UNPUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 20-1100
GREGORY G. ARMENTO,
Plaintiff - Appellant,
v.
ASHEVILLE BUNCOMBE COMMUNITY CHRISTIAN MINISTRY, INC.,
Defendant - Appellee.
---------------------------
NATIONAL EMPLOYMENT LAW PROJECT; DISABILITY RIGHTS NORTH CAROLINA; NEW YORK LEGAL ASSISTANCE GROUP; NORTH CAROLINA ADVOCATES FOR JUSTICE; UCLA SCHOOL OF LAW VETERANS LEGAL CLINIC,
Amici Supporting Appellant.
Appeal from the United States District Court for the Western District of North Carolina, at Asheville. Martin K. Reidinger, Chief District Judge. (1:17-cv-00150-MR-DSC)
Argued: January 27, 2021 Decided: April 21, 2021
Before MOTZ, FLOYD, and RUSHING, Circuit Judges.
Affirmed by unpublished per curiam opinion. ARGUED: Clermont Fraser Ripley, Carol Lee Brooke, NORTH CAROLINA JUSTICE CENTER, Raleigh, North Carolina, for Appellant. Jonathan Hopkins Dunlap, Dale Allen Curriden, THE VAN WINKLE LAW FIRM, Asheville, North Carolina, for Appellee. ON BRIEF: Stephen B. Williamson, THE VAN WINKLE LAW FIRM, Asheville, North Carolina, for Appellee. Holly Stiles, Christopher A. Hodgson, DISABILITY RIGHTS NORTH CAROLINA, Raleigh, North Carolina, for Amicus Disability Rights North Carolina. Catherine K. Ruckelshaus, NATIONAL EMPLOYMENT LAW PROJECT, INC., for Amici National Employment Law Project, New York Legal Assistance Group, and UCLA School of Law Veterans Legal Clinic. Kevin P. Murphy, HERRMANN & MURPHY, PLLC, Charlotte, North Carolina; M. Travis Payne, EDELSTEIN & PAYNE, Raleigh, North Carolina, for Amicus The North Carolina Advocates for Justice.
Unpublished opinions are not binding precedent in this circuit.
2 PER CURIAM:
Plaintiff-Appellant Gregory Armento appeals a district court’s final judgment
following a bench trial in favor of Defendant-Appellee Asheville Buncombe Community
Christian Ministry, Inc. (ABCCM). Armento sought unpaid wages, minimum wages, and
overtime pursuant to the North Carolina Wage and Hour Act (NCWHA). The district court
concluded that the NCWHA did not apply because Armento was not an “employee” of
ABCCM. We agree and affirm the judgment of the district court.
I.
A.
ABCCM is a non-profit corporation that operates the Veterans Restoration Quarters
(VRQ), a homeless shelter for male veterans in Asheville, North Carolina. VRQ is divided
into three components: Emergency Shelter, Transitional Housing, and Permanent
Supportive Housing. The Transitional Housing program is at issue here. Transitional
Housing is intended to help residents learn self-sufficiency and find permanent housing
and employment.
The U.S. Department of Veterans Affairs’ (VA) Homeless Providers Grant / Per
Diem Program (GPD Program) provides federal grant funding to the VRQ’s Transitional
Housing program. Pursuant to the terms of the GPD Program, residents are typically
limited to a twenty-four month stay in Transitional Housing. VRQ’s remaining funding
comes from other sources, including charitable donations. Roughly 2,500 individuals
3 regularly volunteer at VRQ by preparing meals, helping at the front desk, teaching classes,
and cleaning.
