Opinion
28462/11
12-19-2012
Rosemond Carol Altamirano, Plaintiff, v. Omni Childhood Center, Inc. and Feigi Halberstam, , Defendant.
Counsel for Plaintiff: David Harrison, Esq. Harrison, Harrison & Associates 110 State Highway 35, 2nd Floor Red Bank, NJ 07701 888-239-4410 Counsel for Defendant: Micahel J. Halberstam, Esq. 2314 Avenue O Brooklyn, New York 11210 718-998-1415
Counsel for Plaintiff: David Harrison, Esq. Harrison, Harrison & Associates 110 State Highway 35, 2nd Floor Red Bank, NJ 07701 888-239-4410 Counsel for Defendant: Micahel J. Halberstam, Esq. 2314 Avenue O Brooklyn, New York 11210 718-998-1415 Karen B. Rothenberg, J.
Upon the foregoing papers, defendant Feigi Halberstam (Halberstam) moves, pursuant to CPLR 3212, for summary judgment dismissing the complaint of plaintiff Rosemond Carol Altamirano (plaintiff) insofar as asserted against her for "failure to state a claim." Plaintiff cross-moves, pursuant to CPLR 3212, for summary judgment against Halberstam and defendant Omni Childhood Center, Inc. (Omni) (defendants) on her claims for underpayment of wages and breach of contract based upon her early termination as a special education teacher.
The motion to dismiss is analyzed pursuant to summary judgment standards inasmuch Halberstam relies on both the allegations of the complaint as well as evidence in the record.
Facts
In or about 2008, plaintiff, a Special Education Itinerant Teacher (SEIT), began working part-time for Omni, a special education program provider and contracted agency of the New York City Department of Education (DOE), performing "one-on-one SEIT services with special needs children." As of March 1, 2009, plaintiff began working as a full-time salaried employee. In September, 2009, Omni offered plaintiff full-time employment for the upcoming school year. Accordingly, Omni and plaintiff entered into a contract stipulating, among other things, that plaintiff would be compensated $47,000 for ten months of work to be paid over a twelve-month period in bi-monthly installments.
On February 2, 2010, after having worked only five months of her contract, Omni terminated plaintiff on the grounds that her temporary teaching certificate had expired on January 31, 2010. In December, 2011, plaintiff commenced this action against Omni and Halberstam, Chairman or Chief Executive of Omni, seeking $11,559.08 in unpaid wages, $11,559.08 in liquidated damages, and interest and attorney's fees for the five months she worked, under Labor Law §§ 191 and 193, and $23,500 for breach of contract, representing the remaining salary she would have received had she not been terminated.
Subsequently, some discovery was exchanged. Thereafter, Halberstam moved for summary judgment dismissing the action insofar as asserted against her for failure to state a cause of action, and plaintiff cross-moved, pursuant to CPLR 3212, for summary judgment on her causes of action for unpaid wages and breach of contract.
Halberstam's Motion to Dismiss
Halberstam moves to dismiss the complaint insofar as asserted against her in her individual capacity. In support of her motion, defendant first notes that the complaint with respect to her alleges that: "[d]efendant Feigi Halberstam is the Chairman or Chief Executive Officer of [d]efendant Omni . . . ," and that she has "at all relevant times . . . exercised the power to control the wages and working conditions of [p]laintiff." However, Halberstam argues that the complaint fails to allege that she "performed any action with respect to the complaint except as an employee of defendant Omni . . ." In this regard, Halberstam explains that while her discovery demand specifically sought any evidence of an agreement between herself and plaintiff, but for her signature as "the officer" on plaintiff's paychecks, plaintiff's response to her discovery demand does not contain her name in any of the documents produced, including the subject employment contract. Halberstam also points out that the allegations of the complaint asserted against her are based solely upon her status as an officer of Omni - as opposed to any claims that she negotiated the contract with plaintiff, terminated plaintiff, or was personally involved "in anything which is alleged in the complaint to have occurred in this matter." In particular, Halberstam asserts that an officer or employee of a corporation cannot be held liable for the actions of a corporation, unless those actions come under a specific legal exception.
