), the Secretary has presented no evidence to suggest that those communications occurred with individuals outside of Nevada.
The Secretary‘s suggestion that regular use of an instrumentality of commerce suffices to establish individual liability is undermined by the Department‘s own regulation that defines and explains who may be considered an employee engaged in commerce. As relevant here, the regulation states that “workers who regularly use the mails, telephone[,] or telegraph for
Having determined that the defendants and NAB‘s workers were in an employer-employee relationship that falls under the FLSA‘s purview for 2018, 2019, and 2021, I now address whether the Secretary has shown beyond dispute that defendants violated the FLSA‘s minimum-wage provision (as alleged in her first claim for relief) and overtime provision (as alleged in her second claim for relief). The record leaves no genuine dispute that the defendants did violate the FLSA‘s wage-and-hour provision for each category of worker that NAB employed. By failing to respond to requests for admission, the defendants admit that NAB‘s hourly front-desk employees occasionally worked more than 40 hours in a week without receiving overtime pay.183 Their admission has not been meaningfully contested, so I conclude that the defendants violated the FLSA‘s overtime provisions as to those employees.
The Secretary has also presented undisputed evidence that NAB‘s salaried salon assistant Aurora Perez was not paid overtime for hours she worked beyond 40 hours per week. The defendants admit that Perez worked five days a week, and Brown testified that Perez worked from 8:00 a.m. to 6:00 p.m.184 Perez was paid a flat rate regardless of how many hours she worked in any given week.185 By failing to respond to requests for admission, Brown and Trinh admit that Perez occasionally worked more than 40 hours a week and wasn‘t paid overtime for those additional hours.186 So the Secretary has established overtime violations for Aurora Perez.
The same is true for NAB‘s other salaried employee, eyelash tech Sierra Hudson. Hudson negotiated a salary with NAB that differed from the rest of the techs. She avers that, although she was working 50 hours a week at NAB, she wasn‘t making “enough money” and told Brown that she needed to get a second job.187 To prevent that, NAB and Hudson entered into a contract that “required [Hudson] to work 50 hours per week“—if she did, she would receive $800.188 If Hudson would have received more than $800 in commissions for any given week, she would also be paid that additional amount.189 Cleaning fees and “other fees” were deducted from that flat rate, and Hudson was expected to perform other tasks in addition to eyelash services while she was at the salon, like organizing products and helping with advertising.190 NAB‘s overtime violation is memorialized in its contract with Hudson, which required her to work 10 hours more than the statutory maximum without being paid a premium for those extra hours. And the Secretary provides calculations showing that Hudson‘s pay did not always shake out to be at least $7.25 per hour, thus violating the Act‘s minimum-wage provision.191
Brown contends that none of the techs worked more than 40 hours per week and that their commissions pencil out to a wage much higher than the FLSA‘s $7.25 minimum. But Brown‘s assertions rest on the incorrect assumption that the techs were only “working” when they were physically assisting customers. The evidence shows that Brown and Trinh required the techs to come to the salon and essentially be on call for long shifts waiting for walk-in customers. The techs were not permitted to leave the salon and come back only when they had clients scheduled—instead, they were required to stay on the premises. Those hours in which NAB‘s employees were required to be on site, even if they weren‘t actively serving customers, are considered working hours that require compensation.195 And because of prior discovery abuses, the court has determined that Brown may not challenge the Secretary‘s calculation of the
6. The coverage period goes back three years because Brown and Trinh‘s violations were willful.
Having found that the defendants violated the FLSA‘s wage-and-hour requirements, the next question is which statute of limitations applies. The Secretary argues that the longer of the two potential statutes of limitation for these claims applies and permits her to pursue violations that occurred within the three years before the Department filed this lawsuit.196 The defendants don‘t meaningfully respond to this argument.