All residents of the Transitional Housing program are required to participate in
VRQ’s Service Hours Program, an unpaid work rehabilitation program. Many of the
residents come from backgrounds of prolonged social isolation such that they lack even
basic communication skills. The Service Hours Program, also referred to as “service
hours,” is designed to provide structure to residents’ lives, reintegrate residents into a
community, and help residents build basic job skills. Residents may complete service
hours either by performing chores at VRQ or by volunteering at another charity within the
community. The amount of service hours a resident must perform depends on the
resident’s employment and school enrollment status. Residents who are unemployed and
not enrolled in school must perform twenty service hours per week. Residents who are
employed part-time or enrolled in school part-time must perform ten service hours per
week. Residents who are employed full-time or attending school full-time are exempt from
the service hours requirement. Residents may also request exemptions for disability or for
other individualized reasons. VRQ maintains a “Three Strikes Accountability Policy”
under which residents can accumulate strikes for violating rules, including for refusing to
comply with the Service Hours Program. Residents can be removed from VRQ for
committing a third strike.
In addition to the mandatory, unpaid Service Hours Program, VRQ also has an
optional, paid Transitional Employment Program. The Transitional Employment Program
is designed to help “transition homeless veterans into meaningful employment in the
4 community” by allowing them to earn money, develop job skills, acclimate to consistent
employment, build responsible habits in a forgiving environment, and generate an
employment history. J.A. 193. Residents may work up to 1,000 hours in the Transitional
Employment Program. The 1,000-hour cap is intended to encourage participants to seek
permanent, outside employment rather than remain employed within VRQ. Some of the
positions available in the Transitional Employment Program overlap with the positions
available in the Service Hours Program.
B.
Armento arrived at VRQ on September 2, 2015 and enrolled in the Transitional
Housing program. He received various forms detailing VRQ policies, including the
Service Hours Program. He signed a consent form stating that he would receive free room
and board so long as he complied with those policies.
On September 8, 2015, Armento began working as a Front Desk Manager as part of
the Transitional Employment Program. He enrolled by speaking with Front Desk
Supervisor Randy Gamble, who hired Armento on the spot without requiring an application
or resume. As a Front Desk Manager in the Transitional Employment Program, Armento
made nine dollars per hour. Front Desk Managers answer phones, sign residents in and out
of the building, administer breathalyzer tests, conduct bag checks, and provide limited
security. The position is generally staffed by residents performing service hours, residents
enrolled in the Transitional Employment Program, and volunteers.
5 Because ABCCM considered this work to be part-time, it required Armento to
complete ten hours per week in the Service Hours Program. Armento completed his service
hours by working additional hours as a Front Desk Manager. He performed the same tasks
during his service hours and his Transitional Employment Program hours.
Armento soon became concerned with the total number of hours he performed as a
Front Desk Manager through the Service Hours Program and the Transitional Employment
Program. On October 2, 2015, Armento met with his Case Manager, Gene Jones, about
his “problems at the front desk.” J.A. 476. He told Jones that he was working part-time
“and also doing his service hours” at the front desk, but that his supervisor was “making
him work way over the [ten] additional hours that he is supposed to with his service hours.”
Id. When Jones suggested that Armento talk to his supervisor about the problem, Armento
refused and said he instead planned “to follow th[e] chain of command.” Id.
In November 2015, Armento met with Mary Sczudlo, VRQ’s Director of Homeless
Services. Armento told Sczudlo that he should be paid for his service hours because he
was working more than forty hours per week in combined service hours and Transitional
Employment Program hours and was therefore a full-time employee. Sczudlo reviewed
the records for Armento’s prior five weeks of employment and determined that Armento
had, in fact, been short-paid for a total of twenty Transitional Employment Program hours. 1
1 Armento was only required to work ten service hours per week (except for the first week, during which he was still considered unemployed because he was in training and thus had to work twenty service hours). After five weeks, Armento had logged more than ten service hours for three weeks and fewer than ten hours for two weeks. For the three weeks that Armento logged more than ten service hours, Sczudlo credited the extra hours
6 Sczudlo subsequently met with Armento to inform him that he would be compensated for
that mistake. Armento reiterated that he should also be paid for his service hours, not just
Transitional Employment Program hours. Sczudlo explained that service hours are always
unpaid.
