Howard v. Tate Legacy Incorporated

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

TONYA HOWARD and EBONY JOHNSON,

Plaintiffs,

No. 24 CV 7245

V.

Judge Manish S. Shah

TATE LEGACY INC. and DARLENE TATE,

Defendants.

MEMORANDUM OPINION AND ORDER

Tonya Howard and Ebony Johnson worked as tax-return preparers for Darlene

Tate and her business, Tate Legacy Incorporated. Tate nominally hired Howard and

Johnson as independent contractors, compensating them for each return they

prepared that resulted in a refund, but not giving them any of the protections afforded

to employees by state and federal law. Howard and Johnson, believing they were

employees, now sue Tate and Tate Legacy for violations of the Fair Labor Standards

Act and Illinois employment law. Plaintiffs move for summary judgment. For the

reasons discussed below, the motion is granted in part and denied in part.

I. Legal Standards

Summary judgment is appropriate when “the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(a). A dispute about a material fact is genuine “if the

evidence is such that a reasonable jury could return a verdict for the nonmoving

party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party seeking

summary judgment has the burden of establishing that there is no genuine dispute

as to any material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When

considering a motion for summary judgment, I view the facts and draw all inferences

in the light most favorable to the nonmoving party. Smith v. Kind, 140 F.4th 359,

362, 364 (7th Cir. 2025). I do not need to grant all the relief requested by the motion

and may enter an order treating any material fact as established in this case. Fed. R.

Civ. P. 56(g).

II. Background

Darlene Tate owned and operated Tate Legacy Incorporated, a tax preparation

business. [20] ¶ 1.1 In 2019, Tate contracted with Tonya Howard and Ebony Johnson

to assist with preparing tax returns for Tate Legacy clients. [17-1] ¶ 3; [17-2] ¶ 3; [20]

¶ 6. In that role, Howard and Johnson were paid a piece rate, ranging from $125 to

$175 per refund, for each tax return they prepared that resulted in a refund to the

client. [20] ¶ 8. Howard and Johnson were never paid hourly, and Tate kept no record

of the hours they worked. [20] ¶ 12. Both plaintiffs were hired for ongoing work with

no specified end date. [20] ¶ 10.

Tate Legacy’s operating hours were Monday through Sunday, 8:00 a.m. to

6:00 p.m. [20] ¶ 13. Both Howard and Johnson claim to have worked during all of

1 Bracketed numbers refer to entries on the district court docket. Referenced page numbers

are taken from the CM/ECF header placed at the top of filings. The facts are largely taken

from Tate’s response to the motion for summary judgment, [20], where both plaintiffs’

assertions and defendant’s responses are set forth in one document. In Tate’s response to this

motion, she failed to cite or provide any evidence to support her contention of disputed issues

of material fact. See [20]. Any asserted fact that is not controverted by reference to specific,

admissible evidence is deemed admitted. N.D. Ill. Local R. 56.1(e)(3); see Cracco v. Vitran

Exp., Inc., 559 F.3d 625, 632 (7th Cir. 2009). I therefore accept the assertions in plaintiffs’

56.1 statement, [19], as undisputed.

Tate Legacy’s business hours, but neither claims to have worked 70 hours per week.

[20] ¶¶ 13–14. Howard approximates that she worked 20 hours of overtime per week,

while Johnson approximates that she worked 10 hours of overtime per week. [17-1]

¶ 19; [17-2] ¶ 19. Their job responsibilities primarily consisted of inputting data into

the tax preparation software used by Tate Legacy. [17-1] ¶ 9; [17-2] ¶ 9. Howard

worked in her role until April 2022, when the relationship was terminated by Tate.

[17-1] ¶¶ 3, 6. Johnson worked in her role until February 2020, when she terminated

the relationship. [17-2] ¶¶ 3, 6.

In May 2022, following Howard’s termination, plaintiffs filed a precursor suit

to this one asserting the same claims. See Howard et al. v. Tate et al., 22-cv-02817

(N.D. Ill.). That case settled in early 2024, but Tate allegedly did not comply with the

terms of the settlement agreement. [1] ¶ 2. Plaintiffs then filed this second action in

August of the same year. An order of default was entered against Tate Legacy because

it was not represented by counsel. [11]; Philos Techs., Inc. v. Philos & D, Inc., 645 F.3d

851, 858 (7th Cir. 2011) (quoting Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d

1423, 1427 (7th Cir.1985)) (a corporation “is legally incapable of appearing in court

unless represented by counsel—‘corporations must appear by counsel or not at all’”).