The FLSA contains a two-year statute of limitations for “any cause of action for unpaid minimum wages, unpaid overtime compensation, or liquidated damages.”197 But that time period is expanded to three years if the cause of action “aris[es] out of a willful violation.”198 A violation is willful if “the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute . . . .”199 The FLSA‘s regulations counsel that “[a]ll of the facts and circumstances surrounding the violation [must] be taken into account in determining whether a violation was willful.”200 The regulations further explain that reckless disregard “means, among other situations, that the employer should have inquired further into whether its conduct was in compliance with the [FLSA] and failed to make adequate further
The Secretary has presented evidence sufficient to show that Trinh and Brown were aware of the FLSA‘s requirements and attempted to evade them. Soon after the Department began its investigation of NAB, Brown and Trinh undertook a concerted effort to create records that would support their theory that the techs were properly classified as independent contractors, not NAB employees, and thus not subject to the FLSA‘s protections. Brown sent a series of text messages to approximately 25 of the techs, coaching them on what to say if they were interviewed by the investigator and suggesting that the techs should provide information they knew was not true when applied to them.204 For example, Brown instructed the techs to say that they set their own hours and to report only time spent actually serving customers as the hours they worked for any given day—as she put it, “you DO NOT want to say ‘I work 3pm-close 6 days a week’ because you‘re not actually working the entire time.”205 “Waiting for appointments or clients,” she maintained, “is not considered working hours . . . .”206 Brown informed at least one tech that she had “put microphones inside the room where the investigators [were]
In August 2019, Brown and Trinh held a meeting with the techs, during which Brown “told [them] what to say and what not to say if the Department of Labor came to talk to [them].”208 One tech reported that, after the investigation began, Brown started adding notes to the MindBody schedules, falsely suggesting that techs were “out of building” running errands when they were really at the salon but didn‘t have clients.209 It was around that same time that Brown stopped paying techs via direct deposit and instead started paying them in cash.210
Several techs averred that, during this time, Brown and Trinh told every tech to get an employee-identification number and a business license.211 They also made techs sign an independent-contractor agreement—according to two techs, Brown had set up an iPad with the contract on it, and the techs waited in line for their turn to sign.212 Others were asked to sign the contract via email.213 One tech noted that, after she signed the contract, Brown “backdated [it] to reflect a date of January [] 2019 instead of August 8, 2019.”214 The Department‘s counsel also
In sum, this undisputed evidence shows that, instead of truly seeking compliance with the FLSA, Brown and Trinh attempted to mislead the Department‘s investigators and their own employees about how NAB and its techs operated. I find that these facts establish without genuine dispute that NAB willfully violated the FLSA, so the three-year limitations period applies, encompassing any alleged violations beginning on May 21, 2018.216
7. The Secretary has shown that some of NAB‘s employees are entitled to damages for NAB‘s wage-and-hour violations, but further calculations are needed to ensure an accurate damages award.
The Secretary argues that the defendants owe 46 employees $415,189.19 in minimum wages and overtime pay.217 Based on the declarations submitted by NAB‘s employees and because Brown didn‘t provide records reflecting her employees’ hours, Wage and Hour Investigator David Gonzalez “used a base estimate that workers worked 59.8125 hours in a standard week[,] which [he] rounded up to 60 hours.”218 Gonzalez then used the sparse available records of each techs’ commissions to “calculate[] an average weekly rate of pay by using the total pay from contractor payments divided by the total number of workweeks reflected on the
Brown only provided enough information to complete those calculations for 20 employees—for the remaining 25 employees that didn‘t have payroll records, Gonzalez used the combined average rate of pay from the 20 employees and divided that by the estimated 60-hour workweek to conclude that those remaining techs were paid $10.10 per hour.220 And as for Aurora Perez, Gonzalez credited Brown‘s testimony suggesting that Perez worked about 48 hours a week to calculate the amount that Perez should have been paid in overtime for those hours.221 Gonzalez attaches a spreadsheet explaining the totals due to each employee.222 The net result is that five techs were not paid the minimum wage for some periods of their time,223 and all 46 employees experienced overtime violations.224
I find that the basis of the Secretary‘s calculation is reasonable. And according to those calculations, it‘s clear that four employees who worked at NAB in 2018 and 2019 are entitled to compensation under the FLSA‘s overtime and minimum-wage provisions:
- Chrystal Armoogan, NAB nail and eyelash tech from August 25, 2018, through July 6, 2019, is owed $1.68 for minimum-wage violations and $10,847.51 in overtime pay;
- Natalya Camacho, NAB nail tech from April 7, 2018, through August 3, 2019, is owed $9,244.20 in overtime pay;
Danica Estes, NAB nail tech from May 4, 2019, through November 30, 2019, is owed $6,197.00 for minimum-wage violations and $3,664.18 in overtime pay; and - Sierra Hudson, employed from February 2, 2019, through September 28, 2019, is owed $560 for minimum-wage violations and $3,664.76 in overtime pay.225
These four techs’ employment dates fall squarely within the time frame during which NAB and its employees were covered by the FLSA‘s wage-and-hour provisions. Most of the other employees’ date ranges cross into 2020—a year that I have excluded from consideration. Aurora Perez‘s calculations enter 2022, another year I do not consider. And Kimberly Garrison‘s employment began in March 2018, which is outside of the applicable statute of limitations, and it appears that the Secretary‘s calculations for Garrison‘s overtime pay reach back to that excluded date.226
Because I do not consider any backpay calculations before May 21, 2018, or for the years 2020 and 2022, the damages calculations for the remaining employees are no longer reliable, and removing those periods of time from the calculations may result in fewer violations and a smaller damages award. So, though I conclude that the four employees who worked at NAB from 2018 to 2019 are entitled to the damages detailed supra, I deny summary judgment on damages without prejudice to the Secretary filing a renewed motion for judgment based on calculations that exclude any requested damages incurred before May 21, 2018, and during 2020 and 2022. I will also address the Secretary‘s request for liquidated damages in an amount equal to the backpay total at that time.