Armento contacted various government agencies, civil rights groups, and media
outlets about his complaints, including the VA, the U.S. Department of Labor (DOL), and
the North Carolina Department of Labor. He also contacted U.S. Senator Thom Tillis,
whose office submitted the inquiry to the VA and the DOL and requested that Armento’s
complaints be investigated. On April 11, 2016, the VA formally responded to Senator
Tillis’s office indicating that it had investigated the matter and would be not be taking
further action.
In April 2016, VRQ staff twice advised Armento that he was nearing the end of his
1,000 hours in the Transitional Employment Program. On May 13, 2016, Armento told
Jones “that his job at the front desk w[ould] be ending at the end of th[e] month” and he
was “thinking about what he want[ed] to do after his hours run out.” J.A. 469. On June 1,
2016, ABCCM removed Armento from the Transitional Employment Program following
completion of 1,007 Transitional Employment hours. Armento had also completed a total
as Transitional Employment Program hours. For the two weeks that Armento logged fewer than ten service hours, Sczudlo subtracted hours from Armento’s total Transitional Employment Program hours. This calculation resulted in the twenty-hour total.
7 of 349 service hours as a Front Desk Manager while dually enrolled in the Transitional
Employment Program. 2
On September 2, 2017, exactly twenty-four months after he enrolled, Armento
became ineligible to continue receiving funding through the GPD Program, and he left the
VRQ’s Transitional Housing component. ABCCM staff assisted him in qualifying him for
another housing program available through the VA.
C.
On June 12, 2017, Armento filed a pro se complaint against ABCCM. Armento
alleged many federal and state claims, including claims for unpaid wages, minimum wages,
and overtime under the NCWHA. Following ABCCM’s motion to dismiss and motion for
summary judgment, the district court dismissed or granted summary judgment to ABCCM
on all but the NCWHA claims. The district court held a bench trial on those claims on
November 11, 2019.
On December 31, 2019, the district court ruled that the NCWHA did not cover
Armento because he was not an employee of ABCCM in the context of either the Service
Hours Program or the Transitional Employment Program. In so finding, the district court
considered “the totality of the circumstances” and “the principal purpose of the seemingly
2 Armento also performed service hours as a van driver at VRQ. As a van driver, Armento transported residents to the VA hospital and other establishments in Asheville, responded to emergencies involving residents, and picked up homeless individuals when temperatures dropped below freezing. ABCCM considered Armento’s work as a van driver to be service hours and therefore uncompensated.
8 employment relationship.” J.A. 810–11 (first quoting Purdham v. Fairfax Cnty. Sch. Bd.,
637 F.3d 421, 428 (4th Cir. 2011); and then quoting Isaacson v. Penn Cmty. Servs., Inc.,
450 F.2d 1306, 1309 (4th Cir. 1971)). With regard to the Service Hours Program, the
district court explained that the program’s principal purpose was to benefit the residents,
that Armento could have performed service hours at a non-ABCCM-affiliated location,
that Armento could have avoided performing service hours entirely by attending school
full-time or obtaining full-time employment, and that Armento was aware from the outset
that service hours were unpaid. With regard to the Transitional Employment Program, the
district court explained that despite the hourly wage, the program’s principal purpose was
similarly to benefit the residents.
Armento timely appealed the district court’s ruling.
II.
“This Court reviews judgments stemming from a bench trial under a mixed
standard: factual findings are reviewed for clear error, whereas conclusions of law are
reviewed de novo.” Helton v. AT&T Inc., 709 F.3d 343, 350 (4th Cir. 2013) (citing
Plasterers’ Loc. Union No. 96 Pension Plan v. Pepper, 663 F.3d 210, 215 (4th Cir. 2011)).
Under the “clearly erroneous” standard, we afford the district court’s findings of fact the
“highest degree of appellate deference” and will not reverse unless we have a “definite and
firm conviction that a mistake has been committed.” Evergreen Int’l, S.A. v. Norfolk
Dredging Co., 531 F.3d 302, 308 (4th Cir. 2008) (quoting United States Fire Ins. Co., 966
F.2d 820, 823 (4th Cir. 1992); and then quoting United States v. Gypsum Co., 333 U.S.
