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Overtime Suit Dismissed - Plaintiff fails to allege that she was an employee entitled to, among othe

The Plaintiff in this case here brings a collective action and class action to complain of violations of Fair Labor Standards Act ("FLSA") and the failure to pay minimum wage, claims for overtime wages, gap time and record-keeping violations under the New York Labor Law ("NYLL"). Here Plaintiff's complaint is dismissed for the failure to state a claim - specifically discussed here is the fact that Plaintiff cannot state in a legal conclusion that he or she simply worked more than forty (40) hours a week.

The Court recites the following relevant facts:

Plaintiff was a Trainee from August 2014 to around October 2014, and signed a Training Agreement on June 30, 2014, which set forth the terms of her relationship with FDM during her training period. (See id. ¶ 5; Ascher Decl. Ex. A, "Training Agmt," docket entry no. 29-1.) The Agreement provides that "nothing in this Agreement shall give rise to a relationship of employee and employer between you and FDM, or between you and an FDM client with whom you may be on Placement. To the extent that we choose to offer any work to you for a Placement, such matters will be set out in an employment contract and separate documentation." (Id. at 4.) ...The Training Agreement permits termination by the Trainee, with no obligation to pay any costs, within 14 days of the date of the Training Agreement or if the Trainee is not placed with an FDMclient for the first 90 days after "sign-off" of completion of the training. (Id.) The training itself lasts between two and six months, and "consists of foundation training followed by a specialized training program," and teaches Trainees to "perform professional business and IT consultancy" for FDM's clients. (FAC ¶¶ 25-27.)...Plaintiff's Employee Agreement provides that, if an FDM Consultant does not complete the minimum two-year commitment, the Consultant must pay a Termination Fee of $30,000 if the Consultant leaves employment within the first year, and $20,000 in the event the Consultant leaves employment in the second year. (See Employment Agmt.) Plaintiff resigned from her FDM Consultant position shortly before the start of her second year, and paid a Termination Fee of $20,000 shortly after resigning. (FAC ¶ 60.)

The latter provision in the contract signed by the Plaintiff is sometimes referred to as golden handcuffs, providing an incentive for the employee to finish his or her tenure at an otherwise at will job. Although such contracts have a good faith provision, it may be that an employee finds him or herself in a situation where the employee feels that they were unfairly terminated in order to prevent the employee from obtaining the benefit of such a contract. Such contracts (kudos to the draftsman) clearly state that there is no employee-employer relationship but rather a training relationship between the two parties.

The Defendants say, inter alia, that Plaintiff fails to state a claim under 12(b)(6). On a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 570 (2007)) (internal quotation marks omitted).

Here, there is a threshold issue as to whether Plaintiff was an employee, therefore entitled to overtime and minimum wages, or a trainee. The Second Circuit elaborately discussed the rule and the attendant test to determine whether an individual is an employee (in the context put forward by the Second Circuit, the person who claimed employee status was characterized as an intern) entitled to overtime wages/minimum wage:

The Second Circuit has instructed courts to use a "primary beneficiary test," derived from precedents involving trainees and interns, that considers a number of "non-exhaustive" factors, to determine whether an individual, such as an intern, is an employee. See id. at 536-PARK.MTD.WPD 38.[1] Any such inquiry is "high context-specific" and requires consideration of the "totality of circumstances," to determine, given the economic reality of the relationship, who was "the primary beneficiary of the relationship." Id. at 535-36. In the trainee context specifically, in applying the Glatt test, courts have considered, among other factors, whether: (1) the trainees replace regular employees, (2) the trainees have an expectation of compensation, (3) the training sessions are similar to ones offered in vocational school, and (4) whether the employer received an immediate advantage from the trainees' work. Warman v. Am. Nat'l Standards Inst., No. 15 CV 5486, 2016 WL 3647604, at *4 (S.D.N.Y. Jun. 27, 2016) (citing Glatt, 811 F.3d at 536).

Applying this test, the Plaintiff did not meet the minimal threshold of stating that she was an employee entitled to, among other things, overtime wages. Plaintiffs seeking overtime wages and seeking to redress violations of the Fair Labor Standards Act or New York Labor Law for overtime violations must understand the nature of their employment and should consult an attorney before signing such employment contracts.

Should you feel that you are being subjected to Fair Labor Standards Act (FLSA) Violation(s) or denied overtime wages, please contact the office for a free evaluation today: 631-450-2515.

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