Cifuentes v. Outcomes, Inc.

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION

KAYLEE CIFUENTES, AMBER CARL,

CHRISTIE FREEMAN, KARYN YATES,

LAURA COLLINS, ELIZABETH CLINE,

KENNETH HANNAH, MICHELLE HUMPHREY,

LACANREAL ROBERSON, and DAVID LACY,

individually and on behalf of all others

similarly situated PLAINTIFFS

V. CASE NO. 5:23-CV-5197

OUTCOMES, INC. and TONY POSEY DEFENDANTS

MEMORANDUM OPINION AND ORDER

Before the Court are the parties’ cross-Motions for Summary Judgment (Docs. 44,

48, 67), and their briefs, responses, replies, and statements of facts in support of or

opposition to those motions (Docs. 46–47, 49–54, 64–66, 68–69, 72–75). For the

reasons given below, Defendants’ Motion for Partial Summary Judgment and Dismissal

of Kaylee Cifuentes’ Claims (Doc. 44) is DENIED; Defendants’ Motion for Summary

Judgment pursuant to 29 U.S.C. § 259, or Alternatively Partial Summary Judgment

Pursuant to 29 U.S.C. § 255; Ark. Code Ann. § 11-4-218(g), 28 U.S.C. § 260 and Ark.

Code Ann. § 11-4-218(a)(2) (Doc. 48) is DENIED; and Plaintiffs’ Motion for

Partial Summary Judgment (Doc. 67) is GRANTED IN PART AND DENIED IN PART.

All claims and defenses remain for trial.

I. BACKGROUND

Defendant Outcomes, Inc. (“Outcomes”) is an Arkansas nonprofit corporation that

provides a variety of services to assist individuals with disabilities, ranging from minimal

assistance to full-time support. Defendant Tony Posey is the founder and Executive

Director of Outcomes. The plaintiffs in this case are all current or former employees of

Outcomes who worked overnight shifts in the homes of clients, during which they spent

some of their time sleeping on-site. They have brought this class and collective-action

lawsuit under the federal Fair Labor Standards Act (“FLSA”) and the Arkansas Minimum

Wage Act (“AMWA”), claiming that they were improperly denied compensation for the time

they spent sleeping on-site.

II. LEGAL STANDARD

A party moving for summary judgment must establish both the absence of a

genuine dispute of material fact and its entitlement to judgment as a matter of law. See

Fed. R. Civ. P. 56; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–

87 (1986); Nat’l Bank of Commerce of El Dorado v. Dow Chem. Co., 165 F.3d 602, 607

(8th Cir. 1999). The same standard applies where, as here, the parties have filed cross-

motions for summary judgment. When no material facts are in dispute, “summary

judgment is a useful tool whereby needless trials may be avoided, and it should not be

withheld in an appropriate case.” United States v. Porter, 581 F.2d 698, 703 (8th Cir.

1978). Each motion should be reviewed in its own right, however, with each side “entitled

to the benefit of all inferences favorable to them which might reasonably be drawn from

the record.” Wermager v. Cormorant Twp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983); see

Canada v. Union Elec. Co., 135 F.3d 1211, 1212–13 (8th Cir. 1998). In order for there to

be a genuine issue of material fact, the non-moving party must produce evidence “such

that a reasonable jury could return a verdict for the nonmoving party.” Allison v. Flexway

Trucking, Inc., 28 F.3d 64, 66 (8th Cir. 1994) (quoting Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 248 (1986)).

III. DISCUSSION

Most of the critical issues in these motions turn on disputes that are purely legal in

nature, rather than factual. The Court will begin its analysis with those issues. Then it

will separately address each pending motion.