9 364, 395 (1948)). “In cases in which a district court’s factual findings turn on assessments
of witness credibility or the weighing of conflicting evidence during a bench trial, such
findings are entitled to even greater deference.” Id. (citing Evergreen Int’l, 531 F.3d at
308).
Whether Armento was an employee covered by the NCWHA is a legal question that
we review de novo. See Schultz v. Cap. Int’l Sec., Inc., 466 F.3d 298, 304 (4th Cir. 2006).
III.
Armento contends on appeal that the district court erred in concluding that he was
not an employee of ABCCM pursuant to the NCWHA. Armento also asserts that the
district court made several clearly erroneous findings of fact.
We first address whether Armento was an employee of ABCCM pursuant to the
NCWHA. The NCWHA is intended to “protect[] those who, as a matter of economic
reality, are dependent upon the business to which they render service.” Laborers’ Int’l
Union of N. Am. v. Case Farms, Inc., 488 S.E.2d 632, 634 (N.C. Ct. App. 1997) (quoting
Poole v. Loc. 305 Nat’l Post Off. Mail Handlers, 318 S.E.2d 105, 107 (N.C. Ct. App.
1984)). It provides that “[a]ny employer who violates” its provisions related to minimum
wage, overtime, or wage payment “shall be liable to the employee or employees affected.”
N.C. Gen. Stat. § 95-25.22(a). The NCWHA broadly defines the relevant terms: an
“employee” is “any individual employed by an employer,” id. § 95-25.2(4), and to
10 “employ” is “to suffer or permit to work,” id. § 95-25.2(3). Armento has the burden of
showing he is an “employee.” See Powell v. P2Enterprises, LLC, 786 S.E.2d 798, 800
(N.C. Ct. App. 2016) (citing Steelman v. Hirsch, 473 F.3d 124, 128 (4th Cir. 2007)).
Because the NCWHA defines the relevant terms identically to the Fair Labor
Standards Act (FLSA), we may look to federal interpretations of the FLSA for guidance.
See 13 N.C. Admin. Code § 12.0103. 3 The Supreme Court has repeatedly emphasized that
the term “employee” should be broadly interpreted under the FLSA, see Nationwide Mut.
Ins. Co. v. Darden, 503 U.S. 318, 322–24 (1992), though “obviously” with practical limits,
Walling v. Portland Terminal Co., 330 U.S. 148, 152 (1947); see also Tony & Susan Alamo
Found. v. Sec’y of Labor, 471 U.S. 290, 295 (1985) (“While the statutory definition is
exceedingly broad, it does have its limits.” (citations omitted)).
In light of this breadth, “[t]he test of employment under the [FLSA] is one of
‘economic reality.’” Alamo Found., 471 U.S. at 301 (quoting Goldberg v. Whitaker House
Coop., Inc., 366 U.S. 28, 33 (1961)). The economic reality test “calls for pragmatic
construction of [the] concept” of employment by “examin[ing] ‘the circumstances of the
3 Pursuant to the North Carolina Administrative Code,
[w]here the legislature has adopted the language or terminology of the [FLSA] . . . the Department of Labor will look to . . . federal law as a guide for interpreting the North Carolina law. Such federal interpretations will therefore be considered persuasive and will carry great weight as a guide to the meaning of the North Carolina provisions and will be controlling for enforcement purposes.
13 N.C. Admin. Code § 12.0103.
11 whole activity,’ rather than ‘isolated factors,’ or ‘technical concepts.’” Steelman, 473 F.3d
at 128 (first quoting Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947); then
quoting Goldberg, 366 U.S. at 33). The test asks whether these circumstances reflect a
“traditional understanding of employment.” Id. at 129. Thus, the Supreme Court has
applied the FLSA “without regard to deviations from traditional employment paradigms
that are largely technical,” but has not applied the FLSA to “relationships [that] have
deviated from the traditional understanding of employment in fundamental ways.” Id.