In opposition, plaintiff argues that Halberstam should not be dismissed from the action because she is an "employer" under both the Labor Law and the Fair Labor Standards Act (FSLA) - namely an individual officer, director, or executive of a corporation who possesses operational control over the corporation's employees. In support of her argument, plaintiff points to a November 17, 2010 New York City Department of Education Audit Report of Omni which states that Halberstam is the owner, President, and Executive Director of Omni, as well as a Supervising Teacher at Omni. Specifically, the audit report states that as owner, Halberstam was salaried in two positions: Executive Director and Supervising Teacher. The audit report also states that as a Supervising Teacher, Halberstam's duties included "coordinating all records for the SEIT program in addition to [the] supervision of teachers and children." Counsel for plaintiff asserts that since plaintiff was a SEIT teacher and Halberstam coordinated the SEIT program, including supervising the teachers and children, Halberstam is an employer within the meaning of the Labor Law. Counsel for plaintiff also asserts that inasmuch as "Halberstam had and exercised significant operational control an controlled the working conditions of [p]laintiff and . . . Omni's other employees . . . Halberstam was, at all times relevant, [p]laintiff s employer within the meaning of NYLL, and as such . . . is not entitled to [s]ummary [j]udgment." In her own sworn affidavit, plaintiff asserts that Halberstam "is the owner, operator, and manager of . . . Omni [and] [] exercises control over the day-to day management of Omni and has, and exercises, the power to hire and fire Omni's employees."
In reply, Halberstam asserts that since this is an action for breach of contract as opposed to an action under the Labor Law, it may not be brought against her.
"Labor Law art. 6 regulates the payment of wages by employers" (Pachter v Bernard Hodes Group, Inc., 10 NY3d 609, 614 [2008]). The term "employer" under the Labor Law "includes any person, corporation, limited liability company, or association employing any individual in any occupation, industry, trade, business or service" (Labor Law § 190 [3]). The test for determining whether a person is an employer under Article 6 is the same "economic reality" test courts use in analyzing employer status under the Fair Labor Standards Act (Lauria v Heffernan, 607 F Supp 2d 403, 409 [ED NY 2009]; see Herman v RSR Servs. Ltd., 172 F3d 132, 139 [2d Cir 1999]). This test "looks to whether the alleged employer: (1) had the power to hire and fire the employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; (4) and maintained employment records (id. [internal quotation marks and citations omitted]) (Herman, 172 F3d at 139). Further, the type of control possessed by an employer need not be absolute; it "may be restricted, or exercised only occasionally, without removing the employment relationship from the protections of the FLSA, since such limitations on control do[] not diminish the significance of its existence" (Herman, 172 F3d at 139 [internal quotation marks and citations omitted]). In addition, "[n]o one of the four factors is dispositive, and the question of employer status turns upon the totality of the circumstances" (Lauria, 607 F Supp 2d at 409 id.). Thus, "any relevant evidence may be examined so as to avoid having the test confined to a narrow legalistic definition" ( Herman, 172 F3d at 139). In sum, "the overarching concern is whether the alleged employer possessed the power to control the workers in question, with an eye to the economic realities presented by the facts of each case" (Lauria, 607 F Supp 2d at 409 [internal quotation marks and citations omitted]).
