RM Wins Dismissal of Employment Law Claims Against General Contractors

September 4, 2020 | Case Results \ Employment Litigation

Attorney Yenisey Rodriguez-McCloskey (RM) notched another victory in Federal Court last month when she obtained a dismissal of employment law claims brought against two general contractor clients.

The case was brought by several construction workers who had worked on the job sites of Trinity Builders and Structure Enterprise, RM’s clients. The workers alleged violations of the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL), essentially claiming that they were not paid properly under the law.

Rodriguez-McCloskey, PLLC was able to get its clients out of the case at a very early stage by prevailing on a motion for judgment on the pleadings, which is akin to a motion to dismiss. The decision will save these contractors from the time, effort, and expense of going through the lengthy discovery phase of litigation, not to mention avoiding the uncertainty of trial.

Wage Violations Under the Fair Labor Standards Act 

The FLSA sets national standards for payment of employee wages. Perhaps the most important subjects covered by the FLSA are the minimum wage, payment for overtime, and child labor laws. The statute also imposes strict record-keeping requirements on employers. 

The Department of Labor is responsible for enforcing the FLSA, but employees also have the right to sue their employers privately for compensation. The potential liability for employers can be significant: if successful, an employee can recover twice the amount of all unpaid wages, in addition to their attorney fees.

The New York Labor Law

The NYLL is the State of New York’s version of the FLSA. This law sets the NY minimum wage and imposes similar overtime requirements to the FLSA.

In addition to the mandatory payment for weekly overtime under the FLSA, the NYLL requires additional wages to be paid to covered employees who work more than 10 hours in a day. Under the NYLL, employers also must provide wage statements with specific information included.

Both the FLSA and NYLL only apply to employees as defined under the law – not to independent contractors.

The ‘Trinity’ Case

Trinity Builders and Structure Enterprise came to RM after being accused of FLSA and NYLL violations by several construction workers. The plaintiffs in this case claimed they had worked on job sites in New York City run by the contractors – and that they had not been paid adequately or received proper documentation.

The construction workers sued the contractors in the Federal District Court for the Southern District of New York. The plaintiffs also sued a subcontractor at the job sites and several individuals associated with the projects.

On behalf of its clients, RM filed a motion for judgment on the pleadings, arguing that the plaintiff’s complaint failed as a matter of law. Essentially, the plaintiffs had failed to establish that any employer-employee relationship existed between the workers and the general contractors.

The Decision

After reviewing the motion and opposition and hearing oral argument on the issue, the Federal Court agreed with RM.

The Court’s decision focused in large part on the existence (or lack thereof) of an employer-employee relationship under the FLSA.

The Formal Control Test

The Court used two tests to determine whether or not the plaintiffs were in fact employed by RM’s clients. The first test concerned “formal control” and looked at four factors:

• Whether the employer had the ability to hire and fire the workers;
• Whether the employer supervised and controlled the work;
• Whether the employer determined the rate and method of pay; and 
• Whether the employer maintained records of the workers’ employment.

After reviewing the above factors, the Court sided with RM’s clients. Ultimately, the Court found that, based on the allegations in the plaintiffs’ complaint, it was primarily the subcontractor who was responsible for hiring and firing the workers, supervising their work, and paying them.

There simply wasn’t enough connection between the workers and the general contractors to establish an employment relationship under the formal control test.

The Functional Control Test

Next, the Court applied an alternative “functional control” test, a six-factor analysis to determine whether the contractors controlled the workers, even without having formal control.

Again, the Court sided with the general contractors. It found that the plaintiffs’ complaint failed to establish that the workers used the contractors’ equipment or premises, or that the plaintiffs worked exclusively for the contractors.

Because neither the formal nor the functional control test supported an employer-employee relationship, the Court dismissed the FLSA claims entirely against RM’s clients.

The Workers’ NYLL Claims

The plaintiffs were able to bring their claims in Federal Court because they involved the FLSA, a Federal law. The Court had jurisdiction over the NYLL claims under the theory of “supplemental jurisdiction,” which allows related state law claims to be filed along with Federal law claims in Federal Court.

Once the FLSA claims were dismissed, however, supplemental jurisdiction no longer applied, and the NYLL claims had to be dismissed as well. As a result, Rodriguez-McCloskey, PLLC general contractor clients were let out of the case completely.