FLSA riddle: domestic worker, or friend of the family?

The Court of Appeals holds that a jury must decide whether a woman who helped in the household was a family friend who could work without pay or a household worker who deserved a salary under the FLSA.

The case is Velez v. Sanchez, decided on July 31. Velez came to the U.S. from Ecuador, where she lived with her mother and a guy who was the biological father of Sanchez, who asked if he knew anyone in Ecuador who could help out around the house in the U.S. Velez left Ecuador as a 16 year-old and moved in with Sanchez in New York. She did all sorts of household work and sued under the Fair Labor Standards Act for back pay. (She also sued under the Alien Tort Claims Act, alleging that Sanchez was abusive, but the Court of Appeals rejects that claim).

The Court of Appeals evidently has not resolved a case like this. So it has to review the standards governing who is a "domestic worker" or simply a member of the household for whom the FLSA does not apply. The district court ruled against Velez because "the economic reality of the situation was that Velez was a part of the family because (1) Velez thought of Sanchez as a sister and valued that relationship; (2) Velez received gifts and opportunities outside of the home; and (3) Velez did not leave the Sanchez household when she did not receive wages." The Court of Appeals (Raggi, Droney and Matsumoto [D.J.]) sees it differently, at least for purposes of summary judgment, stating, "[w]hile these circumstances may support the defendant’s argument that a familial relationship existed, they do not, either individually or in combination, summarily preclude Velez from being an employee under the FLSA as a matter of law."

Judge Droney writes:

the following factors are useful to a district court evaluating a minimum wage claim under the FLSA’s domestic worker provision: (1) the employer’s ability to hire and fire the employee; (2) the method of recruiting or soliciting the employee; (3) the employer’s ability to control the terms of employment, such as hours and duration; (4) the presence of employment records; (5) the expectations or promises of compensation; (6) the flow of benefits from the relationship; and (7) the history and nature of the parties’ relationship aside from the domestic labor. Of course, a court must not apply these factors rigidly, and the list is not all inclusive.

Velez can win the case, the Court of Appeals says, because Sanchez did promise to pay her and provide room and board at the start of the relationship, triggered by Sanchez's search for an employee. Sanchez exercised "considerable control" over Velez's employment, including hours and duties. Moreover, "the evidence that Sanchez claimed to 'own' Velez and could send her back to Ecuador at any time indicates that Sanchez could terminate the relationship at will."