For example, the Supreme Court has held that prospective railroad yard brakemen
in a pre-employment training course did not constitute employees under the FLSA. See
Portland Terminal, 330 U.S. at 152–53. Following completion of the week-long course,
the railroad provided retrospective pay to only those trainees it ultimately hired. See id. at
150. The course exclusively involved observation and closely supervised work, meaning
the trainees did “not displace any of the regular employees,” did “not expedite the company
business,” and in fact sometimes “actually impede[d]” the business. Id. at 149–50. Noting
that the railroad received no “immediate advantage” from the trainees’ work, id. at 153, the
Court explained that the FLSA was “obviously not intended to stamp all persons as
employees who, without any express or implied compensation agreement, might work for
their own advantage on the premises of another,” id. at 152.
In contrast, the Supreme Court held in Alamo Foundation that unpaid associates
who staffed a nonprofit organization’s commercial businesses were employees under the
FLSA. See 471 U.S. at 299–303. Although the associates received no cash wages, they
worked in expectation of “implied” compensation in the form of food, shelter, and clothing.
12 See id. at 301. The associates were therefore “entirely dependent upon the [organization]
for long periods, in some cases several years.” Id. at 301 (quoting Donovan v. Tony &
Susan Alamo Found., 567 F. Supp. 556, 562 (W.D. Ark. 1982)).
Interpreting this guidance, we have repeatedly emphasized the relationship’s
primary purpose as an important factor. See, e.g., McLaughlin v. Ensley, 877 F.2d 1207,
1209 (4th Cir. 1989) (using the “primary beneficiary” inquiry to determine that trainee was
an employee). In Harker v. State Use Industries, we held that prisoners participating in a
work program were not employees because they performed work “not to turn profits for
their supposed employer, but rather as a means of rehabilitation and job training.” 990
F.2d 131, 133 (4th Cir. 1993). We explained that this “custodial relationship” did not
constitute the “‘bargained-for exchange of labor’ for mutual economic gain that occurs in
a true employer-employee relationship.” Id. (quoting Vanskike v. Peters, 974 F.2d 806,
809 (7th Cir. 1992); Gilbreath v. Cutter Biological, Inc., 931 F.2d 1320, 1325 (9th Cir.
1991)).
Similarly, in Isaacson, we held that a conscientious objector who performed work
for a nonprofit organization in lieu of military service was not an employee. See 450 F.2d
at 1309. There, “the principal purpose of the seemingly employment relationship was to
benefit the person in the employee status” by “providing him with the opportunity to
perform work of national importance to his liking.” Id. at 1309–10. Additionally, because
the organization specifically “created positions . . . to accommodate conscientious
objectors,” the conscientious objector “cannot be said to have displaced a bona fide
13 applicant who desired to sell his services at prevailing rates[] or . . . to be an exploited
unorganized laborer, evils which the [FLSA] was designed to prevent.” Id. at 1310.
With this framework in mind, we consider whether Armento was an employee of
ABCCM.
1.
Preliminarily, Armento argues that the district court erred by failing to apply the
economic reality test. We disagree. The district court properly applied the economic
reality test, albeit not by name, by analyzing “the totality of the circumstances.” J.A. 810–
11 (quoting Purdham, 637 F.3d at 428). In doing so, the district court considered whether
Armento worked in expectation of compensation, “the facts surrounding the principal
purpose” of the relationship, and “for whose benefit that arrangement was designed.” J.A.
814. This comports with the economic reality test’s focus on “the circumstances of the
whole activity.” Steelman, 473 F.3d at 128 (quoting Rutherford, 331 U.S. at 730).
Armento’s confusion stems from the district court’s express rejection of the
similarly named—but distinct—“economic reality” test from Schultz v. Capital
International Security, Inc., 466 F.3d 298 (4th Cir. 2004). In Schultz, we held that “a court
considers the ‘economic realities’ of the relationship between the worker and the putative
employer” to determine “whether a worker is an employee or an independent contractor.”
