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Ansoumana v. Gristede's Operating Corp. - 255 F. Supp. 2d 184 (S.D.N.Y. 2003)

Rule:

It is not the characterization of a hiring hall, but the test of "economic reality," that governs how a relationship of employment is to be characterized in relation to the Fair Labor Standards Act, 29 U.S.C.S. §§ 201-219.

Facts:

Defendant Duane Reade, Inc. ("Duane Reade") was a large retail drugstore chain in the New York metropolitan area. Duane Reade outsourced its requirements for delivery workers by engaging the Hudson/Chelsea defendants ("Hudson/Chelsea") to provide delivery workers to the Duane Reade stores, at the rate of $ 250 to $ 300 per week, per worker. Hudson/Chelsea defendants, in turn, paid the delivery workers whom they assigned $ 20-$ 30 per day, characterizing them as independent contractors. Plaintiffs Faty Ansoumana and others, as well as the class they represented (collectively, the "Workers"), were delivery workers for supermarkets and drugstore chains, including stores owned and operated by defendant Duane Reade and assigned to Duane Reade by Hudson/Chelsea. Deliveries were made by various means, such as by foot, by beeper and by vehicle. The Workers filed a lawsuit against defendants in federal district court, alleging that defendants violated the Fair Labor Standards Act ("FLSA"), 29 U.S.C.S. §§ 201-219, and New York Minimum Wage Law, N.Y. Lab. Law §§ 650-665. The parties filed cross-motions for summary judgment, presenting the district court with the issues of whether, as to Hudson/Chelsea, the Workers were independent contractors or employees entitled to be paid a minimum wage and time-and-a-half for overtime and, if the Workers were employees, whether Duane Reade was a "joint employer," jointly obligated with Hudson/Chelsea to pay minimum wages and overtime.

Issue:

Were defendants liable for violations of the FLSA and New York labor law?

Answer:

Yes.

Conclusion:

The court granted in part the Workers' motion for summary judgment and deferred the remaining cross-motions for summary judgment. The court first ruled that its decision was limited only to those Workers who were assigned by Hudson/Chelsea to Duane Reade and who made deliveries by foot. The court reserved judgment as to Workers assigned to Duane Reade and other defendant stores who made deliveries by means other than by foot because, the court ruled, the record as to those Workers was not developed enough for summary judgment purposes. The court then held that Duane Reade and Hudson/Chelsea qualified as joint employers under the FLSA and New York labor law and were jointly and severally obligated to pay minimum wages and overtime to the foot-delivery Workers. The court applied the "economic reality" test and concluded the Workers were employees, rather than independent contractors, because Duane Reade 's managers directed the Workers in their tasks and the Workers worked out of its stores, and the Workers depended upon Hudson/Chelsea for the opportunity to sell their labor and were not in any real sense in business for themselves. Moreover, the court ruled, the individual owners of Hudson/Chelsea were individually liable under the FLSA and New York law because they had operational control over the placement services.

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