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Armento v. Asheville Buncombe Community Christian Ministry, Inc.

United States District Court, W.D. North Carolina, Asheville Division

December 31, 2019



          Martin Reidinger United States District Judge

         THIS MATTER is before the Court following a bench trial on November 13, 2019. Upon consideration of the testimony and evidence presented by the parties, the Court hereby enters the following Findings of Fact and Conclusions of Law.


         On June 12, 2017, the Plaintiff Gregory Armento (“Armento” or the “Plaintiff”) initiated this suit against the Defendant Asheville Buncombe Community Christian Ministry, Inc., (“ABCCM” or the “Defendant”), alleging failure to pay minimum wage and overtime in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 206 and 207, and the North Carolina Wage and Hour Act (“NCWHA”), N.C. Gen. Stat. §§ 95-25.3 and 95-25.4; record-keeping violations under 29 U.S.C. § 211(c) and N.C. Gen. Stat. § 95-25.13; misclassification of employees under 29 C.F.R. Part 541; retaliation and wrongful termination in violation of 29 U.S.C. §§ 215 and 218c and the North Carolina Retaliatory Employment Discrimination Act (“REDA”), N.C. Gen. Stat. § 95-241; claims under 42 U.S.C. §§ 1983 and 1985; and claims for “duress, undue influence, and illegal contracts” and intentional infliction of emotional distress. [Doc. 1].

         On July 7, 2018, the Defendant filed a motion to dismiss the Plaintiff's claims, except for the NCWHA claim, under Rule 12(b)(6) of the Federal Rules of Civil Procedure, and a motion for partial summary judgment under Rule 56 of the Federal Rules of Civil Procedure on the Plaintiff's FLSA, NCWHA, and REDA claims. [Docs. 46, 49].

         On March 27, 2019, the Court issued an Order granting the Defendant's motion to dismiss with respect to the Plaintiff's claims for record-keeping violations under the FLSA and NCWHA; duress, undue influence, and illegal contracts; intentional infliction of emotion distress; retaliation and wrongful termination under the FLSA and REDA; and violations of 42 U.S.C. §§ 1983 and 1985, but denied the Defendant's motion with respect to the Plaintiff's claims for unpaid wages and overtime violations under the FLSA and NCWHA. [Doc. 66]. In the same Order, the Court granted the Defendant's motion for summary judgment with respect to the Plaintiff's claims for minimum wage and overtime violations under the FLSA but denied the Defendant's motion with respect to the Plaintiff's claims for minimum wage and overtime violations under the NCWHA. [Id.]. As a result, the Plaintiff's only remaining claim is for unpaid wages and overtime violations under the NCWHA. [Id.].

         This matter thereafter proceeded to a bench trial. Upon conclusion of the presentation of evidence, the Court allowed the parties to file supplemental briefs. The parties filed those briefs on December 6, 2019. [Docs. 110, 111]. Having been fully heard and briefed, this matter is ripe for disposition.


         A. The Parties

         1. The Plaintiff Gregory Armento is a United States Army veteran who was homeless in 2015.

         2. The Defendant Asheville Buncombe Community Christian Ministry, Inc., is a nonprofit corporation, organized in accord with Section 501(c)(3) of the Internal Revenue Code. [Second Revised Joint Stipulations (“Joint Stip.”), Doc. 95 at ¶ 1].

         3. The Defendant operates The Veteran's Restoration Quarters (“VRQ”) in Asheville, North Carolina. [Id. at ¶ 2].[1] The VRQ offers rehabilitative services to homeless veterans with the goal of making them self-sufficient, drug-free and alcohol-free, and capable of establishing permanent housing and permanent employment.

         4. The VRQ provides homeless veterans with transitional housing, meals, counseling, a gym, an onsite chaplain, educational assistance, a computer room, a library, laundry facilities, Alcoholics Anonymous meetings, nursing services, psychologist services, case management services, claims assistance, and transportation to the local United States Veteran's Administration (the “VA”) medical center. [Id. at ¶ 2-3].

         5. The VRQ receives funding by way of grants from the VA through the Homeless Providers Grant/Per Diem Program (“GPD Program”) pursuant to Title 38 of the United States Code and subject to the requirements thereof. [Id. at ¶ 2]. The funding from the VA only partially covers the cost of the services provided by the VRQ. The VRQ pays the rest of its costs with funding from other sources, including charitable donations and grants from entities like Land of Sky Regional Council, a local non-profit organization. Neither the Defendant nor the VRQ derives any funding from work performed by VRQ residents. As a non-profit entity subject to the requirements of the GPD Program, the Defendant would have to return the grant money it receives from the VA if it earned a profit.