Halberstam has made a prima facie showing, via the complaint, her affidavit and the documentary records before the court that the "economic realities" present here warrant the dismissal of the complaint insofar as asserted against her. Halberstam has demonstrated that she merely signed plaintiff's paychecks, a ministerial act, as an officer of Omni. In response, plaintiff has failed to rebut this showing. Although plaintiff relies on a statement in the November, 2010 audit report indicating that Halberstam "coordinated all the records of the SEIT program in addition to [the] supervision of teachers and children," the broad statement in the report fails to establish that defendant controlled plaintiff's wages and working conditions, or formed her rate of pay. Further, plaintiff's statement that Halberstam had the power to hire and fire employees is without any support in the record, including the audit report. Nor does the report establish that Halberstam maintained any employment or work relationship with plaintiff. Notably, Halberstam states in her affidavit that she never met plaintiff, which plaintiff does not dispute. Further, plaintiff has failed to show that Halberstam negotiated her contract, knew of, participated in or ordered plaintiff's wage deductions, or was involved in the determination to terminate plaintiff. Inasmuch as Halberstam has established that she was not an "employer" under the Labor Law, which plaintiff has failed to rebut, Halberstam's motion to dismiss to complaint insofar as asserted against her is granted.
Plaintiff's Cross Motion
A. Withheld Wages
Plaintiff seeks summary judgment on her claim for delayed payment of wages and illegal deduction of wages under Labor Law §§ 191 and 193, respectively. First, she points out that the contract rate of pay was $47,000 for 10 months of work to be paid out over 12 months, equaling $3,916.66 per month. Based upon the foregoing, she seeks $11,559.08 for withheld wages, namely $23,500 (half of the contract amount) less $11,940 (the amount she was paid), totaling $11,559.08. She also seeks $11,559.08 in liquidated damages, as well as interest and attorney's fees.
In opposition, defendants argue that plaintiff admits that she was employed pursuant to a contract, that the contract was not ambiguous, and that "[p]laintiff does not allege that she was not paid according to [the terms of the contract] and "does not explain why she never indicated any objection to the . . . checks she received." Rather, defendants assert that plaintiff merely argues that the contract was breached.
In addition, defendants argue that plaintiff's claims are not covered under Article 6 of the Labor Law because as a professional working in a position requiring state certification who earns more than nine hundred dollars per week she is not a "clerical or other worker" as defined under Labor Law § 190 (7). Further, they assert that the FSLA provides that professional workers are separately exempt from its provisions (29 USC § 213).
Labor Law § 190, entitled "Definitions," states in section 7 that a "[c]lerical or other worker" includes all employees not included in subdivisions four, five and six of this section, except any person employed in a bona fide executive, administrative or professional capacity whose earnings are in excess of . . . nine hundred dollars a week." Sections four, five and six define manual workers, railroad workers, and commission salesmen, respectively.
Plaintiff replies that she was an "employee" as defined by Labor Law § 190 (2), which includes "any person employed for hire by an employer in any employment"; that she was not an exempt professional under Labor Law § 190 (7) because she earned less than $900 per week; and that therefore, as a non-exempt employee, her wages are protected under Labor Law § 191(1) (d), among other Labor Law provisions, which required defendants to pay her wages in accordance with the agreed terms of her employment. Further, plaintiff asserts that inasmuch as defendants have failed to raise any other defenses, and since they have implicitly admitted their failure to pay her her wages by raising the "professional" exemption, she is entitled to summary judgment on her claim for "underpayment" of wages.
Plaintiff also contends that even assuming she was an exempt professional under Labor Law § 191, she is a covered employee under Labor Law § 193, which protects all employees, including professionals, and prohibits employers from making deductions, with limited exceptions, from the wages of employees. Finally, plaintiff asserts that if her Labor Law claims are not viable, she is nevertheless entitled to $11,559.58 in unpaid wages based upon her breach of contract claim because defendants have not raised a question of fact with respect to their failure to pay her the full amount of wages due under the contract for the period of September, 2009 through January, 2010.
