Court: District Court, E.D. New York; April 6, 2016; Federal District Court
The memorandum addresses a legal dispute involving Raul Padilla, an ophthalmic technician, who seeks retroactive overtime payments from his employer, Sheldon Rabin, M.D. P.C., under the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL). The determination of Padilla's entitlement hinges on whether he qualifies as an "exempt" salaried professional. Both parties have filed motions for summary judgment, with the plaintiff's motion granted in part and denied in part, while the defendants' motion is denied.
The factual background establishes that the medical practice operates at two locations, overseen by Dr. Sheldon Rabin, with Shari Coen handling compliance matters related to FLSA and NYLL. Padilla lacks a college degree but possesses substantial education and training, including a two-year program in ophthalmic dispensing, a one-year certification in ophthalmic assistance, and ongoing continuing education requirements. He is certified in multiple areas, including as a Certified Ophthalmic Assistant and a certified refractionist, and has received extensive on-the-job training in various ophthalmic procedures.
Padilla has been employed as a full-time ophthalmic technician by the Practice since late April or early May 2012, with a compensation rate of $35 per hour, paid by checks from "Sheldon Rabin, M.D. P.C." He is not required to seek authorization for overtime work. The dispute centers on whether Padilla is entitled to overtime pay, with the defendants asserting he qualifies as an exempt employee under the "learned professional" exemption of the FLSA and NYLL, while Padilla claims he does not meet the exemption criteria.
Defendants argue that Padilla satisfies the salary requirement due to his payment structure, which totals at least $1,400 per week, and that he receives a paid lunch break. They assert that his role requires significant education and ongoing training, involving judgment and discretion, thereby meeting the primary duty requirement. They further contend compliance with the law and assert no willful violation of the FLSA occurred, citing a two-year statute of limitations.
In opposition, Padilla claims that the defendants waived their exemption argument by failing to plead it specifically in prior responses. He argues that his qualifications and job responsibilities do not fit the learned professional exemption, describing his certification as the most basic for an ophthalmic technician and stating that his work primarily involves executing tests without discretion. He acknowledges some autonomy in recommending additional tests but maintains that his duties during procedures are limited to preparatory tasks without requiring professional judgment.
Plaintiff claims he does not receive a guaranteed minimum weekly salary as mandated by law, therefore failing to meet federal regulations. He asserts that the defendants willfully violated the Fair Labor Standards Act (FLSA), justifying a three-year statute of limitations, due to their lack of inquiry into the legality of not paying him overtime. The office manager's lack of training and Rabin's unilateral decision-making regarding overtime payments are highlighted as evidence of reckless disregard for the law.
Plaintiff seeks to hold both Rabin and the Practice jointly and severally liable, asserting they are both his employers and that Rabin controls business decisions. He confirms the Practice's gross revenues exceed $500,000 and acknowledges working over 40 hours weekly without receiving overtime pay. Plaintiff anticipates the defendants will invoke the learned professional exemption, arguing it does not apply in this case. He also claims entitlement to liquidated damages, citing the defendants' failure to demonstrate good faith compliance with wage laws.
In opposition, defendants argue plaintiff was appropriately paid on a salaried basis exceeding the required threshold and that he could work beyond 40 hours without prior approval. They contest the waiver argument, indicating plaintiff was aware of their exemption claim as early as May 2015. Defendants maintain that plaintiff is an exempt employee under both the FLSA and New York Labor Law (NYLL) and challenge his interpretation of the learned professional exemption. They reference regulations allowing salary computation on an hourly basis and assert that plaintiff's job requires advanced knowledge, which does not necessitate a four-year degree. Furthermore, they argue that established compensation policies reflect good faith, and note that plaintiff did not raise overtime payment issues until January 2015, despite his long tenure at the Practice.
Summary judgment is warranted when evidence such as affidavits or deposition transcripts shows no genuine issue of material fact, allowing a party to be entitled to judgment as a matter of law. The materiality of facts is determined by the applicable law, and only factual disputes that could influence the lawsuit's outcome prevent summary judgment. A moving party can establish the absence of a triable issue by demonstrating that no rational jury could favor the non-moving party, considering all evidence and inferences in the latter's favor.
Under the Fair Labor Standards Act (FLSA), non-exempt employees of enterprises engaged in commerce are entitled to overtime pay at a rate of at least one and a half times their regular pay for hours exceeding forty in a workweek. "Commerce" encompasses various forms of trade and transportation across state lines. An employee is considered engaged in the production of goods if involved in related processes essential to their production. An enterprise is defined by unified operations for a common business purpose and must have gross annual sales of at least $500,000 to be classified as engaged in commerce.
Individuals exercising operational control over an enterprise can be held liable as employers under the FLSA. The court assesses operational control by examining authority over management and oversight of employment affairs, applying the Carter framework, which includes evaluating if the alleged employer had the power to hire/fire, supervised work conditions, determined payment methods, and maintained employment records.
