                                                        United States Court of Appeals
                                                                 Fifth Circuit
                                                              F I L E D
                IN THE UNITED STATES COURT OF APPEALS
                        FOR THE FIFTH CIRCUIT                 August 19, 2005

                                                           Charles R. Fulbruge III
                                                                   Clerk
                             No. 04-50311
                           Summary Calendar



JOSE ROSALES; ESTHER ROSALES,

                                     Plaintiffs-Appellants,

versus

DONA LORE,

                                     Defendant-Appellee.

                          --------------------
             Appeal from the United States District Court
                   for the Western District of Texas
                        USDC No. SA-02-CV-968-PM
                          --------------------

Before JOLLY, DAVIS, and OWEN, Circuit Judges.

PER CURIAM:*

     Following the termination of their employment, Jose and

Esther Rosales filed suit against their employer, Dona Lore,

raising claims for unpaid wages under the Fair Labor Standards

Act (“FLSA”) and for breach of contract under Texas state law.

The parties agreed to a bench trial before a magistrate judge.

After a bench trial, the magistrate judge entered judgment in

favor of Lore on all claims.    The Rosaleses filed the instant

appeal.


     *
       Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
                             No. 04-50311
                                  -2-

     The Rosaleses first challenge the magistrate judge’s

decision to credit Lore’s records of their work hours instead of

their own records.    An employee bringing suit for unpaid wages

under the FLSA bears the burden of proving that he performed work

for which he was not properly compensated.      Anderson v. Mt.

Clemens Pottery Co., 328 U.S. 680, 686-87 (1946).     If the

employer’s records are “proper and accurate,” the employee may

rely on these records; if the employer’s records are “inaccurate

or inadequate,” the employee may produce “sufficient evidence to

show the amount and extent of that work as a matter of just and

reasonable inference.”     Id. at 687.   If the employee does so, the

employer must “come forward with evidence of the precise amount

of work performed or with evidence to negative the reasonableness

of the inference to be drawn from the employee’s evidence.”       Id.

at 687-88.   Factual findings regarding hours worked are reviewed

for clear error.     See Anderson, 328 U.S. at 689.

     Although Lore’s records are not as clear or complete as they

could have been, the Rosaleses’ records were insufficient to

allow a “just and reasonable inference” of the hours they worked.

The Rosaleses admitted that their records were a reconstruction

prepared after the termination of their employment.     Jose Rosales

also claimed that he had worked 12 or more hours per day, seven

days a week, for several months.    Such claims strain credibility,

especially when considered in light of the testimony of Lore’s

witnesses that the tasks the Rosaleses were hired to perform took
                           No. 04-50311
                                -3-

less than two hours per day to complete.   The magistrate judge

did not clearly err by accepting Lore’s records.

     The Rosaleses also challenge the magistrate judge’s

conclusion that the mobile home that Lore provided them, rent-

free, was sufficient to compensate them for their work.    The

magistrate judge accepted Lore’s assertion that this trailer

could be rented for $650 per month.

     An employer generally may deduct the “reasonable cost” of

board, lodging, or other facilities provided to employees.       See

29 U.S.C. § 203(m).   There are three methods an employer can use

to ascertain whether any furnished facilities are part of “wages”

within the meaning of 29 U.S.C. § 203(m); because Lore did not

request a determination from either the Administrator of the Hour

and Wage Division or the Secretary of Labor under the second or

third methods, only the method described in 29 C.F.R. § 531.3 is

relevant here.   See id.; 29 C.F.R. § 531.33.   The formula in 29

C.F.R. § 531.3 provides that the reasonable cost to the employer

of furnishing his employees with lodging or other facilities is

no more than the cost of operation and maintenance, including

adequate depreciation, plus a reasonable allowance (not more than

5 1/2 percent) for interest on the depreciated amount of capital

investment by the employer.   29 C.F.R. § 531.3(c).   In order to

substantiate “actual cost,” an employer must “maintain and

preserve” records of “itemized accounts showing the nature and
                            No. 04-50311
                                 -4-

amount of any expenditures entering into the computation of the

reasonable cost.”    29 C.F.R. § 516.27(a)(1).

     In the instant case, Lore failed to comply with the

applicable regulations for determining the “reasonable cost”

of the trailer.   Lore provided only her own unsubstantiated

assertions that she could have rented the trailer for $650 per

month.   We conclude that the magistrate judge clearly erred by

accepting Lore’s estimate of the fair rental value of the trailer

and in deducting this amount from any wages owed to the

Rosaleses.

     The Rosaleses also challenge the magistrate judge’s

rejection of their supplemental state-law claim for breach of

contract.    The magistrate judge found that, even if it was

assumed that Lore had signed the letter/contract presented by the

Rosaleses, there was no evidence that she had read or understood

the import of the letter before signing.    The magistrate judge

failed to address relevant Texas law that provides that a party

to a contract is presumed to have read and understood its terms.

See Estes v. Republic Nat’l Bank of Dallas, 462 S.W.2d 273, 276

(Tex. 1970) (absent a showing of “fraud or imposition,” failure

to read a contract before signing is not ground for avoidance);

Castroville Airport, Inc. v. City of Castroville, 974 S.W.2d 207,

211 (Tex. App. 1998) (“Contracting parties are obligated to

protect themselves by reading what they sign and are presumed, as

a matter of law, to know the contract’s terms.”).    We conclude
                          No. 04-50311
                               -5-

that the magistrate judge erred in rejecting the Rosaleses

breach-of-contract claim on this basis.

     For the reasons stated above, we VACATE the magistrate

judge’s judgment and REMAND this case for further proceedings

consistent with this opinion.