The FLSA requires employers to “make, keep, and preserve such records of the persons employed by [them] and of the wages, hours, and other conditions and practices of employment maintained by [them].”227 An employer‘s failure to comply with this requirement is unlawful.228 There‘s no genuine dispute that Brown and Trinh did not keep adequate records of their employees’ hours.229 They did not require techs to clock in or out for their shifts and kept only spotty records of the commissions that the techs earned.230 So the Secretary is entitled to judgment on her recordkeeping claim, and the defendants are enjoined from committing future violations of the FLSA‘s recordkeeping provisions.
C. The Secretary is entitled to summary judgment on her FLSA retaliation claim.
The FLSA makes it “unlawful for any person . . . to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding” under the FLSA.231 The Ninth Circuit hasn‘t explicitly stated the elements for an FLSA retaliation claim. But other courts that have taken up the issue use largely the same standard that applies to Title VII retaliation claims: a plaintiff must prove that an employee “engaged in protected expression” and “suffered an adverse employment action,” and “that a causal link existed between the protected expression and the adverse
1. NAB‘s employees engaged in protected activity by cooperating with the Department‘s investigation.
The Secretary has sufficiently shown that the techs who cooperated with Department investigators “engaged in protected expression” under the FLSA. At least one circuit court has recognized that “communicat[ing] with investigators from the Wage and Hour Division” is “necessary to the effective assertion of employees’ rights under the [FLSA], and thus entitled to protection.”234 The Ninth Circuit hasn‘t addressed this question, but it has instructed courts to give “a broad construction to” the anti-retaliation provision “to ensure that employees are not compelled to risk their jobs in order to assert their wage and hour rights . . . .”235 “The Supreme Court has made clear that the key to interpreting the FLSA‘s anti-retaliation provision is the need to prevent employees’ fear of economic retaliation for voicing grievances about substandard conditions.”236 Certainly, retaliating against an employee because she cooperated with the Department‘s investigation into FLSA violations would discourage employees from sharing complaints with the investigators. That‘s precisely the type of conduct that the FLSA‘s anti-retaliation provision is meant to protect.
The Secretary argues that Brown and Trinh engaged in adverse actions against their employees when they “[told] techs what to say and what not to say to” the Department‘s investigators, “demand[ed that] they purchase business licenses they did not need or desire,” required that they sign independent-contractor agreements that did not reflect their true working conditions, and “threaten[ed] legal process and tens of thousands of dollars in liquidated damages.”237 Brown and Trinh do not meaningfully respond to these arguments.
In the parallel Title VII context, the Ninth Circuit has explained that courts must take “an expansive view of the types of actions that can be considered adverse employment actions.”238 Adverse actions are those that are “reasonably likely to deter employees from engaging in protected activity.”239 Several courts have concluded that coercing employees to provide false testimony and declarations to the Department during an FLSA investigation can constitute an adverse action.240 The Sixth Circuit reasoned that forcing an employee to choose between signing an agreement that would constitute a significant change in employment terms or risking termination could be considered constructive discharge and constitute an adverse action.241
The Secretary has presented undisputed evidence that, after the initial Department visit to the salon, Brown instructed her employees on what to say if they were interviewed by the investigator, suggesting that they provide information that the techs knew was not true when applied to them.242 Brown also required all of the techs to get a business license to support NAB‘s independent-contractor story, telling them that the licenses were needed to prevent the Department from levying fines against NAB employees.243
Brown also made the techs sign an independent-contractor agreement that contained “basic guidelines,” informing techs that they “make and set [their] own schedule[s],” must “purchase all [of their] own products to service the clients,” will “determine and set [their] own prices to charge each client,” will receive “a copy of their own key to access the facility any time they would like to service clients,” and are entitled to “[t]ake work as needed or on a case-by-case basis.”244 None of those guidelines reflected the working realities of the techs employed at that time.245 The contract also required techs to pay rent and a security deposit.246 And it contains a non-compete clause prohibiting techs from performing services for any business within a ten-mile radius of NAB, a non-solicitation clause barring techs from attempting to provide non-NAB services to prior NAB customers, and a confidentiality provision.247 None of those restrictions existed for techs who were already working at NAB. Two techs aver that
There is no genuine dispute that Brown and Trinh‘s actions are adverse-employment ones. Requiring employees to give false testimony to Department investigators has the direct effect of dissuading workers to speak honestly with investigators about any wage-and-hour violations they experienced at NAB. And requiring employees to sign agreements and obtain licenses that reflect a significant change in the terms of their employment, or else face termination, is equivalent to constructive discharge and thus also qualifies as adverse.
