United States District Court, S.D. Texas, Houston Division
CARMEN A. MARTINEZ, Plaintiff,
RANCH MASONRY, INC., RANCH MASONRY AND CAST STONE, LLC, JOSEFINA C. GARCILAZO, and ARTURO GARCILAZO, Defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
F. ATLAS SENIOR UNITED STATES DISTRICT JUDGE.
Carmen A. Martinez filed this Fair Labor Standards Act
(“FLSA”) case against Defendants Ranch Masonry,
Inc. (“Ranch Masonry”), Ranch Masonry and Cast
Stone LLC (“Ranch LLC”), Josefina C. Garcilazo,
and Arturo Garcilazo. The Court has subject matter
jurisdiction pursuant to 28 U.S.C. § 1331. The Court has
personal jurisdiction over all parties, and venue is proper
in the United States District Court for the Southern District
of Texas pursuant to 28 U.S.C. § 1391(b)(1) and (2).
case was tried to the Court on February 15 and 16, 2018. The
parties presented evidence through live witnesses and
documentary exhibits. Having considered the evidence
introduced by the parties, all matters of record in this
case, the arguments of counsel and applicable legal
authorities, the Court makes the following findings of fact
and conclusions of law.
Masonry was formed by Arturo Garcilazo, Sr., in 1998. Ranch
LLC was formed in 2015 by Arturo Garcilazo, Sr.'s two
children, Defendants Arturo Garcilazo and Josefina Garcilazo.
Ranch LLC was formed to transition the family masonry
business from Arturo Garcilazo, Sr. to his children. In 2015,
Ranch Masonry's employees were transferred to the payroll
of Ranch LLC. Ranch Masonry remained in business through
2016, staffing its projects, in part, with the same workers
who transferred to Ranch LLC's payroll in 2015.
Martinez was employed by Ranch Masonry from November 2012
through July 2016. Martinez was employed by Ranch LLC from
its inception in 2015 through July 2016. Between November
2013 and the formation of Ranch LLC in 2015, Martinez was
paid an hourly rate by Ranch Masonry for the first forty
hours that he worked each workweek. After the formation of
Ranch LLC in 2015, Martinez was paid an hourly rate of pay by
that new entity, Ranch LLC, for the first forty hours that he
worked each workweek. After forty hours of paid work in any
workweek, Ranch Masonry paid Martinez a “piece
rate” for any other work he performed during that
workweek. During his employment with Ranch Masonry and Ranch
LLC, Martinez performed various job duties, such as laborer,
scaffolding, and stucco work.
claims and Defendants' defenses were tried to the Court
for two days in February 2018. None of the witnesses at trial
was disinterested. Defendants Josefina Garcilazo and Arturo
Garcilazo testified, as did Plaintiff Carmen Martinez. Mario
and Jose Palma, who testified on Plaintiff's behalf, are
pursuing their own FLSA lawsuit against Defendants. See
Palma, et al., v. Ranch Masonry, Inc., et al., Civil
Action No. H-17-cv-2288. Defense witness David Chavez is a
supervisor for Ranch LLC, and defense witness Matthew Chacon
is Defendant Arturo Garcilazo's son-in-law.
FAIR LABOR STANDARDS ACT
FLSA provides that “no employer shall employ any of his
employees . . . for a workweek longer than forty hours unless
such employee receives compensation for his employment in
excess of the hours above specified 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). “An
employee bringing an action for unpaid overtime compensation
must first demonstrate by a preponderance of the evidence:
(1) that there existed an employer-employee relationship
during the unpaid overtime periods claimed; (2) that the
employee engaged in activities within the coverage of the
FLSA; (3) that the employer violated the FLSA's overtime
wage requirements; and (4) the amount of overtime
compensation due.” Johnson v. Heckmann Water
Resources (CVR), Inc., 758 F.3d 627, 630 (5th Cir.
undisputed, and the Court finds, that during the years 2013
through 2016, Ranch Masonry was an enterprise engaged in
commerce within the meaning of the FLSA. It is similarly
undisputed, and the Court finds, that in 2015 and 2016, Ranch
LLC was an enterprise engaged in commerce within the meaning
of the FLSA.
parties dispute whether there existed an employer-employee
relationship during the unpaid overtime periods claimed.
Defendants assert that during any time Plaintiff worked in
excess of forty hours per workweek, he worked as an
independent contractor and not as an employee. Plaintiff
asserts that Ranch Masonry and Ranch LLC were joint
employers, and that Plaintiff was an employee during the
parties dispute whether Defendants violated the FLSA's
overtime wage requirements. As noted above, Defendants assert
that Plaintiff was working as an employee of Ranch LLC for
the first forty hours, and then was working as an independent
contractor for Ranch Masonry during the overtime hours.
parties dispute the number of overtime hours Plaintiff
worked, and the amount of overtime compensation due, if any.
There are also disputes regarding whether any violation was
willful and thus the statute of limitations is extended to
three years, and whether Defendants acted in good faith so
that liquidated damages should be reduced or not awarded.
