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Murphy v. Heartshare Human Services of New York

United States District Court, E.D. New York

June 1, 2017

KAISHA MURPHY and SHANA-KAY MCDOUGALL, on behalf of themselves and those similarly situated, Plaintiffs,
v.
HEARTSHARE HUMAN SERVICES OF NEW YORK and HEARTSHARE EDUCATION CENTER, Defendants.

          Kaisha Murphy and Shana-Kay McDougall Owen Huntting Laird Walker G. Harman, Jr. The Harman Firm P.C.

          HeartShare Human Services of New York Aaron G. Gingrande Ropes & Gray LLP Jeffrey F Webb Ropes & Gray LLP Lee S. Gayer Ropes & Gray LLP

          HeartShare Education Center Dominic Sarna Wingate Kearney & Cullen Richard John Cea Wingate Kearney & Cullen

          MEMORANDUM AND ORDER

          Jack B. Weinstein, Senior United States District Judge.

         I. Introduction ........................................................................................................................... 1

         II. Facts ....................................................................................................................................... 3

         III. Law ...................................................................................................................................... 4

         A. Legal Standard ............................................................................................................... 4

         B. Overtime under FLSA and NYLL ................................................................................ 5

         C. Joint Employment .......................................................................................................... 5

         1. Vertical Employment ................................................................................................. 6

         2. Horizontal Employment ............................................................................................. 9

         IV. Application of Law to Facts ............................................................................................ 11

         A. Horizontal Employment .............................................................................................. 11

         1. 29 C.F.R. § 791.2 ....................................................................................................... 14

         2. Additional 29 C.F.R. § 791.2 Factors ...................................................................... 15

         B. NYLL ............................................................................................................................. 21

         C. Breach of Contract Claim ............................................................................................ 21

         V. Conclusion ........................................................................................................................... 21

         I. Introduction

         Plaintiffs were employees of both a school and a residence for students with disabilities. They claim that the two employers are so closely related that they must be considered one for purposes of federal and state overtime law. Alleged are violations under the Fair Labor Standards Act (“FLSA”) and the New York State labor law (“NYLL”). Defendants had good professional and business reasons for setting up two related separate operations. But those non-pretextual business reasons do not affect workers' rights to overtime.

         Defendants have moved to dismiss for failure to allege that defendants are joint employers. The motion is denied. After an evidentiary hearing the court finds that a motion for summary judgment is not viable; the case is set down for trial. See Hr'g Tr., May 24, 2017 (“Hr'g Tr.”).

         By treating the two entities as one for compensation purposes, the law leans strongly in favor of protecting workers' wage rights over employers' rights to run an efficient business. See, e.g., Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999) (“[T]the remedial nature of the [labor law] statute . . . warrants an expansive interpretation of its provisions so that they will have ‘the widest possible impact in the national economy.'” (quoting Carter v. Dutchess Cmty. Coll., 735 F.2d 8, 12 (2d Cir. 1984))). The employer cannot reduce these worker rights by contract or organization of its operations:

The principal congressional purpose in enacting the Fair Labor Standards Act of 1938 was to protect all covered workers from substandard wages and oppressive working hours, “labor conditions [that are] detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers.” 29 U.S.C. § 202(a). In contrast to the Labor Management Relations Act, which was designed to minimize industrial strife and to improve working conditions by encouraging employees to promote their interests collectively, the FLSA was designed to give specific minimum protections to individual workers and to ensure that each employee covered by the Act would receive “‘[a] fair day's pay for a fair day's work'” and would be protected from “the evil of ‘overwork' as well as ‘underpay.'” Overnight Motor Transportation Co. v. Missel, 316 U.S. 572, 578, 62 S.Ct. 1216, 1220, 86 L.Ed. 1682 (1942), quoting 81 Cong. Rec. 4983 (1937) (message of President Roosevelt). . . . This Court's decisions interpreting the FLSA have frequently emphasized the nonwaivable nature of an individual employee's right to a minimum wage and to overtime pay under the Act. Thus, we have held that FLSA rights cannot be abridged by contract or otherwise waived because this would “nullify the purposes” of the statute and thwart the legislative policies it was designed to effectuate.

Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739-40 (1981) (alterations in original) (third emphasis added) (footnotes and internal citations omitted).