A. Rulings Generally Applicable to All Pending Motions

First, and most fundamentally, Outcomes contends it is not subject to the

requirements of the FLSA because it is a nonprofit corporation. This is incorrect. “The

statute contains no express or implied exception for commercial activities conducted by

religious or other nonprofit organizations, and the agency charged with its enforcement

has consistently interpreted the statute to reach such businesses.” Tony and Susan

Alamo Foundation v. Sec. of Labor, 471 U.S. 290, 296–97 (1985). The FLSA explicitly

states that “the employment of persons in domestic service in households” is a

commercial activity that is subject to its requirements, see 29 U.S.C. § 202(a), and the

performance of tasks like “cooking, light housekeeping, . . . ensuring timely provision of

ordered treatments and medications[,] . . . dressing, grooming, feeding, bathing, toileting,

and transfer to and from bed,” in the nature of “caretakers and home health aides,” is

labor that obviously qualifies as such “domestic service in households,” see Carmack v.

Park Cities Healthcare, LLC, 321 F. Supp. 3d 689, 698–99 (N.D. Tex. 2018).

Second, as both sides concede, “[t]he FLSA and the AMWA impose similar

minimum wage and overtime requirements on employers and, in cases involving claims

brought under both acts, the courts have concluded that their parallel provisions should

be interpreted in the same manner.” Cummings v. Bost, Inc., 218 F. Supp. 3d 978, 985–

86 (W.D. Ark. 2016). Accordingly, this Court’s analysis will focus primarily on the FLSA

but should be understood to apply to Plaintiffs’ claims under both the FLSA and the AMWA

except where the AMWA is specifically referenced herein as differing in some way from

the FLSA.

Third, the Court will address the topic of “sleep time” under the FLSA generally.

“Under certain conditions an employee is considered to be working even though some of

his time is spent sleeping . . . .” 29 C.F.R. § 785.20. The general rule is that “[a]n

employee who is required to be on duty for less than 24 hours is working even though he

is permitted to sleep or engage in other personal activities when not busy.” Id. at § 785.21.

“It makes no difference that she is furnished facilities for sleeping. Her time is given to

her employer. She is required to be on duty and the time is worktime.” Id. The governing

regulations on this topic allow only two exceptions to this rule. One is that “[w]here an

employee is required to be on duty for 24 hours or more, the employer and the employee

may agree to exclude bona fide meal periods and a bona fide regularly scheduled

sleeping period of not more than 8 hours from hours worked, provided adequate sleeping

facilities are furnished by the employer and the employee can usually enjoy an

uninterrupted night’s sleep.” Id. at § 785.22(a) (emphasis added). The other exception

is for “[a]n employee who resides on his employer’s premises on a permanent basis or

for extended periods of time.” Id. at § 785.23 (emphasis added). Since an employee who

resides on his employer’s premises “is not considered as working all the time he is on the

premises,” he and the employer may come to “any reasonable agreement” that excludes

his “normal private pursuits” such as “eating, sleeping, entertaining, and other periods of

complete freedom from all duties” from compensation, so long as that agreement “takes

into consideration all of the pertinent facts.” See id.

The parties’ dispute in the instant case largely turns on whether Plaintiffs come

within this second exception for employees who reside on their employer’s premises.

There is no dispute that Outcomes and Plaintiffs had a written “Scheduled Sleep Time

Agreement” (hereinafter “the Sleep Agreement”) under which employees working

overnight for shifts of 12 hours or longer would have 8 hours of regularly scheduled

uncompensated sleep time, with exceptions requiring compensation for documented

interruptions in sleep time. See, e.g., Doc. 18-2. If the nature of the documented

interruptions were such that the employee received less than five hours of uninterrupted

sleep during the scheduled sleeping period, then under the Sleep Agreement she would

be compensated for the full eight hours of her scheduled sleep time. See id. The question

here, then, is whether the Sleep Agreement complies with the requirements of the FLSA

because, critically, “FLSA rights cannot be abridged by contract or otherwise waived

because this would ‘nullify the purposes’ of the statute and thwart the legislative policies

that it was designed to effectuate.” Barrentine v. Ark.-Best Freight Sys., 450 U.S. 728,

740 (1981).

