New York v. Scalia

• Decision Date: 01 June 2020
• Docket Number: 1:20-cv-01689-GHW
• Citation: 464 F.Supp.3d 528
• Parties: State of NEW YORK, Commonwealth of Pennsylvania, State of California, State of Colorado, State of Delaware, District of Columbia, State of Illinois, State of Maryland, Commonwealth of Massachusetts, State of Michigan, State of Minnesota, State of New Jersey, State of New Mexico, State of Oregon, State of Rhode Island, State of Washington, State of Vermont, and Commonwealth of Virginia, Plaintiffs, v. Eugene SCALIA, Secretary of the United States Department of Labor, United States Department of Labor, and United States of America, Defendants.
• Court: U.S. District Court — Southern District of New York

464 F.Supp.3d 528

State of NEW YORK, Commonwealth of Pennsylvania, State of California, State of Colorado, State of Delaware, District of Columbia, State of Illinois, State of Maryland, Commonwealth of Massachusetts, State of Michigan, State of Minnesota, State of New Jersey, State of New Mexico, State of Oregon, State of Rhode Island, State of Washington, State of Vermont, and Commonwealth of Virginia, Plaintiffs,

v.Eugene SCALIA, Secretary of the United States Department of Labor, United States Department of Labor, and United States of America, Defendants.

1:20-cv-01689-GHW

United States District Court, S.D. New York.

Signed June 1, 2020

Fiona Jeannette Kaye, Matthew Colangelo, Julie Rivchin Ulmet, NYS Office of the Attorney General, New York, NY, for Plaintiff State of New York.

Nancy A. Walker, Pennsylvania Office of Attorney General, Ryan B. Smith, Pennsylvania Office of Attorney General Fair Labor Section, Philadelphia, PA, for Plaintiff Commonwealth of Pennsylvania.

Jennifer C. Bonilla, California Department of Justice, San Diego, CA, for Plaintiff State of California.

Eric Olson, Colorado Department of Law, Denver, CO, for Plaintiff State of Colorado.

Christian Douglas Wright, Delaware Department of Justice, Wilmington, DE, for Plaintiff State of Delaware.

Kathleen Konopka, Office of the Attorney General for the District of Columbia, Washington, DC, for Plaintiff District of Columbia.

Alvar Ayala, Illinois Attorney General's Office, Chicago, IL, for Plaintiff State of Illinois.

Jeffrey Paul Dunlap, Office of the Attorney General, Baltimore, MD, for Plaintiff State of Maryland.

Andrew H. Cahill, Attorney General's Office, Boston, MA, for Plaintiff Commonwealth of Massachusetts.

Zachary A. Risk, Matthew Lee Walker, Michigan Attorney General, Lansing, MI, for Plaintiff State of Michigan.

Jonathan Dean Moler, Minnesota Attorney General's Office, St. Paul, MN, for Plaintiff State of Minnesota.

Estelle Bronstein, NJ Office of the Attorney General, Trenton, NJ, for Plaintiff State of New Jersey.

Tania Maestas, NM Office of the Attorney General, Santa Fe, NM, for Plaintiff State of New Mexico.

Marc Abrams, Oregon Department of Justice, Salem, OR, for Plaintiff State of Oregon.

James Mills, WA State Attorney General Office, Tacoma, WA, Jeffrey T. Sprung, State of Washington, Attorney General's Office, Seattle, WA, for Plaintiff State of Washington.

Mamoona Siddiqui, Office of the Attorney General, Richmond, VA, for Plaintiff Commonwealth of Virginia.

Natasha Waglow Teleanu, United States Attorney's Office, New York, NY, for Defendants.

MEMORANDUM OPINION AND ORDER

GREGORY H. WOODS, United States District Judge:

Imagine that you work for a temp agency, Temp. Co., that hires you out to a large company, Large Corp. Although you get paid by Temp. Co., you go to work every day at Large Corp. and Large Corp. employees tell you what to do. Also imagine that you work sixty hours a week but get paid for forty. That's illegal under the Fair Labor Standards Act (the "FLSA"). You sue for the overtime wages you're owed—but Temp. Co. goes bankrupt. Can you also sue Large Corp.? Maybe. It depends on whether Temp. Co. and Large Corp. are a "joint employer" under the FLSA.

This case is about the FLSA's definition of a joint employer. After a notice-and-comment period, the Department of Labor (the "Department") issued a final rule (the "Final Rule") that narrows that definition. Eighteen States sued. The States argue that the Final Rule's promulgation violated the Administrative Procedure Act. Defendants—the Secretary of the Department, the Department, and the United States—moved to dismiss for lack of both constitutional and prudential standing. The States have plausibly alleged that the Final Rule will reduce their tax revenue and increase their administrative and enforcement costs for state-law analogues of the FLSA, so Defendants’ motion to dismiss is DENIED.