III. Analysis

A. Minimum Wage

At some points in their filings, plaintiffs frame their complaint as alleging

“violations of the minimum wage provisions of the Fair Labor Standards Act,

29 U.S.C. § 201, et seq., the Illinois Minimum Wage law, 820 ILCS 105/1, et seq., and

the Illinois Wage Payment and Collection Act, 820 ILCS 115/1, et seq.”2 [17] ¶ 1; see

also [1] ¶ 58. But their motion for summary judgment does not include any evidence

that they were compensated at below a minimum wage. To the extent their motion

asks for summary judgment on the issue of failure to pay a minimum wage, the

motion is denied.

B. Timely Payment

Plaintiffs also alleged in their complaint that Tate violated the Illinois Wage

Payment and Collection Act, 820 ILCS 115/1, et seq., by failing to pay earned wages

within 13 days after the end of the pay period in which such wages were earned, and

by failing to pay all compensation owed to Howard and Johnson at the time of

separation. [1] ¶¶ 64–73. While their motion for summary judgment mentions the

Illinois Wage Payment and Collection Act by name, it presents no evidence pertaining

to the timing or amount of any compensation Howard or Johnson received, so they

have failed to establish that they are entitled to judgment as a matter of law. To the

extent their motion asks for summary judgment on their claim for violations of the

Illinois Wage Payment and Collection Act, the motion is denied.

C. Overtime

Plaintiffs argue that Tate violated the maximum hours provision of the Fair

Labor Standards Act, 29 U.S.C. § 207, and the overtime compensation provision of

the Illinois Minimum Wage Law, 820 ILCS 105/4a(1), by not paying them an overtime

premium for hours over 40 worked in a week. [17] ¶ 4. The state overtime provision

2 The Illinois Wage Payment and Collection Act does not have a minimum wage provision.

is parallel to its federal counterpart, and “Illinois courts apply the same principles …

to the state provision.” Urnikis-Negro v. Am. Fam. Prop. Services, 616 F.3d 665, 672

n.3 (7th Cir. 2010).

Under the Fair Labor Standards Act, no employer may employ any employee

“for a workweek longer than forty hours unless such employee receives compensation

for his employment in excess of [40 hours] at a rate not less than one and one-half

times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1).3 To prevail on

their motion for summary judgment, plaintiffs need to prove that they were

“employees” within the meaning of the Act, and that they performed work for which

they were improperly compensated. See Melton v. Tippecanoe Cnty., 838 F.3d 814,

818 (7th Cir. 2016).

The Act defines “employee” circularly: an “employee” is “any individual

employed by an employer,” an “employer” is “any person acting directly or indirectly

in the interest of an employer in relation to an employee,” and “employ” is simply

defined as “to suffer or permit to work.” 29 U.S.C. § 203. These terms are

intentionally broad, as “Congress designed the FLSA to reshape the economy to avoid

the economic and social ills caused by low pay and long hours for workers.” Brant v.

Schneider Natl., Inc., 43 F.4th 656, 665 (7th Cir. 2022); see also United States v.

3 The maximum hours provision only applies to employees “engaged in commerce or in the

production of goods for commerce” or “employed in an enterprise engaged in commerce or in

the production of goods for commerce.” 29 U.S.C. § 207(a)(1). While the parties dispute

whether Howard and Johnson were “employees,” there is no dispute that Tate Legacy was

an “enterprise engaged in commerce or in the production of goods for commerce” under the

statutory definition. See 29 U.S.C. § 203(s)(1).

Rosenwasser, 323 U.S. 360, 362 (1945) (“A broader or more comprehensive coverage

of employees within the stated categories would be difficult to frame.”).

“The conclusion of whether an individual qualifies as an employee under the

Act requires an examination of the totality of the circumstances, with the ultimate

goal of determining the ‘economic reality of the working relationship.’” Simpkins v.

DuPage Hous. Auth., 893 F.3d 962, 964 (7th Cir. 2018) (citing Vanskike v. Peters,

974 F.2d 806, 808 (7th Cir. 1992). To determine whether economic reality indicates a

worker is an employee, I consider six factors:

1) the nature and degree of the alleged employer’s control as to 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 workers;

4) whether the service rendered requires a special skill;

5) the degree of permanency and duration of the working relationship;

6) the extent to which the service rendered is an integral part of the

alleged employer’s business.