The Court finds that to the extent the Sleep Agreement applies to shifts of less than

24 hours, it does not comply with the FLSA. The only argument to the contrary that

Outcomes offers is that 29 C.F.R. § 785.23 allows an employer and employee to agree to

uncompensated sleep time of up to 8 hours per shift when the employer works shifts of

five consecutive nights. But in fact § 785.23 says nothing of the sort. It allows an

exception for employees who reside on their employers’ premises “for extended periods

of time,” but it does not attempt to define what qualifies as an extended period of time.

Outcomes’ argument about five consecutive night shifts is based entirely on an April 25,

2016 Memorandum (“the 2016 Memo”) from the U.S. Department of Labor’s (“DOL”)

Wage and Hour Administrator entitled “Exclusion of Sleep Time from Hours Worked by

Domestic Service Employees,” see Doc. 30-4, and on the 1991 Eighth Circuit case of

Bouchard v. Regional Governing Board of Region v. Mental Retardation Services, 939

F.2d 1323.

The facts of Bouchard are materially different from those in the instant lawsuit.

Importantly, the employees in that case “resided at the Region V group homes for

consecutive five day and four night periods.” 939 F.2d at 1329 (emphasis added). In

other words, they “remained at [the employer’s] premises from Monday afternoon until

Friday.” Id. at 1328 (emphasis added). The Eighth Circuit observed that the DOL had

previously “issued letter rulings that houseparents who work five day-four night schedules

comparable to those of [the plaintiffs in Bouchard] do reside on the employer’s premises

for extended periods of time within the meaning of § 785.23 and therefore may be

afforded, pursuant to a written employment agreement, up to eight hours of unpaid sleep

time per day in private quarters on the employer’s premises.” Id. at 1330. It further

observed that the DOL’s “interpretation of its own regulation is reasonable on its face and

is entitled to deference by the courts and contracting parties.” Id. However, the Sleep

Agreement in the instant lawsuit does not contain terms limiting its application to periods

in which the employee remains at the client’s home for consecutive days and nights of

any length at all; instead, it applies, by its terms, “to any 12 – 24 hour or longer work shift.”

See Doc. 18-2. And the record does not contain any evidence that any Plaintiff was ever

required to stay at a client’s house for a period of five consecutive days and four

consecutive nights (or vice versa).

As for the 2016 Memo, a couple of important points should be made. First, and

most importantly, it is not a regulation, statute, or judicial opinion having any binding force

of law on employers or employees. Rather it was simply a “field assistance bulletin”

issued to by the DOL to its regional administrators and district directors in order to

“provide[] guidance to Wage and Hour Division (WHD) field staff regarding the exclusion

of sleep time from the hours worked of domestic service employees.” See Doc. 30-4, p.

1. But second, this Court does not believe the 2016 Memo takes the position advocated

by Outcomes, though the 2016 Memo’s language admittedly contains some ambiguity.

The 2016 Memo states, in relevant part, that:

An employee is deemed to reside at her worksite if she lives there on a

“permanent basis,” i.e., stays there seven nights a week and has no other

home, or for “extended periods of time,” i.e., works and sleeps there for five

days a week (120 hours of more) or five consecutive days or nights

(regardless of the total number of hours).

Id. This has been the DOL’s policy for a long time now. Indeed, Bouchard quotes a letter

ruling of the Deputy Administrator dated February 3, 1981, containing substantively

identical language: “[W]here employees are on duty for less than 120 hours in a week,

they can be considered as residing on the employer’s premises, provided that they spend

five consecutive days or five consecutive nights on the premises.” 939 F.2d at 1329.

Both of these sources contain similar ambiguous language: “five consecutive days

or nights” and “five consecutive days or five consecutive nights.” The ambiguity here is:

does this language refer to all employees who simply work shifts of any length which

happen to fall on five consecutive calendar days; or does this language refer only to

employees who continuously remain on workplace premises for a period of five

consecutive calendar days (so either a period of five consecutive days with four nights in

between or a period of four consecutive nights with four days in between)? This Court

believes the latter scenario is the intended meaning, and notes again that the latter

scenario was precisely the factual situation in Bouchard.