I. BACKGROUND

A. Statutory and Regulatory Background

"The principal congressional purpose in enacting the FLSA 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." Mei Xing Yu v. Hasaki Rest., Inc. , 944 F.3d 395, 402 (2d Cir. 2019) (quoting Barrentine v. Arkansas-Best Freight Sys., Inc. , 450 U.S. 728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981) ) (brackets omitted); see also Salinas v. Commercial Interiors, Inc. , 848 F.3d 125, 132 (4th Cir. 2017) ("Congress enacted the FLSA in 1938—in the midst of the Great Depression—to combat the pervasive ‘evils and dangers resulting from wages too low to buy the bare necessities of life and from long hours of work injurious to health.’ ") (quoting S. Rep. No. 75-884, at 4 (1937)). Congress intended the FLSA "to free commerce from the interferences arising from production of goods under conditions that were detrimental to the health and well-being of workers." Rutherford Food Corp. v. McComb , 331 U.S. 722, 727, 67 S.Ct. 1473, 91 L.Ed. 1772 (1947). So "[t]he FLSA contains two primary worker protections: first, it guarantees covered employees a federal minimum wage; and second, it provides covered employees the right to overtime pay at a rate of one-and-a-half their regular rate for hours worked above forty hours a week." Mei Xing Yu , 944 F.3d at 402 (citing 29 U.S.C. §§ 206 - 07 ).

"Consistent with the FLSA's ‘remedial and humanitarian’ purpose, Congress adopted definitions of ‘employ,’ ‘employee,’ and ‘employer’ that brought a broad swath of workers within the statute's protection." Salinas , 848 F.3d at 133 (quoting Tenn. Coal, Iron & R.R. Co. v. Muscoda Local No. 123 , 321 U.S. 590, 597, 64 S.Ct. 698, 88 L.Ed. 949 (1944) ). The FLSA defines an "employee" as "any individual employed by an employer." 29 U.S.C. § 203(e)(1). The Supreme Court described this as the "broadest ... ever" statutory definition. United States v. Rosenwasser , 323 U.S. 360, 363 n.3, 65 S.Ct. 295, 89 L.Ed. 301 (1945) (quoting 81 Cong. Rec. 7657 (1937) (statement of Sen. Hugo Black)).

"Congress defined ‘employer’ in a similarly expansive fashion." Salinas , 848 F.3d at 133. The FLSA defines "employer" to include "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d). Again, "[t]he Supreme Court has emphasized the ‘expansiveness’ of the FLSA's definition of employer." Herman v. RSR Sec. Servs. Ltd. , 172 F.3d 132, 139 (2d Cir. 1999) (quoting Falk v. Brennan , 414 U.S. 190, 195, 94 S.Ct. 427, 38 L.Ed.2d 406 (1973) ). And the FLSA also defines the term "employ" broadly, as "to suffer or permit to work." 29 U.S.C. § 203(g).¹

"Above and beyond the plain language" of the FLSA, "the remedial nature of the statute further warrants an expansive interpretation of its provisions so that they will have the widest possible impact in the national economy." Herman , 172 F.3d at 139 (quotation omitted). The Supreme Court has "consistently construed the Act ‘liberally to apply to the furthest reaches consistent with congressional direction’ " because "broad coverage is essential to accomplish the goal of outlawing from interstate commerce goods produced under conditions that fall below minimum standards of decency." Tony & Susan Alamo Found. v. Sec'y of Labor , 471 U.S. 290, 296, 105 S.Ct. 1953, 85 L.Ed.2d 278 (1985) (quoting Mitchell v. Lublin, McGaughy & Associates , 358 U.S. 207, 211, 79 S.Ct. 260, 3 L.Ed.2d 243 (1959) and citing Powell v. United States Cartridge Co. , 339 U.S. 497, 516, 70 S.Ct. 755, 94 L.Ed. 1017 (1950) ).

The Department has recognized that two employers may be so interconnected that they function as a single, joint employer since 1939. That year, the Department's Wage and Hour Division issued an interpretative bulletin, which addressed whether multiple employers could be held jointly and severally liable under the FLSA. See Interpretative Bulletin No. 13, "Hours Worked: Determination of Hours for Which Employees are Entitled to Compensation under the Fair Labor Standards Act of 1938," at 16-17 (U.S. Dep't of Labor July 1939). Although it did not use the words "joint employer," this interpretive bulletin was a precursor to the modern joint employer doctrine. Id.

The Supreme Court has also "long recognized that two or more entities may constitute joint employers for purposes of the FLSA." Salinas , 848 F.3d at 134. "For example, in Rutherford Food —which [was decided in 1947 and] predated the Department of Labor regulations setting forth the circumstances in which joint employment generally exists—the Court observed that the plaintiff meat boners could be employed both by the subcontractor that directly employed them and by a slaughterhouse operator who supervised and controlled their daily work." Id. (citing 331 U.S. at 724-25, 730, 67 S.Ct. 1473 ); see also Zheng v. Liberty Apparel Co. , 355 F.3d 61, 70 (2d Cir. 2003) (" Rutherford was a joint employment case, as it is apparent from the Supreme Court's opinion that the boners were, first and foremost, employed by the [independent contractor] who had entered into a contract with the slaughterhouse.").

In 1958, the Department first codified the joint employment standard. See 23 Fed. Reg. 5905 (Aug. 5, 1958). "Although the FLSA does not expressly reference ‘joint employment,’ the Department of Labor's first set of regulations implementing the statute ... recognize[d] that ‘[a] single individual may stand in the relation of an employee to two or more employers at the same time under the Fair Labor Standards Act of 1938[.]’ " Salinas , 848 F.3d at 133 (quoting former 29 C.F.R. § 791.2(a) ). That was because "there is nothing in the act which prevents an individual employed by one employer from also entering into an employment relationship with a different employer." Id. (quoting former 29 C.F.R. § 791.2(a) ); see also 23 Fed. Reg. at 5906.

The Department's 1958 regulations...