         6. Roughly 2, 500 individuals volunteer regularly at the VRQ by preparing and cooking meals, helping at the front desk, teaching life skills classes, performing maintenance, cleaning, assisting with landscaping, providing housekeeping, and performing other similar activities. The VRQ does not compensate volunteers for the hours that they work.

         B. Service Hours

         7. As part of the overall housing and rehabilitative services program at the VRQ, all residents are required complete a certain No. of “Service Hours” by performing various chores around the VRQ. [Id. at ¶ 7]. The only exception to the Service Hours requirement is that VRQ residents who are employed full-time or attend school full-time do not have to perform Service Hours. [Id. at ¶ 10]. Residents are not paid for completing Service Hours. Residents can perform Service Hours at the VRQ by maintaining the living spaces, cleaning the kitchen, cleaning common areas, staffing the front desk and computer lab, or driving a van. Residents also can perform their Service Hours at a different ABCCM location or a charitable organization that has no affiliation with ABCCM.

         8. Service Hours further the mission and purpose of the VRQ by providing structure for residents' lives and helping them build job skills and gain experience to become self-sufficient and employable. Residents also develop a sense of personal pride in the VRQ by working Service Hours.

         9. The No. of Service Hours that a resident must perform is determined by his employment and school enrollment status. Residents employed full-time or enrolled in school full-time do not have to perform any Service Hours. Unemployed residents must perform twenty Service Hours per week, while residents who are employed part-time or enrolled in school part-time must perform ten Service Hours per week. The Defendant defines part-time employment as working thirty hours or less per week.

         10. While some residents perform more Service Hours than are required, such extra service is on a volunteer basis and there are no repercussions for refusing to work extra Service Hours if asked.

         11. Residents performing Service Hours at the VRQ perform chores that would otherwise be performed by community volunteers, resident volunteers, or residents providing hours pursuant to other programs (e.g. the Transitional Employment Program, infra). Community volunteers typically complete the chores around the VRQ more effectively and reliably than residents performing Service Hours, primarily because VRQ residents generally have a history of employment difficulties and other related problems. While the Defendant has more issues with residents performing Service Hours than volunteers, it is particularly forgiving towards residents when they make mistakes performing Service Hours.

         12. The VRQ has enough community volunteers to perform all the chores that are performed by residents performing Service Hours. According to Reverend Scott Rogers, the Executive Director of ABCCM, the VRQ would only use volunteers and would not have residents perform any Service Hours at all if its sole objective was to ensure that the work was performed and performed in the most effective manner.

         13. The VRQ enforces its rules through a “Three Strikes Accountability Policy.” [Plaintiff's Ex. 1-A at 11]. That policy provides that residents can receive a strike for committing infractions or violating rules, including by refusing to perform required Service Hours. [Id.]. Residents can be removed from the VRQ for committing their third strike, although residents who commit particularly serious infractions can be removed prior to their third strike. [Plaintiff's Ex. 1-A at 11; Plaintiff's Ex. 20 at 1].

         C. Transitional Employment Program

         14. The VRQ also has a Transitional Employment Program, which allows residents to work at the VRQ for pay. [Joint Stip. at ¶ 12]. Unlike the Service Hours program, residents are not required to work in the Transitional Employment Program. Residents wishing to participate in the Transitional Employment Program must apply and be approved. Residents can work up to 1, 000 hours in the Transitional Employment Program. [Id. at ¶ 13].

         15. Participants in the Transitional Employment Program work in various positions at the VRQ, including as front desk managers and as van drivers. [Id.].

         16. The Transitional Employment Program is designed to help “transition homeless veterans into meaningful employment in the community.” [Plaintiff's Ex. 7 at 3]. The Transitional Employment Program provides participants with “the experience, knowledge, and skills necessary to attain competitive employment in the community.” [Id.].

         17. The Transitional Employment Program allows unemployed residents to earn money, develop job skills, build responsible habits, demonstrate accountability, acclimate to consistent employment, generate an employment history, and otherwise transition towards self-sufficiency. [Joint Stip. at ¶ 12]. The Transitional Employment Program also empowers the Defendant to give residents who complete the program an honest job recommendation for potential employers.

         D. Plaintiff's Enrollment at the VRQ

         18. The Plaintiff enrolled at the VRQ on September 2, ...

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