Sec. of Lab., U.S. Dept. of Lab. v. Lauritzen, 835 F.2d 1529, 1534–35 (7th Cir. 1987).

Those six factors control—not the parties’ characterization of the relationship in any

contract. Brant v. Schneider Natl., Inc., 43 F.4th at 665. “No single factor is

necessarily controlling,” however, “the ultimate conclusion on employee status is

made by examining the totality of the circumstances.” Id.

Here, all six factors weigh in favor of employee status. Tate controlled the

hours and manner in which Howard and Johnson completed their work. [20] ¶ 5.

Howard and Johnson did not invest in the business, nor could they earn profits or

suffer losses through their own independent efforts and decision-making. [20] ¶ 9.

Their job responsibilities did not require special skills to perform. [20] ¶ 6. They were

hired for ongoing work through tax season with no specific end date. [20] ¶ 10. And

the services Howard and Johnson rendered—preparing tax documents—were

integral to Tate’s business—tax preparation. [20] ¶ 1. I conclude that, as a matter of

economic reality, Howard and Johnson were Tate’s employees.4

Plaintiffs have also proven that they were improperly compensated. Howard

and Tate both worked “well over 40 hours per week during their average workweek,”

and Tate never paid them an overtime premium for the hours over 40 that plaintiffs

worked in a workweek. [20] ¶¶ 13–15. Plaintiffs have established a prima facie case

for violations of federal and state overtime provisions.

D. Statute of Limitations

Plaintiffs’ entitlement to judgment as a matter of law on Tate’s liability for

failure to pay an overtime premium depends on the applicable statutes of limitations.

The statute of limitations is an affirmative defense, Tate raised the defense in her

answer, [5] at 6, and she bears the burden of proving it. That burden is met, however,

where “the allegations of the complaint itself set forth everything necessary to satisfy

the affirmative defense, such as when a complaint plainly reveals that an action is

4 Tate, as the owner, operator, and direct controller of the day-to-day business operations of

Tate Legacy, is jointly and severally liable for Tate Legacy’s FLSA violations. See Solis v.

Intern. Detective & Protective Serv., Ltd., 819 F.Supp.2d 740, 748–49 (N.D. Ill. 2011)

(collecting sources).

untimely under the governing statute of limitations.” United States. v. Lewis,

411 F.3d 838, 842 (7th Cir. 2005).

Claims under the Fair Labor Standards Act are subject to a two-year statute

of limitations, unless the claim arises out of a willful violation, in which case the

statute of limitations is extended to three years. 29 U.S.C. § 255. Plaintiffs bear “the

burden of showing that the defendants’ conduct was willful for purposes of the statute

of limitations.” Bankston v. State of Ill., 60 F.3d 1249, 1253 (7th Cir. 1995). Plaintiffs

have provided no evidence to support a finding that Tate willfully violated the Act, so

I apply a two-year statute of limitations for the FLSA violations against her. The

corresponding statute of limitations under the Illinois Minimum Wage Law is three

years. 820 ILCS 105/12.

The complaint in this case was filed in August 2024, two years and four months

after Howard was fired by Tate, and more than four years after Johnson voluntarily

left Tate Legacy. In their complaint—but nowhere in their motion for summary

judgment—plaintiffs request the application of equitable tolling. [1] ¶ 2. Without

equitable tolling going back to the filing date of the first complaint (May 2022), both

plaintiffs’ federal claims are barred, but Howard’s state-law claims survive.

Application of equitable tolling, however, would save Howard’s federal claim and

Johnson’s state-law claims.

Equitable tolling “is an extraordinary remedy, and the burden is on the party

seeking its application to demonstrate that it is warranted.” Dent v. Charles Schwab

& Co., Inc., 121 F.4th 1352, 1353 (7th Cir. 2024). A litigant “is ‘entitled to equitable

tolling’ only if he shows ‘(1) that he has been pursuing his rights diligently, and

(2) that some extraordinary circumstance stood in his way’ and prevented timely

filing.” Holland v. Florida, 560 U.S. 631, 649 (2010) (citing Pace v. DiGuglielmo,

544 U.S. 408, 418 (2005)).

If the allegations in the complaint are true—that Tate entered into the prior

settlement agreement5 fraudulently and has since repudiated the agreement—

equitable tolling would be appropriate. Since filing their complaint, however, Howard

and Tate have provided no evidence of Tate’s failure to abide by the settlement

agreement, or proof that she has repudiated the agreement. Plaintiffs did not file a

claim for breach of contract alleging a breach of the settlement agreement. See

Howard et al. v. Tate et al., Case No. 22-cv-02817, Dkt. No. [85-1] at ¶ 11 (N.D. Ill.