FLSA defines “employer” expansively to include
any person acting directly or indirectly in the interest of
an employer in relation to an employee. See 29
U.S.C. § 203(d). The parties dispute whether Martinez,
when working in excess of forty hours per workweek, was an
employee or an independent contractor. Additionally,
Plaintiff argues that Ranch Masonry and Ranch LLC were joint
employers of Plaintiff.
Employee or Independent Contractor
determine if a worker qualifies as an employee for purposes
of an FLSA claim, the focus is on “whether, as a matter
of economic reality, the worker is economically dependent
upon the alleged employer or is instead in business for
himself.” Hopkins v. Cornerstone Am., 545 F.3d
338, 343 (5th Cir. 2008); see also Gray v. Powers,
673 F.3d 352, 354-55 (5th Cir. 2012) (citing Williams v.
Henagan, 595 F.3d 610, 620 (5th Cir. 2010); Watson
v. Graves, 909 F.2d 1549, 1553 (5th Cir. 1990)). There
are five factors relevant to this inquiry: “(1) the
degree of control exercised by the alleged employer; (2) the
extent of the relative investments of the worker and the
alleged employer; (3) the degree to which the worker's
opportunity for profit or loss is determined by the alleged
employer; (4) the skill and initiative required in performing
the job; and (5) the permanency of the relationship.”
Hopkins, 545 F.3d at 343. No. single factor is
determinative, and these factors are a non-exhaustive list
“used to gauge the economic dependence of the alleged
Pay Structure.- Defendants structured the work
performed for them by separating work hours between Ranch LLC
and Ranch Masonry. Defendants claim that for each workweek,
the first forty hours an individual worked were as an
“employee” of Ranch LLC, and any hours in excess
of forty were worked for Ranch Masonry as an independent
contractor. Defendants presented evidence that Ranch
LLC's employees were allowed to work only forty hours per
week. Defendants' witnesses testified that once the
forty-hour limit was reached in a given week, the employee
was no longer permitted to work for Ranch LLC during that
week. Defendants presented evidence that, if a Ranch LLC
employee wanted to perform additional work, he could request
an assignment from Ranch Masonry. Ranch LLC paid its
employees for the forty-hour workweek, and Ranch Masonry
would issue a separate check to any worker who requested and
received additional work during that workweek. Plaintiff
signed neither an employment contract with Ranch LLC nor an
independent contractor agreement with Ranch Masonry.
Court finds that there was no clear break between the work
performed for Ranch LLC and any subsequent work for Ranch
Masonry. The Court does not credit Defendants' evidence
that the supervisors knew when an employee reached the
forty-hour limit and would then refuse to allow that employee
to work additional hours for Ranch LLC. The Court finds that
Ranch LLC employees often continued to perform the same work
at the same jobsite, regardless of whether they asked to
continue working beyond the forty-hour mark.
Factors.- Regarding the degree of control
exercised over Plaintiff in connection with his work, control
is significant only to the extent that a worker has such
control over a meaningful part of his work that he stands as
a separate economic entity. See Hopkins, 545 F.3d at
343. The Court finds that Arturo Garcilazo gave Plaintiff the
work assignments for both Ranch LLC and Ranch Masonry, and
that sometimes the assignments would be at the same location.
Defendants presented evidence that Plaintiff could control
his work because he would not be given any work assignment
beyond the forty-hour workweek unless he specifically
requested additional work. However, as noted above, the Court
does not find credible Defendants' evidence regarding the
forty-hour limit for Ranch LLC work or the requirement that
additional work be requested and be performed for Ranch
Masonry. The Court finds that Plaintiff's work was
supervised both when working the first forty hours and when
he worked beyond the first forty hours.
the relative investment factor, the Court compares
Plaintiff's individual investment to that of the alleged
employer. See Id. at 344. It is undisputed that
Plaintiff (and other laborers) supplied basic work tools,
with a total cost between $100 and $250. The Court finds that
this is a minimal investment relative to the investment of
Defendants in Ranch LLC and Ranch Masonry of substantial
materials, equipment and supervisory and administrative
the degree to which Plaintiff's opportunity for profit or
loss is determined by Ranch Masonry, the Court finds that
Plaintiff did not share in Ranch Masonry's profits, and
that Plaintiff did not perform work for any company other
than Ranch Masonry and Ranch LLC. Defendants presented
evidence that Plaintiff's profit on the work performed
for Ranch Masonry, for which he was paid a piece rate, could
increase if he worked more quickly. The Court finds, based on
Arturo Garcilazo's testimony, that the inspection of
workers' “piece work” was superficial and
insufficient to evaluate meaningfully the pace of the work.
At best, it appears Arturo Garcilazo would look at the work
and “guess-timate” how much work had been
performed by each worker.
also presented evidence that Plaintiff could suffer a loss if
his work was not of acceptable quality, in which case he
would have to redo the work at his own expense.
Defendants' witnesses described only one instance in
which work may have had to be redone, and the ...