Id. at 304 (emphasis added) (quoting Henderson v. Inter-Chem Coal Co., 41 F.3d 567, 570
(10th Cir. 1994)). With an eye to that dichotomy, Schultz recited a six-factor “economic
reality” test focused on the parties’ respective levels of control, dependency, risk, and
opportunity for profit. See id. at 304–05. But we have repeatedly explained that when, as
14 here, “[t]he plaintiff is [i]ndisputably not an independent contractor,” this six-factor test
has “little relevance.” Steelman, 473 F.3d at 129 n.1; see also Purdham, 637 F.3d at 433
(“[T]he test is best suited to determine whether, as a matter of economic reality, an
individual is in business for himself or herself as an independent contractor . . . [and] is of
limited utility in determining whether an individual is an employee, as opposed to a
volunteer.” (quoting Krause v. Cherry Hill Fire Dist. 13, 969 F. Supp. 270, 274 (D.N.J.
1997) (cleaned up)). Thus, despite the similarity in name, Schultz’s economic reality test
is not appropriate here. The district court correctly rejected this test in favor of considering
the “totality of the circumstances.” J.A. 810–11 (quoting Purdham, 637 F.3d at 428).
2.
With that said, Armento’s participation in neither the Service Hours Program nor
the Transitional Employment Program reflects a “traditional understanding of
employment” under the proper economic reality test. Steelman, 473 F.3d at 129. It is
useful to analyze each program separately.
First, Armento was not an employee of ABCCM by virtue of the Service Hours
Program. The primary beneficiary of the Service Hours Program is the VRQ residents
15 themselves, not ABCCM. 4 See Isaacson, 450 F.2d at 1309 (considering whether “the
principal purpose of the seemingly employment relationship was to benefit the person in
the employee status”). In contrast to the associates in Alamo Foundation, the VRQ
residents performed service hours “not to turn profits for their supposed employer, but
rather as a means of rehabilitation and job training.” See Harker, 990 F.2d at 133 (“By
producing useful goods in an atmosphere that mirrors the conditions of a true private
employer, [the defendant] helps prepare inmates for gainful employment upon release.”).
The objective of the Service Hours Program—undisputed by Armento—is to transition
homeless veterans back into gainful employment by reintegrating them into a community,
habituating them to structure, building their confidence, teaching them basic job skills, and
limiting their idle time. Cf. McLaughlin, 877 F.2d at 1209 (finding trainees were
employees where they “were taught only simple specific job functions related to [the
employer’s] own business”). Residents may also choose to perform their service hours at
charities unaffiliated with ABCCM, in which case ABCCM receives no benefit.
Further, Armento neither expected nor received compensation—explicit or
4 Armento argues that the district court erred in considering whether Armento or ABCCM was the “primary beneficiary” of Armento’s work. He claims that the primary beneficiary test is appropriate only in the context of determining whether an individual was an employee or a trainee. Not so. Although our case law emphasizes the importance of the primary beneficiary test in that context, we have also implicitly considered the test as part of the holistic economic reality analysis. See, e.g., Harker, 990 F.2d at 133 (considering whether inmates’ work was intended to benefit inmates or to profit prison).
16 implicit—through the Service Hours Program. See Alamo Found., 471 U.S. at 301. 5 True,
VRQ residents receive free room and board in exchange for complying with VRQ policies,
and the Service Hours Program is a generally mandatory VRQ policy. But unlike in Alamo
Foundation, VRQ residents do not perform service hours in direct exchange for room and
board. In Alamo Foundation, the associates worked on a “‘commission’ basis, and were
prohibited from obtaining food from the cafeteria if they were absent from work.” 471
U.S. at 301 n.22. Here, the Service Hours Program is part of the overall rehabilitative
relationship between ABCCM and residents, and benefits are not directly premised upon
participation. The Service Hours Program includes many exemptions, including for those
employed full-time, those enrolled as students full-time, those with disabilities, and those
with individualized needs. Indeed, VRQ staff excused Armento from the Service Hours
Program in early 2017 so that he could focus on obtaining employment and securing
permanent housing. Such exemptions do not in any way change the allocation of benefits.