In order to make out any claim under Article 6 of the Labor Law, a claimant must first establish that he or she is an "employee" as that term is defined in the statute. As an initial matter, defendants correctly argue that plaintiff is not a "clerical or other worker" within the meaning of Labor Law § 190 (7). "Clerical or other worker" includes all employees not included in subdivisions four (manual workers), five (railroad workers) and six (commission salesmen) of this section, except any person employed in a bona fide executive, administrative or professional capacity whose earnings are in excess of . . . nine hundred dollars a week." Plaintiff does not dispute that she is a professional, namely a licensed and (formerly) certified special education teacher. Moreover, her contract guaranteed her more than $900 a week, based upon a total salary of $47,000 for a ten-month period. Thus, she does not qualify as a "clerical or other worker." As such, she is " expressly excluded' from the protections of Labor Law § 191" (Eden v St. Luke's-Roosevelt Hosp. Ctr., 96 AD3d 614, 616 [2012], citing Pachter, 10 NY3d at 616). Thus, plaintiff's claim for withheld wages under Labor Law § 191 is dismissed.
However, "Labor Law § 193 provides that no employer shall make any deduction from the wages of an employee' unless those deductions are made in accordance with the provisions of any law or any rule or regulation issued by any governmental agency' or are expressly authorized in writing by the employee and are for the benefit of the employee'" (Gennes v Yellow Book of NY, Inc., 23 AD3d 520, 521 [2005]). "Labor Law § 190 (2) defines the term employee as any person employed for hire by an employer in any employment'" (Corcoran v GATX Corp., 49 AD3d 1174, 1176 [2008], lv dismissed 10 NY3d 909 [2008]). Further, "Labor Law § 193 applies equally to all employees as defined in section 190 (2)" (id. [internal quotation marks and citations omitted]; see also Tortorella v Postworks NY LLC, 2011 NY Slip Op 32014 [U],*18 [Sup Ct, New York County [July 13, 2011], citing Pachter, 10 NY3d at 614 ["(Labor Law §) 193 applies to employees notwithstanding their positions as executives or managers"]). Moreover, "[w]ages are defined in Labor Law § 190 (1) as the earnings of an employee for labor or services rendered, regardless of whether the amount of earnings is determined on a time, piece, commission or other basis" ( Gennes, 23 AD3d at 521 [internal quotation marks and citations omitted]).
In order to make a prima facie showing for relief under this section of Article 6, plaintiff must demonstrate that defendants improperly withheld wages or failed to pay her the wages to which she was entitled (Konidaris v Aeneas Capital Mgmt., LP, 8 AD3d 244, 244 [2d Dept 2004] ["The Supreme Court providently granted the plaintiffs cross motion for leave to amend the complaint to assert additional claims pursuant to Labor Law article 6 for unpaid or improperly withheld wages]; Edlitz v Nipkow & Kobelt, Inc., 264 AD2d 437, 440 [2d Dept 1999] [Deduction withheld from plaintiffs wages due to a customer's failure to pay defendant violated Labor Law § 193]; Wachter v Kim, 82 AD3d 658, 663 [1st Dept 2011] [where "contract" provided that plaintiff"shall" receive aggregate cash compensation of not less than $2 million and a prorated portion in 2007, and that any shortfall "shall be payable" to plaintiff by defendant, such were "sums certain" that defendant had to pay and had no discretion not to pay, and which constituted wages protected under Labor Law § 193]; Tuttle v Geo. McQuesten Co., 227 AD2d 754, 756 [3d Dept 1996] [summary judgment appropriately granted on plaintiff's claim under Labor Law § 193 based upon his employer's withholding of deferred payments which he had earned]), as opposed to merely demonstrating that a specific deduction was made from her wages (Tortorella, 2011 NY Slip Op 32014 [U], *18] ["Section 193 . . . prohibits the withholding of wages and not simply a specific deduction as argued by the plaintiffs"]; but see Miles A. Kletter, D.M.D. & Andrew S. Levine, D.D.S., P.C. v Fleming, 32 AD3d 566, 567 [3d Dept 2006] [Labor Law § 193 inapplicable because claim that plaintiff withheld some of defendant's pay to compensate other dentists for the correction of his work merely amplified his breach of contract claim that plaintiff improperly calculated the net amount upon which his percentage fees were based - dispute as to the calculation of the next amount does not reflect a deduction from wages within meaning of statute]).
