Court Awards Summary Judgment to Plaintiff on Wage Claims; Employer Kept No Records And Admitted to Failing to Pay Plaintiff as Required by Law

In Alladin v. Paramount Management LLC, the Southern District of New York recently granted summary judgment to plaintiff on various issues relating to her unpaid wage claims under the Fair Labor Standards Act and the New York Labor Law, but denied it with respect to plaintiff’s race discrimination claim.

Plaintiff worked for defendant for two weeks as an unpaid intern, after which she was hired and paid a flat rate of $300.00 per week.  Defendant company did not keep time records, and plaintiff’s pay did not vary depending on the hours she worked.

Legal Standards

The FLSA requires every employer to pay its employees a minimum wage and, with certain exceptions, an overtime premium (1.5 times their regular rate) for hours worked in excess of forty in a workweek.  This only applies to employees who are “engaged in commerce or in the production of goods for commerce, or [are] employed in an enterprise engaged in commerce or in the production of goods for commerce.” 

To recover under the FLSA, plaintiff must show:

  1. She had an employer-employee relationship with Defendants;
  2. Defendants failed to pay her minimum wage and overtime; and
  3. Plaintiff or the company was engaged in commerce or in the production of goods for commerce.

Aside from the “commerce” requirement, the minimum wage and overtime requirements are the same under the FLSA and the New York Labor Law.

Plaintiff Was an “Employee”

First, the court held that plaintiff was defendant Paramount Management’s “employee.” During the two-week period in which plaintiff was identified as an “intern”, plaintiff was tasked with sending packages, answering phones, making coffee, running errands, and performing other administrative tasks. There was no evidence that she received training or education beyond on-the-job training given to employees, or that she received any benefit beyond those that any company employee would receive.

The record also supported the conclusion that Paramount’s owner, Ekdeshman, was plaintiff’s “employer” under the FLSA. He testified that he oversaw all operations of the business, and admitted in the answer that he had supervisory authority over plaintiff and had the power to determine her wages and the terms of her employment.  The record therefore showed that he possessed “authority over management, supervision and oversight of [Paramount’s] affairs in general” and that he “exercise[d] … direct control over” Alladin.

Failure to Pay Wages

The court next determined that plaintiff was not paid minimum wages and overtime to which she was entitled.

To establish liability for unpaid wages or overtime, Alladin was required to

demonstrate that she performed work for which she was not properly compensated and that her employer had actual or constructive knowledge of that work. Where an employer’s records are inaccurate or inadequate, an employee need only present sufficient evidence to show the amount and extent of [the uncompensated work as a matter of just and reasonable inference. An employee may meet this burden through estimates based on his or her own recollection. The burden then shifts to the employer to 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. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.

Plaintiff made this showing, since it was either admitted or undisputed that: Paramount did not keep any records of plaintiff’s hours; plaintiff worked for two weeks without receiving any pay; plaintiff was paid $300.00 per week regardless of how many hours she worked; and plaintiff worked more than 40 hours in a given week.

There was, however, conflicting evidence as to the precise number of overtime hours worked by plaintiff.  Therefore, “while there can be no dispute that Alladin worked overtime for which she was not paid, the current record is insufficient to calculate the amount of overtime worked.”

Commerce

Next, the court evaluated the “commerce” element of the FLSA:

The FLSA applies only where there is a nexus to commerce. The Act defines commerce to mean trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof. Further, an enterprise is engaged in commerce for purposes of the FLSA if it (1) has employees engaged in commerce or in the production of goods for commerce, or handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person; and (2) has an annual gross volume of sales made or business done that is not less than $ 500,000.

It determined, however, that the current record was insufficient to establish whether plaintiff was herself “engaged in commerce or the production of goods for commerce”, and that while there was testimony that Paramount had 200,000 in its trading account, the evidence was not clear “what the annual volume of trading done by Paramount is, let alone whether such business exceeds $500,000 a year.”

Bad Faith/Liquidated Damages

The court then held that plaintiff was entitled to liquidated damages, because defendants’ conduct was not in “good faith”.

The FLSA provides that:

in addition to recovering the amount of his or her unpaid wages, a plaintiff is entitled to an additional equal amount as liquidated damages, unless the employer demonstrates to the satisfaction of the court that the act or omission giving rise to its failure to comply with the FLSA was in good faith and that it had reasonable grounds for believing that its act or omission was not a violation of the law. The employer’s burden is a difficult one to meet, however, and double damages are the norm, single damages the exception. Under the NYLL, an employee is entitled to liquidated damages in an amount equal to one hundred percent of the total unpaid wages, unless the employer proves a good faith basis to believe that its underpayment of wages was in compliance with the law.

Here, defendants’ failure to comply with these statutes was not in “good faith”.  In particular:

Defendants admit that they did not keep any records of Alladin’s hours and, in fact, that they made no effort whatsoever to comply with the record-keeping requirements of the FLSA and NYLL. They also concede that Alladin worked for two weeks without receiving any compensation at all, and that she subsequently received the same wages regardless of the hours she worked, even though she worked more than forty hours a week. Such conduct, considered as a whole, demonstrates not a good faith effort to comply with the FLSA and NYLL’s requirements, but instead a complete disregard for them.

The court further adopted the “majority view … that because liquidated damages under the FLSA are compensatory and those under the NYLL are punitive, recovery under both statutes is permissible.”

Race Discrimination

Finally, the court denied plaintiff’s motion for summary judgment on her race discrimination claim.  Plaintiff alleged that defendants subjected her to race discrimination “by requiring her to change her name to one that did not sound African American; regularly subjecting her to racist comments; and ultimately terminating her because she is African American.” However, it held that there were “plainly material disputes of fact” regarding these contentions.  For example, while plaintiff alleged that she regularly heard racist statements in the office, the company’s owner testified that he neither made nor heard anyone make such statements.

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