There are two reasons why the Court has arrived at this conclusion: one is a

common-sense reason, while the other is based on the context provided by the language

surrounding the ambiguity. First, as a matter of common-sense, it would be absurd to

propose that, for example, an employee “resides” for an “extended period of time” at a

client’s home when he is hired to work mere two-hour shifts there on five consecutive

nights, but is permitted to sleep during those shifts unless the client wakes him with some

need. And yet, that is an implication of Outcomes’ preferred interpretation.

But second, the Court believes significant context is provided by the 2016 Memo’s

(and the 1981 letter ruling’s) description of the alternative method of residing at the

workplace for an extended period of time: “work[ing] and sleep[ing] there for five days a

week (120 hours or more).” See Doc. 30-4, p. 1. Here, the unavoidable implication is

that these are five 24-hour days, because 120 divided by 5 is 24. This is arithmetically

obvious even though the Memo says “five days a week” rather than “five days and nights

a week.” Similarly, it is notable that the Memo deems someone a permanent resident of

their workplace if she “stays there seven nights a week and has no other home”—again,

note that the language here says “seven nights a week” rather than “seven days and

nights a week.” Given this linguistic context, the Court believes it far more likely than not

that the 2016 Memo’s reference to “five consecutive days or nights” likewise refers to

employees who remain on the workplace premises for a continuous period of five

consecutive calendar days. The accompanying proviso of “(regardless of the total

number of hours)” would be perfectly reasonable under this interpretation because an

employee who, for example, was expected to arrive at the client’s home at 5:00 p.m. on

Monday and depart at 8:00 a.m. on Friday would have been on the premises for “only”

111 hours during that period (which, of course, is less than 120 hours), but nevertheless

would have remained there for five consecutive calendar days or nights. Meanwhile, this

interpretation avoids the absurd outcome of allowing the “(regardless of the total number

of hours)” to sweep in the aforementioned hypothetical employee who “resides” at his

client’s home for a grand total of 10 hours per week.

So, to summarize and repeat its ruling: the Court finds that the Sleep Agreement

does not comply with the requirements of the FLSA and its implementing regulations that

sleep hours may not be excluded from pay, see 29 C.F.R. § 785.21, unless the employee

works shifts of at least 24 hours, see id. at § 785.22, or “resides on his employer’s

premises on a permanent basis or for extended periods of time,” see id. at § 785.23. With

these preliminary rulings out of the way, the Court can now rule on the three pending

cross-motions for summary judgment with great ease.

B. Defendants’ Motion for Partial Summary Judgment and Dismissal of Kaylee

Cifuentes’ Claims (Doc. 44)

First, Defendants’ Motion for Partial Summary Judgment and Dismissal of Kaylee

Cifuentes’ Claims (Doc. 44) must be denied in its entirety. The relief requested therein is

premised entirely on the proposition that Ms. Cifuentes was properly characterized as

residing at her workplace for an extended period of time simply because her regularly

scheduled shift was on five consecutive nights per week. But Outcomes has not provided

any evidence that she was required to remain continuously at her workplace for five

consecutive calendar days in the manner described above and as, for example, the

plaintiffs in Bouchard were required to do. Therefore, dismissal of Ms. Cifuentes’ claims

is inappropriate on summary judgment because a material dispute of fact remains as to

whether she remained at her client’s home during the days between her consecutive

nights on duty. Cf. Blanco v. Samuel, 91 F.4th 1061, 1078 (11th Cir. 2024) (“Here, Blanco

did not remain at the Parents’ house during the days between her consecutive nights on

duty. So . . . Blanco does not qualify as having spent ‘an extended period of time’ at the

Parents’ house. And as a result, she did not ‘reside’ there.”).

C. Defendants’ Motion for Summary Judgment pursuant to 29 U.S.C. § 259, or

Alternatively Partial Summary Judgment Pursuant to 29 U.S.C. § 255; Ark.