Nor does a resident performing service hours “displace[] a bona fide applicant who
desired to sell his services at [the] prevailing rates.” Isaacson, 450 F.2d at 1310. Rather,
ABCCM “created the position occupied by [Armento] to accommodate [Armento] and
others similarly classified.” Id. For the first twenty years of ABCCM’s operation, it staffed
5 At trial, Armento testified that he did not understand at intake that the Service Hours Program was uncompensated. The district court found that Armento’s “testimony in this regard was manifestly not credible.” J.A. 811. Armento does not expressly dispute this factual finding on appeal. To the extent he does dispute the district court’s finding of incredibility, we see no error in that conclusion. Armento’s statements to his case manager throughout his time at VRQ firmly establish that he understood the unpaid nature of the Service Hours Program.
17 the relevant positions with volunteers. ABCCM began replacing the volunteers with
residents for the express purpose of benefiting those residents. Indeed, residents generally
provide lower quality work than volunteers. See Portland Terminal, 330 U.S. at 150
(noting that trainees did “not expedite the company business”). Should ABCCM need
additional help, “[v]olunteers are more than willing to jump in and fill any gaps.” J.A.
574. 6 Should ABCCM lack enough volunteers to fill these gaps, it would simply eliminate
many of the positions. As such, applying the NCWHA to the Service Hours Program
would not further its goal of “prevent[ing] the unfair competition that arises when
businesses cut their costs by paying exploitatively low wages.” Steelman, 473 F.2d at 132.
Nearly the same reasoning applies to the Transitional Employment Program. The
only major distinction between the two programs is that the Transitional Employment
Program paid Armento a nine-dollar hourly wage. 7 Although compensation is an important
6 The district court found, as a matter of fact, that ABCCM had “enough community volunteers to perform all the chores that are performed by residents performing Service Hours.” J.A. 799. Armento argues that this was clear error. He points to testimony that community volunteers rarely drive the vans; are not available to drive the vans at night; and do not perform all the essential functions of a front desk manager, such as conducting security patrols. But this testimony establishes only that volunteers do not currently perform these chores. ABCCM offered evidence at trial that volunteers could fully staff all of the chores and that ABCCM had operated as such for its first twenty years. Accordingly, we cannot say that the district court clearly erred. 7 The Transitional Employment Program also included some superficial trappings of an employment relationship. Armento filled out paperwork that typically signifies the beginning of an employment relationship—including an I-9, W-2, and E-Verify
18 factor in considering whether an individual is an employee, see Alamo Found., 471 U.S. at
301, it is not dispositive, see Isaacson, 450 F.2d at 1308 (holding that plaintiff was not an
employee despite payment of a “subsistence salary”); Harker, 990 F.2d at 133 (holding
that plaintiff was not an employee despite payment of hourly wage); Purham, 637 F.3d at
434–35 (holding that plaintiff was not an employee despite payment of stipend linked to
“overtime” hours). Finding compensation dispositive would be contrary to the Supreme
Court’s instruction to focus on “‘the circumstances of the whole activity,’ rather than
‘isolated factors.’” Steelman, 473 F.3d at 128 (quoting Rutherford, 331 U.S. at 730). 8
Here, “the circumstances of the whole activity” establish that ABCCM did not
compensate Armento pursuant to an employment relationship. See id. The compensation
Armento received did not reflect the “‘bargained-for exchange of labor’ for mutual
economic gain that occurs in a true employer-employee relationship.” Harker, 990 F.2d at
133 (quoting Vanskike, 974 F.2d at 809; Gilbreath, 931 F.2d at 1325). Unlike in Alamo
authorization—and he was designated as an “employee” in onboarding forms. While the parties’ understanding of the putative employee’s classification is certainly relevant, it is not controlling. See Alamo Found., 471 U.S. at 301–02 (finding associates to be employees despite the fact that they “vehemently protest[ed] coverage under the [FLSA]”). 8 Armento cites Williams v. Strickland, 87 F.3d 1064 (9th Cir. 1996), in an attempt to show that compensation is dispositive. There, the Ninth Circuit held that the plaintiff was not an employee by virtue of his participation in the Salvation Army’s six-month rehabilitation program, which included unpaid, full-time work therapy. See id. at 1067. The Ninth Circuit distinguished Alamo Foundation on the basis that the plaintiff’s “relationship with the Salvation Army was solely rehabilitative,” whereas Alamo Foundation involved “both a rehabilitative element and an implied agreement for compensation.” Id. at 1067–68. Armento proffers this analysis to establish that a relationship that contemplates compensation is necessarily one of employment. True, Williams distinguished Alamo Foundation on the basis of compensation. But Williams did not hold that the presence or absence of compensation is dispositive.