Here, plaintiff falls within the definition of an employee under Labor Law § 190 (2). She has also made a prima facie showing through her affidavit that she has been underpaid in the amount of $11,559.08 for the five months that she worked, beginning September, 2009 and ending January 31, 2010. In opposition, defendants have failed to raise an issue of fact demonstrating that plaintiff is not an employee. Further, defendants have failed to provide any reason for withholding plaintiffs wages. As noted above, they assert (incorrectly) that "[p]laintiff does not allege that she was not paid according to [the terms of the contract]." While defendants also argue that plaintiff "does not explain why she never indicated any objection to the . . . checks she received," but merely argues that the "contract was breached," this does not serve as a defense to plaintiff's claim. Based upon the foregoing, plaintiff has established that defendants violated Labor Law § 193 by deducting wages from her pay absent a statutory basis.
Although plaintiff is entitled to recover for withheld wages, she is not entitled to an award of $11,559.08. Under the contract, plaintiff was promised $47,000 for ten months of work to be paid over a period of twelve months. As such, her monthly salary was $3,916.66. Thus, for a period of five months, she should have been paid $19,583.30 ($3,916.66 x 5 months). However, upon her termination, it is undisputed that she was only paid $11,940.92 for the five months she worked. Thus, she is entitled to $7,642.38 (the difference between $19,583.30 and $11,940.92).
Further, under Labor Law § 198 (1-a), if a claimant establishes a violation of Labor Law § 193, he or she is entitled to liquidated damages, prejudgment interest, and attorney's fees. In this regard, § 198 (1-a) provides that: "[i]n any action instituted in the courts upon a wage claim by an employee . . . in which the employee prevails, the court shall allow such employee to recover the full amount of any underpayment, all reasonable attorney's fees, prejudgment interest as required under the civil practice law and rules, and, unless the employer proves a good faith basis to believe that its underpayment of wages was in compliance with the law, an additional amount as liquidated damages equal to one hundred percent of the total amount of the wages found to be due." Here, plaintiff has established that defendant willfully made the deductions, and defendants' have failed to rebut this showing. Thus, plaintiff is entitled to liquidated damages in the amount of $7642.38, in addition to attorney's fees and pre-judgment interest (Gebhardt v Time Warner Entertainment-Advance/Newhouse, 284 AD2d 978 [2001], citing Labor Law § 198 [1-a]; Gottlieb v Laub & Co., 82 NY2d 457, 459 [1993]). Thus, a hearing must be conducted regarding the reasonable value of attorney's fees.
B. Breach of Contract
With respect to her breach of contract claim, plaintiff seeks $23,500 - the salary she would have been paid had she worked the remaining five months of her contract, plus interest and costs. Specifically, she argues that since she worked five months of the ten month contract period pursuant to the clear and definite terms of the contract, she is entitled to one-half of $47,000, or $23,500 because defendants terminated her before June, 2010. She also asserts that to the extent that the contract is ambiguous, it must be construed against defendants (the drafters).
In addition, plaintiff argues that her failure to renew or extend her teaching certificate does not provide a valid basis for her termination because there is no provision in the contract requiring her to renew her teaching certificate during the 2009-2010 school year. In support of this claim, plaintiff annexes a letter from the New York City Department of Education (the DOE), dated October 2009, which states, in pertinent part: "If you do not obtain and present to the DOE by June 30, 2010, valid certification effective as of 9/1/2009 in your license area, you will be terminated from the payroll at the end of the 2009-2010 school year." In addition, plaintiff annexes an undated, unaddressed notification from the United Federation of Teachers (the UFT) stating: "[t]he DOE sent a fourth reminder to more than 500 new teachers whose jobs are at risk. If you received this letter, you must complete your state certification requirements before the end of the school year or you will be removed from payroll on June 28." Plaintiff contends that both the DOE and UFT letters confirm that teachers whose certificates expire mid-year may only be "terminated at the end of the year (emphasis added)." She also asserts that the expiration of her teaching certificate mid-term did not affect her ability to perform work for defendants or defendants' ability to bill for her work, and that since she could have performed her contractual duties, defendants breached the contract.