         II. Facts

         Plaintiffs Kaisha Murphy and Shana-Kay McDougall were employed as education and childcare professionals by defendants HeartShare Human Services of New York, Roman Catholic Diocese of Brooklyn (which operates the “Residence”) and HeartShare Education Center (which operates the “School”). Am. Compl., May 16, 2017, ECF No. 22-1 (“Am. Compl.”), at ¶ 1. The non-profit School offers classes for students with developmental and learning disabilities, and the non-profit Residence houses these students who attend the School and require full-time residential care. Id. at ¶¶ 52-53.

         Ms. Murphy worked as an assistant teacher for the School from 2011 to 2016, for approximately 35 hours per week. Id. at ¶¶ 65, 70. Her shifts at the School were from 8:00 a.m. to 2:30 p.m. Id. at ¶ 70. After completing her School shift, she usually accompanied her students to the Residence, where she waited for a Direct Support Professional (“DSP”) to arrive to take custody of the children. Id. at ¶¶ 73-74. She became a DSP in 2013 and worked approximately 25 hours per week in the student Residence in addition to some 35 hours as a teacher at the School. Id. at ¶¶ 75-76.

         Ms. McDougall worked for the School as a paraprofessional from 2015 to 2016 for approximately 35 hours per week. Id. at ¶¶ 90, 94. She also worked as a DSP in the Residence. Id. at ¶ 91. She usually arrived at the Residence at 6:30 a.m., and after assisting her students with their morning routines, accompanied them to the School. Id. at ¶¶ 92-93. Her shifts at the School were from 8:00 a.m. to 2:30 p.m. Id. at ¶ 94. She then accompanied her children back to the Residence, where she waited for a DSP to arrive to take custody of the children. Id. at ¶¶ 97-98. She occasionally worked as a DSP in the afternoon and evening. Id. at ¶ 99.

         Plaintiffs were compensated separately for their work at the School and the Residence through separate paychecks; each paycheck reflected the number of hours plaintiffs worked at one entity. Id. at ¶¶ 3, 80-89, 103-106. The School distributed an annual “Notice and Acknowledgement of Wage Rate and Designated Payday Under Section 195.1 of the New York State Labor Law.” It states that Ms. Murphy and Ms. McDougall were eligible for overtime pay. Id. at ¶¶ 7, 77, 100.

         Whenever plaintiffs worked more than 40 hours at either the School or the Residence, they received overtime pay for the amount of time they worked at that entity. But, they did not receive overtime pay for more than 40 hours per week in the School and the Residence combined. Id. at ¶¶ 3, 80-89, 103-106. Plaintiffs allege that they routinely worked in excess of 40 hours per week combined between the School and the Residence, and that they should have received overtime pay for the combined work periods. Id. at ¶¶ 79, 102, 107-120. They allege violations of the FLSA, the NYLL, and breach of contract under state law. Id. at ¶¶ 107-126.

         Defendants move to dismiss on the ground that the School and the Residence are, and operate as, separate entities and have each separately met their overtime obligations under the FLSA and NYLL. See Mem. of Law in Supp. of Defs.' Joint Mot. to Dismiss Pls.' Compl., ECF No. 10, Mar. 29, 2017 (“Defs.' Mem.”).

         III. Law

         A. Legal Standard

         Rule 12(b)(6) of the Federal Rules of Civil Procedure allows dismissal of claims when the pleading party has failed “to state a claim upon which relief can be granted.” In ruling on a 12(b)(6) motion, a court must accept all factual allegations in the complaint as true and draw all reasonable inferences in plaintiffs' favor. Hayden v. Paterson, 594 F.3d 150, 160 (2d Cir. 2010); Polanco v. Brookdale Hosp. Med. Ctr., 819 F.Supp.2d 129, 132 (E.D.N.Y. 2011).

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Pleadings that “are no more than conclusions[ ] are not entitled to the assumption of truth.” Ashcroft, 556 U.S. at 679. The court's task “is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.” Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980). “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).

         B. Overtime under FLSA and NYLL

         The FLSA and the NYLL provide minimum wage and overtime pay requirements for covered, non-exempt workers who are employed by an enterprise engaged in commerce. 29 U.S.C. § 201 et seq.; N.Y. Lab. Law § 652; 12 N.Y.C.R.R. § 142-2.1; 12 N.Y.C.R.R. § 142-2.2. Both mandate that employers compensate employees at ...


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