To establish an employer’s liability for unpaid overtime under the Fair Labor Standards Act (FLSA), a plaintiff must demonstrate: (1) that they performed uncompensated work, and (2) that the employer had actual or constructive knowledge of that work. Certain employees are exempt from overtime requirements, including those in a bona fide professional capacity, which must be narrowly construed as the FLSA is a remedial statute. The employer bears the burden of proving the employee qualifies for this exemption, defined as an employee earning at least $455 per week and primarily engaged in work that requires advanced knowledge or creativity.
The exemption involves a two-part test: the "salary basis" test and the "primary duty" test. An employee is considered paid on a "salary basis" if they receive a predetermined salary that is not reduced based on work quality or quantity. The salary can be calculated hourly, daily, or by shift, provided there is a minimum weekly guarantee.
Regarding statutes of limitations, violations of the FLSA must be raised within two years, or three years for willful violations. A willful violation occurs if the employer knew or showed reckless disregard for whether their conduct violated the FLSA. Mere negligence does not constitute willfulness. To prove willfulness, the plaintiff must show the employer had reason to know of their FLSA obligations. The burden of proof for willfulness lies with the plaintiff, and this question is typically reserved for the jury in district courts.
Liquidated damages under the Fair Labor Standards Act (FLSA) allow for recovery equivalent to unpaid overtime compensation, with the employer responsible for proving good faith and reasonable belief of compliance, a challenging burden. Generally, double damages are standard, while single damages are rare. Employers must actively seek to understand and comply with FLSA requirements to establish good faith.
In New York, the Minimum Wage Act does not directly include an overtime provision; instead, it empowers the Commissioner of Labor to regulate overtime, largely adopting FLSA standards. Employers must pay overtime at one and a half times the regular rate, excluding certain FLSA exemptions. The New York Labor Law (NYLL) similarly mandates overtime pay and applies the same exemptions but has a six-year statute of limitations, irrespective of willfulness. NYLL liquidated damages can reach up to 100% of unpaid wages and serve as a penalty for willful wage withholding, with employers needing to demonstrate good faith to avoid such penalties.
Regarding joint liability, defendants acknowledge their FLSA liability and admit Rabin's operational control over the practice, rendering him jointly liable. The plaintiff contends that defendants should be barred from asserting the learned professional exemption due to its non-pleading in prior answers, referencing Schwind v. EW Assocs. Inc., which states that affirmative defenses must be pleaded or waived. However, the court found that the plaintiff would not suffer surprise or prejudice from the defendants' exemption claim, allowing it to be raised.
To qualify for the learned professional exemption under the Fair Labor Standards Act (FLSA), both the salary basis and primary duty tests must be met, while only the primary duty test is required under the New York Labor Law (NYLL). An employee is considered salary-based if they receive a guaranteed weekly payment exceeding $455, although the plaintiff's compensation lacked such a guarantee based on testimony. Despite the plaintiff not qualifying under the FLSA, he might still qualify under the NYLL since it only requires meeting the primary duty test. This test necessitates advanced knowledge typically acquired through extensive specialized education. The parties disagree on whether the plaintiff's responsibilities meet this criterion. The plaintiff asserts his role is mechanical and lacks discretion, while the defendants emphasize his significant post-high school education and professional status. They reference a relevant case, Nairne v. Manzo, which found an ophthalmic technician meets the learned professional standard. However, the plaintiff's qualifications differ, lacking a college degree and holding a lower-level certification. The court views the determination of exemption as too close to resolve through summary judgment, deferring the matter to a jury.
Regarding the statute of limitations for FLSA damages, the parties debate whether the Practice acted with reckless disregard for its FLSA obligations. Defendants conceded to being subject to the FLSA and had an admitted policy to comply with labor laws, indicating awareness of their obligations. However, conflicting evidence suggests a policy decision against paying overtime. The plaintiff bears the burden of proof regarding willfulness but has not met the threshold for summary judgment, leaving the jury to decide.
For liquidated damages under the FLSA, defendants must prove they took adequate steps to comply with the law, while under the NYLL, they must show good faith. Neither party has sufficiently demonstrated the absence of factual disputes, and the court will address liquidated damages based on jury findings regarding liability and willfulness.
Summary judgment on the issue is denied. The plaintiffs' motion for summary judgment is partially granted and partially denied; it is granted regarding the Fair Labor Standards Act (FLSA) claim, as the plaintiff fails to meet the "salary basis" test necessary for the "learned professional" exemption. The motion is denied in all other respects. The defendants’ motion for summary judgment is denied. A jury trial is scheduled to begin on May 16, 2016, in Courtroom 10 B South, with jury selection overseen by a magistrate judge that morning. In limine motions and supporting briefs must be filed by May 2, 2016, with a hearing on these motions set for May 9, 2016, at 10 a.m. in the same courtroom, where individual parties are not required to attend. By May 9, 2016, parties must submit: 1) complete lists of pre-marked exhibits and stipulations on admissibility, 2) lists of potential witnesses with brief summaries of their expected testimony, 3) briefs on any evidentiary disputes, and 4) proposed jury instructions excluding any references to liability under the FLSA, as that has already been established. Courtesy copies should be provided to the court.
