Employees should be aware that his or her employer may be allowed to count “the reasonable cost … of furnishing [the] employee with board, lodging, or other facilities” toward the employee’s owed wages. This issue was recently addressed in Balbed v Eden Park Guest House, et al. by the U.S. Court of Appeals for the Fourth Circuit, of which Maryland is part.
The federal Fair Labor Standards Act (FLSA) requires employers to pay their employees a minimum wage, currently at least $7.25 per hour, for every hour worked. In Maryland, the required minimum wage is $9.25 per hour. The FLSA and Maryland Wage and Hour Law also require employers to pay non-exempt employees overtime wages at a rate of one-and-one-half times their hourly rate of pay for all overtime hours worked over 40 hours in a workweek.
Typically, determining whether an employer has paid an employee all required wages is relatively simple; multiply the hours worked by the required wage. However, things get more complicated if an employee lives on the employer’s premises because the FLSA defines wages as including the reasonable cost of lodging, board or other facilities provided to the employee. Accordingly, an employee’s wages can be reduced by the cost of lodging or other in-kind compensation, such as food.
In Balbed, the employee lived in her employer’s bed and breakfast. After she quit, the employee sued her former employer for failure to compensate her for minimum wages and overtime wages due. The trial court ruled in the employer’s favor, but the Fourth Circuit reversed and held that the trial court did not properly analyze whether the lodging and food provided to the employee properly compensated her for all owed wages.
This case is important for employees who receive in-kind compensation such as lodging, food or other facilities from their employers. Your employer may be able to offset your owed wages by the “reasonable cost” of those amenities; however, it is the employer’s duty to provide documentation of those costs and things can get complicated if the employer has not kept adequate records.
If you think you are owed unpaid minimum or overtime wages, the attorneys at Lebau & Neuworth may be able to help. For more information, contact us at 888-456-2529 or lebauneuworth.com/contact-us.