Code Ann. § 11-4-218(g), 28 U.S.C. § 260 and Ark. Code Ann. § 11-4-218(a)(2)

(Doc. 48)

Next, Defendants’ Motion for Summary Judgment pursuant to 29 U.S.C. § 259, or

Alternatively Partial Summary Judgment Pursuant to 29 U.S.C. § 255; Ark. Code Ann.

§ 11-4-218(g), 28 U.S.C. § 260 and Ark. Code Ann. § 11-4-218(a)(2) (Doc. 48) must also

be denied. In this Motion, Outcomes asserts three separate defenses and argues that

they limit or entirely excuse it from liability for the alleged FLSA and AMWA violations in

this case. The Court will permit Outcomes to argue these defenses at trial, but finds that

they are not appropriate grounds for summary judgment here.

The first such defense is grounded in 29 U.S.C. § 259, which states:

[N]o employer shall be subject to any liability or punishment for or on

account of the failure of the employer to pay minimum wages or overtime

compensation under the [FLSA], if he pleads and proves that the act or

omission complained of was in good faith in conformity with and in reliance

on any written administrative regulation, order, ruling, approval, or

interpretation, of the [DOL], or any administrative practice or enforcement

policy of such agency with respect to the class of employers to which he

belonged.

Outcomes argues this defense entitles it to dismissal of all claims in this case. That would

clearly be inconsistent with this Court’s ruling above regarding what qualifies as residing

at the workplace for an extended period of time. On this point, it is worth noting that the

DOL’s long-standing interpretation of its own regulations in this regard accords with the

Court’s own in this Opinion and Order. See Doc. 51-4, pp. 21–24 (internally numbered

as pp. 13–16) (DOL amicus brief in Blanco discussing DOL’s history of providing guidance

for determining whether an employee resides at her workplace for an extended period of

time, and noting that “[t]his examination does not turn simply on whether the employee

works five consecutive shifts, during which shifts she may sleep”). However, since the

record currently before the Court is quite underdeveloped on the factual question of

whether or to what extent any Plaintiffs were required to remain at their clients’ homes on

consecutive days and nights, the Court will permit Outcomes to present evidence on this

matter at trial; and Outcomes may argue its § 259 defense then, to whatever extent such

evidence supports it.

The second defense asserted in Outcomes’ Motion is that Outcomes is entitled to

a two-year statute of limitations on Plaintiffs’ FLSA claims because there is no evidence

that any of its alleged violations were “willful.” This is based on 29 U.S.C. § 255, which

provides a general two-year statute of limitations for FLSA violations but extends the

limitations period to three years for “a cause of action arising out of a willful violation.”

See id. at § 255(a). In support of this argument, Outcomes points to evidence that, among

other things, Mr. Posey attended industry conferences on FLSA requirements for

employers and discussed Outcomes’ policies and practices with an Arkansas Wage and

Hour investigator. See generally Doc. 48-1. However, Plaintiffs counter that Mr. Posey’s

testimony indicates that the only person he ever consulted about the Sleep Agreement

before adopting it was his administrative assistant, and that he never consulted any

attorneys about it. See Doc. 66-1, pp. 21–23. The United States Supreme Court has

explained that a finding of willfulness can be based on evidence showing reckless

disregard for whether an employer’s conduct was prohibited by the FLSA. See

McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988). And FLSA regulations define

“reckless disregard” as “failing to make adequate inquiry into whether conduct is in

compliance with the [FLSA].” 5 C.F.R. § 551.104. Given the inherently fact-intensive and

nuanced nature of this inquiry, the Court does not believe the record before it permits a

finding as a matter of law that Outcomes’ alleged violations were not willful. But here too,

Outcomes may argue this defense at trial.