b. Threatening legal action against Kimberly Garrison was an adverse employment action.
The Secretary also contends that Brown and Trinh violated the FLSA‘s anti-retaliation provision when they “attempted to muzzle workers who left NAB with cease-and-desist letters, drafted by NAB‘s attorney ordering them to . . . stop speaking with third parties concerning the nail salon” and “threaten[ing] workers who sought unpaid wages with tens of thousands of dollars in liability . . . for allegedly breaching the non-compete clause of the fictitious independent[-]contractor agreement . . . .”250 The Secretary cites only one declaration—that of nail tech Kimberly Garrison—to support her factual contentions on this claim. Garrison quit NAB in September 2019 “because [she] did not like how [Brown] and [Trinh] were operating the
Though the Ninth Circuit has not clearly ruled on this issue, other circuits have persuasively concluded that the FLSA‘s anti-retaliation provision protects employees who voluntarily leave their employers.256 And withholding a former employee‘s final paycheck and threatening litigation with a large monetary demand surely constitutes “economic retaliation”257
3. There is no genuine dispute that the employees’ cooperation with the Department‘s investigation caused the adverse employment actions.
There is no genuine dispute that the Department‘s investigation and the tech‘s agreements to speak with the investigators caused Brown and Trinh to take these actions. But-for the investigation, Brown and Trinh would not have attempted to coach the techs to provide false testimony. Nor would Brown and Trinh have required the techs to sign independent-contractor agreements or obtain business licenses at their own expense. Brown said as much in text messages to the techs, telling them that some techs “[f]*cked up the interview” by failing to answer questions in a manner that supported Brown‘s contention that they were independent contractors and asking them to “memorize everything in” the independent-contractor agreement they were required to sign, emphasizing that the terms in that agreement “are the rules we need to play and follow.”259
There is also no genuine dispute that NAB threatened legal action against Garrison because of her willingness to participate in the Department‘s investigation. Retaliation “may be inferred from proximity in time between the protected action and the allegedly retaliatory” action.260 Investigators spoke to techs for the first time in July 2019.261 Garrison signed the independent-contractor agreement that August and quit a month later because she was
Because there is no genuine dispute that the employees engaged in protected conduct when they spoke to investigators, that Brown and Trinh‘s actions constitute adverse actions, and that NAB‘s employees suffered those actions because they were speaking with—or expected to soon speak with—investigators, I grant the Secretary summary judgment on her retaliation claim and enjoin the defendants from committing future violations of the FLSA‘s anti-retaliation provision.
D. Brown‘s objection to the magistrate judge‘s attorney-withdrawal order is overruled.
On October 3, 2024, attorney Paige Pulley moved to withdraw from this action, explaining that she would no longer be working for the Department of Labor on November 1, 2024.262 Magistrate Judge Youchah granted the motion the day it was filed.263 Brown objects, arguing that she wasn‘t permitted to file a response to the motion, depriving her “of the opportunity to raise concerns about the attorney‘s misconduct.”264 A district judge may reconsider any non-dispositive matter that has been finally determined by a magistrate judge “when it has been shown that the magistrate judge‘s order is clearly erroneous or contrary to
Brown‘s argument is patently frivolous. She is not entitled to respond to an attorney‘s request to withdraw from representing an entity that the attorney no longer works for. And Brown may seek sanctions against the Department even if the at-issue attorney no longer represents a party—an action that Brown indeed has taken.267 So I overrule Brown‘s objection to the magistrate judge‘s order granting Pulley‘s withdrawal motion.