19 Foundation, Armento was not “entirely dependent upon” ABCCM by virtue of the
compensation. 471 U.S. at 301 (quoting Donovan, 567 F. Supp. at 562). ABCCM
provided room and board to Armento independent of his participation in the program.
Indeed, the entire purpose of the Transitional Employment Program is to eliminate
dependence upon ABCCM’s free resources. It does so by creating an artificial job market
available only to Armento and those similarly classified and by capping participation at
1,000 hours.
* * *
Accordingly, Armento was not an employee of ABCCM by virtue of either the
Service Hours Program or the Transitional Employment Program. 9
We next address Armento’s remaining disputed findings of fact. We do not dwell
long here. Even if we agreed with Armento that the district court erred, each of the alleged
errors is rendered harmless by our conclusion that Armento was not an employee of
9 Armento provides authority for the proposition that if he is an employee of ABCCM with regard to the Transitional Employment Program, he cannot be considered a volunteer with regard to the Service Hours Program. Because we conclude that Armento was not an employee of ABCCM with regard to either program, these authorities are unavailing.
20 ABCCM with regard to either the Service Hours Program or the Transitional Employment
Program. See 28 U.S.C. 2111 (codifying harmless error on appellate review).
First, Armento argues that the district court erred in finding that ABCCM “defines
part-time employment as working thirty hours or less per week.” J.A. 798. Armento
asserts that ABCCM considered part-time employment to be twenty hours or less per week
at the relevant time. Because Armento worked twenty or more hours per week in the
Transitional Employment Program, he argues that he should have been considered a full-
time employee and therefore exempt from the service hours requirement altogether. As
such, he requests that ABCCM pay him for all the service hours he worked as if they were
Transitional Employment Program hours. Armento is correct that nowhere does the record
define “part-time” as thirty hours or less per week. Yet any error was harmless. Because
Armento was not ABCCM’s employee vis-à-vis the Transitional Employment Program,
ABCCM’s potentially unfair application of its programs does not implicate the NCWHA.
Second, Armento asserts that the district court erred in calculating the number of
weeks he worked and the number of hours he worked per week. Once again, because
Armento was not an employee, this is harmless error at most.
Third and finally, Armento argues that the district court erred in finding that even if
Armento were an employee, the cost of room and board offset any lost wages. See J.A.
824 n.4 (citing N.C. Gen Stat. § 95-25.2(16)). Of course, the district court did not find that
Armento was an employee and thus did not make any damages calculations. Even
assuming otherwise, this is at most harmless error because Armento was not an employee.
21 VI.
We are wary of the risks at stake here. We do not condone the use of shelter
residents as an unprotected labor pool available at substandard wages or uncompensated
hours. Our holding is limited to the specific facts at issue. ABCCM created an artificial
job market specifically designed to provide Armento with rehabilitative training. To the
extent that the relationship contemplated compensation, it did not reflect a bargained-for
exchange of labor for value and did not foster dependence upon ABCCM. For the
foregoing reasons, the district court’s judgment is
AFFIRMED.