The third defense raised in Outcomes’ Motion is that it is entitled to a finding as a

matter of law that no liquidated damages may be imposed in this matter because it acted

in good faith and reasonable belief that its acts or omissions were not violations of the

FLSA or AMWA.1 This defense is inappropriate for resolution on summary judgment for

the same reason as that regarding willfulness: a fact-finder could reasonably make

conflicting inferences about what Mr. Posey’s research and inquiries about his obligations

under the FLSA or AMWA say about the level of care or concern he possessed for those

1 The FLSA gives a court discretion to “award no liquidated damages” if “the employer

shows to the satisfaction of the court that the act or omission giving rise to such action

was in good faith and that he had reasonable grounds for believing that his act or omission

was not a violation of the [FLSA].” 29 U.S.C. § 260. By contrast, the AMWA permits an

award of liquidated damages if the employee proves the violation was willful. See Ark.

Code Ann. § 11-4-218(a)(2).

obligations. As with the other defenses, Outcomes may argue and present evidence in

support of this defense at trial.

D. Plaintiffs’ Motion for Partial Summary Judgment (Doc. 68)

The Court turns finally to Plaintiffs’ Motion for Partial Summary Judgment (Doc.

68). This motion will be granted in part and denied in part. Plaintiffs argue that they are

entitled to a ruling as a matter of law that Outcomes cannot deduct any sleep time from

per diem shifts of less than 24 hours. That is too broad a proposition. As discussed

extensively above, Outcomes can potentially deduct some sleep time from shifts of less

than 24 hours if those shifts come within a period of five consecutive days or nights when

the employee in question was required to stay continuously at the client’s home. And as

already noted, the evidentiary record presently before the Court is underdeveloped on the

extent, if any, to which that was the case for these Plaintiffs. Therefore, this matter is not

appropriate for resolution on summary judgment.

However, Plaintiffs are entitled to partial summary judgment on the other issue

raised in their Motion: whether Mr. Posey may be individually liable for unpaid wages.

“The overwhelming weight of authority is that a corporate officer with operational control

of a corporation’s covered enterprise is an employer along with the corporation, jointly

and severally liable under the FLSA for unpaid wages.” Solis v. Hill County Farms, Inc.,

808 F. Supp. 2d 1105, 1115 (S.D. Iowa 2011). This is consistent with the FLSA’s definition

of “employer” as “any person acting directly or indirectly in the interest of an employer in

relation to an employee.” 29 U.S.C. § 23(d). As already mentioned above, there is no

dispute that Mr. Posey is Outcomes’ founder and Executive Director. There also is no

dispute that Mr. Posey is the person who had ultimate authority for hiring and firing

employees and for adopting Outcomes’ practices concerning the Sleep Agreement. See

Doc. 22, pp. 3-4, 6 (responses to Interrogatories 6—7 and 11). The only argument Mr.

Posey offers against the proposition that he is also Plaintiffs’ “employer” under the FLSA

is the aforementioned argument that the Outcomes’ nonprofit status exempts it from the

FLSA’s requirements—an argument which this Court has already rejected, above.

Therefore, the Court finds as a matter of law that Mr. Posey is, along with Outcomes,

Plaintiffs’ “employer” for purposes of the FLSA claims in this action.

IV. CONCLUSION

IT IS THEREFORE ORDERED that Defendants’ Motion for Partial Summary

Judgment and Dismissal of Kaylee Cifuentes’ Claims (Doc. 44) is DENIED; Defendants’

Motion for Summary Judgment pursuant to 29 U.S.C. § 259, or Alternatively Partial

Summary Judgment Pursuant to 29 U.S.C. § 255; Ark. Code Ann. § 11-4-218(g), 28

U.S.C. § 260 and Ark. Code Ann. § 11-4-218(a)(2) (Doc. 48) is DENIED; and

Plaintiffs’ Motion for Partial Summary Judgment (Doc. 67) is GRANTED IN PART AND

DENIED IN PART. All claims and defenses remain for trial.

IT IS SO ORDERED on this 31st day of March, 2025.

UNITED STATES DISTRICT JUDGE

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