2024) (any action to enforce the settlement shall be brought in state or federal court

in Illinois). Unless plaintiffs provide evidence to support their request for equitable

tolling, I will enter judgment in Tate’s favor on all federal claims, as well as Johnson’s

state-law claims.

E. Damages

Plaintiffs’ request for relief is deficient in its failure to establish the amount

and extent of their damages. Brown v. Fam. Dollar Stores of IN, LP, 534 F.3d 593,

595 (7th Cir. 2008) (“once a plaintiff establishes a violation of the FLSA, the plaintiff

must establish damages”). Where, as here, “an employer failed to keep the proper and

5 I take judicial notice of the existence of the agreement as it appears executed in Howard et

al. v. Tate et al., 22-cv-02817, Dkt. No. [85-1] (N.D. Ill. 2024).

accurate records required by the FLSA, the employer rather than the employee

should bear the consequences of that failure.” Id. Accordingly, plaintiffs only need to

prove their damages by “a just and reasonable inference.” Id.

“The just and reasonable inference standard is a relaxed one.” Osborn v. JAB

Mgt. Services, Inc., 126 F.4th 1250, 1261 (7th Cir. 2025). For example, an employee

can prove damages “by relying on her own recollection,” by “approximat[ing] the

extent of her overtime ‘from the particulars of the jobs she did,’” or by “point[ing] to

‘“triggering factors” that would signal extended work hours.’” Id. (citing Melton,

838 F.3d at 819; then Espenscheid v. DirectSat USA, LLC, 705 F.3d 770, 775 (7th Cir.

2013); then Brown, 534 F.3d at 597) (cleaned up).

While it is a relaxed burden of proof, the just and reasonable inference

standard is still a burden that remains with the plaintiffs. Id. At summary judgment,

“an employee must at least have ‘a reasonably reliable story.’” Id. (citing Melton, 838

F.3d at 819). An employee cannot “prove the amount and extent of her

uncompensated overtime based on “unsupported ipse dixit,” nor “can her version of

events be “so internally inconsistent or implausible on its face that ‘no reasonable

person would believe it.’” Id. (citing Melton, 838 F.3d at 819).

The evidence presented is inconsistent as to the number of hours plaintiffs

worked. While both Howard and Johnson testified that they worked “Monday though

Sunday,” arriving at 8:00 a.m. and working until 6:00 p.m., [20] ¶ 13, neither claims

to have worked 70 hours per week, [20] ¶ 14. Despite claiming to have arrived and

departed at the same time every day, Howard and Johnson do not claim to have

worked the same number of hours. Contrast [17-1] ¶ 19 (Howard declaring she

worked 60 hours per week) with [17-2] ¶ 19 (Johnson declaring she worked 50 hours

per week). Drawing all reasonable inferences in favor of the non-movant, plaintiffs

have not established that there is no genuine dispute surrounding how many hours

they worked—their own testimony is contradictory.

Moreover, plaintiffs have failed to provide any evidence establishing what their

“regular rate” was for the purposes of overtime pay. See 29 U.S.C. § 207 (overtime

pay must be at least “one and one-half times the regular rate” at which the employee

is compensated). Plaintiffs were paid on a piece-rate basis, so their “regular hourly

rate of pay is computed by adding together total earnings for the workweek from piece

rates” and dividing that sum by the number of hours worked in the week. 29 C.F.R.

§ 778.111.

Granted, because Tate failed to keep any records, the week-by-week precision

impliedly required by federal regulations may be impossible. But plaintiffs failed to

provide any information on how much they were compensated while working for Tate.

Plaintiffs have also not provided any evidence establishing what, if any, state or local

minimum wage laws may apply here. Without further evidence, I cannot determine

whether the “regular rate” is the federal minimum wage, the Illinois minimum wage,

the Chicago minimum wage, or the quotient of the weekly piece-rate sum divided by

the hours worked.

IV. Conclusion

Plaintiffs’ motion for summary judgment, [17], is granted in part and denied

in part. Plaintiffs were Tate’s employees under both federal and Illinois law. Tate is

liable to Howard for any damages resulting from Tate’s violations of 820 ILCS 105/4a

that are proven up at trial. All other relief requested by the motion is denied.

ENTER:

Manish 8. Shah

United States District Judge

Date: September 16, 2025

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