In opposition to this branch of plaintiff' cross motion, defendants argue that plaintiff was terminated because she failed to maintain her teaching certification as required by Education Law § 4410 (1) (k). Defendants also assert that plaintiff's argument that the rules of the DOE allow her to continue in her employment (without certification) until the end of the school year is inapplicable here because plaintiff is not an employee of the DOE.
In reply, plaintiff reiterates that although she was a certified special education itinerant teacher when she contracted with defendants, there is no provision in the contract which required her to renew her certification during the school year. She asserts that the policies of both the DOE and the UFT state that teaching certificates which expire mid-year are valid through the end of the year.
Education Law § 4410 (1) (k) provides that "Special education itinerent services means an approved program provided by a certified special education teacher on an itinerant basis in accordance with the regulations of the commissioner...'". In general, under the common-law rule, compensation "has historically [been] denied to unlicensed providers of services for which a regulatory license is required" (Goldman Metroscan Imaging, P.C. v GEICO Ins. Co., 13 Misc 3d 35 [2006], citing Johnston v Dahlgren, 166 NY 354, 358 [1901] [statutory prohibition barring fraudulently incorporated medical corporation from recovering assigned first-party no-fault benefits applied retroactively to medical services rendered prior to the effective date of regulation]). Here, plaintiff failed to renew her license, which violated the Education Law and provided defendants with a valid basis to terminate her without paying her for the last five months of her contract (Johnston, 166 NY at 358 [failure of plumbers to obtain license required by statute precluded them from recovering under contract for work performed]). Plaintiff's claim that the DOE and UFT renewal notifications prevent a teacher from being terminated based upon a lapsed certification is misplaced. A reasonable reading of these notifications indicates that their purpose is to inform/warn teachers to renew their certifications as a condition of their continued employment. Even if plaintiff's interpretation of these notifications is credited, neither the letters nor the contract preclude defendants from terminating plaintiff from employment based upon a lapsed certification.
The commissioner refers to the Commissioner of the New York State Department of Education (see Matter of Mid Is. Therapy Assoc., LLC v New York State Dept. of Educ., 99 AD3d 1082, 1084 [3d Dept 2012] ; Cooke Ctr. for Learning & Dev. v Mills, 19 AD3d 834 [3d Dept 2005]).
Moreover, "where an action is based upon a contract which violates public policy or which is being used to circumvent public policy, courts have refused to enforce such a contract and have left the parties where they stand" (Goldman Metroscan Imaging, P.C., 13 Misc 3d at 39). Here, permitting a special education teacher to continue teaching special needs children without the proper state certification clearly undermines the public policy considerations involved here, namely ensuring that special needs children receive the proper guidance and instruction by qualified, certified professionals. Based upon the foregoing, plaintiff has failed to make a prima facie showing that she is entitled to the remaining amount due on her contract for the five months she did not work. Thus, this branch of plaintiff's cross motion is denied.
In sum, the motion of defendant Halberstam is granted. That branch of the cross motion of plaintiff for withheld wages is granted to the extent of awarding plaintiff $7,642.38, liquidated damages in the same amount, and pre-judgment interest and attorney's fees; the amount of attorney's fees to be determined at a hearing before a JHO of this court to hear and report, pursuant to the Order of even date directing same. That branch of plaintiff's cross motion for breach of contract is denied.
This constitutes the decision and order of the court. ENTER, / Karen B. Rothenberg Justice, Supreme Court