E. Brown‘s motion for sanctions is denied.
Three days after Brown filed her objection, she filed a motion for sanctions against the Department.268 It contains unsupported, frivolous accusations against various Department of Labor investigators and attorneys who have been involved in this case. Brown states that the Department‘s former attorney “engaged in egregious and systematic misconduct throughout this case,” including forgery, tampering with evidence, falsification of declarations, and “abuse of the government informant privilege.”269 She insists that the “evidence of misconduct is clear, well-documented, and compelling”270 but provides no facts or documentation to support any of her accusations.
Brown references exhibits filed with her untimely summary-judgment response that she claims show wrongdoing, but those documents have no indicia of reliability. Most of those
Brown spends the rest of her sanctions motion complaining that the Department‘s investigation has cost her hundreds of thousands of dollars in legal fees and countless hours of her time. She blames this litigation for the deterioration of her health, financial status, and business prospects. Even if true, none of this justifies sanctions against the Department or its attorneys. Brown has presented no competent evidence to show that the Department undertook its investigation or initiated this lawsuit for vindictive or bad-faith reasons or with the intent to financially harm Brown or her business. Indeed, as explained supra, the Department has largely met its burden to show that NAB, Brown, and Trinh misclassified their employees as independent contractors and willfully violated the FLSA. Litigation is often stressful and expensive, but that alone is not a reason to sanction a plaintiff for pursuing meritorious claims. So I deny Brown‘s motion for sanctions.
Conclusion272
IT IS THEREFORE ORDERED that the Secretary of Labor‘s motion for summary judgment [ECF No. 108] is GRANTED in part and DENIED in part:
I grant the Secretary summary judgment against Brown and Trinh, and default judgment against NAB, LLC, on her retaliation and recordkeeping claims. The defendants are hereby enjoined from committing future violations of the FLSA‘s recordkeeping provisions ( 29 U.S.C. §§ 211(c) &215(a)(5) ) and anti-retaliation provision (29 U.S.C. § 215(a)(3) ).- The Secretary has established that NAB‘s employees are covered by the FLSA‘s wage-and-hour provisions from May 21, 2018, through December 31, 2019, and January 1, 2021, through December 31, 2021. The Secretary has also established that the defendants violated the FLSA‘s wage-and-hour provisions during that time frame, so I grant summary judgment for the Secretary and against Brown and Trinh, and default judgment against NAB, LLC, on her minimum-wage and overtime claims for those time periods as to liability only. I deny the Secretary‘s summary judgment motion as to those claims for the years 2020 and 2022.
- Because this narrowed timeframe complicates any damages calculations for the defendants’ wage-and-hour violations, I deny the Secretary summary judgment on damages for the minimum-wage and overtime violations without prejudice to the Secretary‘s filing of a renewed motion with calculations that exclude any damages stemming from alleged violations that occurred in 2020 and 2022. The Secretary‘s new damages calculation must include the damages owed to all employees for the years 2018, 2019, and 2021, including the four employees that are entitled to damages as discussed in this order. The court will determine whether liquidated damages apply at that time. The Secretary must also renew her request for injunctive relief related to her wage-and-hour claims and include any proposed language that such an injunction should
contain. That motion must be filed by February 3, 2025. Brown and Trinh will have until February 17, 2025, to respond. The Secretary will have until February 24, 2025, to reply.
IT IS FURTHER ORDERED that Brown‘s motion for summary judgment [ECF No. 97] is GRANTED in Part and Denied in Part. It is granted only as to the Secretary‘s wage-and-overtime claims for 2020 and 2022. It is DENIED in all other respects.
IT IS FURTHER ORDERED that Brown‘s motion to dismiss [ECF No. 98] is DENIED.
IT IS FURTHER ORDERED that Brown‘s objection to the magistrate judge‘s order withdrawing counsel [ECF No. 143] is OVERRULED.
IT IS FURTHER ORDERED that Brown‘s motion for sanctions [ECF No. 144] is DENIED.
IT IS FURTHER ORDERED that the Secretary‘s motion to strike [ECF No. 136] is DENIED.
IT IS FURTHER ORDERED that the Clerk of Court is directed to STRIKE ECF Nos. 139 and 140 because those filings do not comply with the rules of this court.
IT IS FURTHER ORDERED that the Clerk of Court is instructed not to enter judgment in this case at this time. Final judgment will be ordered following the Secretary‘s additional showing of proof.
U.S. District Judge Jennifer A. Dorsey
January 14, 2025