Collison v. Wandrd, LLC

Background

Kyle Collison alleged that he worked for WANDRD from approximately May 2021 through August 2023. He worked remotely from New York City. WANDRD first classified him as a 1099 worker and later changed him to a W-2 employee and made him a Financial Planning & Analysis Manager. Collison alleged that he continued performing customer-service work, worked more than 40 hours per week, and was not paid overtime. He also alleged that the earlier classification caused him to pay payroll taxes and miss benefits.

Collison further alleged that WANDRD did not provide required hiring notices or accurate wage statements, did not provide information about continuing health coverage after his employment ended, and treated other customer-service workers more favorably under New York’s pay-equity law. He also alleged that he raised concerns about possible legal and regulatory violations, after which he was excluded from meetings, told he was not a cultural fit, and ultimately terminated.

WANDRD and Austin Cope moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim.

Federal Overtime Claim

The court denied dismissal of Collison’s Fair Labor Standards Act overtime claim against WANDRD. Collison alleged that, during the period when he was a W-2 employee—from approximately May 2022 through the end of his employment—he regularly worked more than 40 hours per week, typically worked 10 to 20 overtime hours per week, and received no additional compensation for those hours. The court held that these allegations were sufficient at the pleading stage. The court noted, however, that Collison had not alleged a federal overtime claim for the earlier 1099 period because he did not allege that he worked more than 40 hours in any week during that period.

Federal COBRA Claim

The court denied dismissal of Collison’s federal Consolidated Omnibus Budget Reconciliation Act claim against WANDRD. Collison alleged that he had health and dental coverage as a W-2 employee but received no information about continuing that coverage after his employment ended.

The defendants argued that Collison had not adequately alleged that WANDRD had at least 20 employees, which is relevant to the federal law’s small-employer exception. The court held that this exception is an affirmative defense: the defendant must raise and establish it, and the plaintiff does not have to plead that the exception is unavailable to state a claim. The court also declined to rely at the motion-to-dismiss stage on facts offered by the defendants that were not alleged in the complaint or incorporated into it.

Claims Against Austin Cope

The court granted without prejudice dismissal of all claims against Cope. Collison alleged that Cope was his primary manager and supervisor and, on information and belief, had authority over hiring, firing, wages, and working conditions. The court held that these allegations were boilerplate and did not plausibly show that Cope was an employer under the Fair Labor Standards Act or the New York Labor Law. The court therefore dismissed the claims against Cope without prejudice.

New York Claims

The court retained jurisdiction over the state-law claims because they arose from the same facts as the federal claims. The court denied dismissal of Collison’s New York overtime claim because the pleading standard is materially the same as for the federal overtime claim.

The court granted without prejudice dismissal of the third claim, which alleged harm from Collison’s classification as a 1099 worker. The court concluded that Collison did not allege that WANDRD deducted money from his wages and failed to pay it to tax authorities, and that the New York statutes specifically addressing employee misclassification apply to industries not alleged to be involved here. The court also noted that Collison did not allege a claim under Internal Revenue Code § 7434(a).

The court denied dismissal of the fourth and fifth claims. Collison alleged that WANDRD failed to provide the required hiring notice and failed to provide wage statements accurately showing his pay rate, hours, and deductions.

The court granted without prejudice dismissal of the sixth claim under New York’s pay-equity statute. Collison alleged that other customer-service employees performed substantially similar or lower-level work, were classified as W-2 employees with benefits, and, on information and belief, received higher hourly wages. The court held that he did not allege that he belonged to a protected class or that employees outside that protected class who performed equal work received higher pay.

The court denied dismissal of the seventh claim for whistleblower retaliation. Collison alleged that he raised concerns about WANDRD’s compliance with legal and regulatory requirements, including sales- and consumption-tax requirements. He also alleged that, within weeks, he was excluded from meetings, criticized as not being a cultural fit, threatened with being classified as a 1099 worker again, and terminated. The court held that these allegations stated a claim under New York Labor Law § 740.

The court denied dismissal of the eighth claim concerning federal and state insurance-continuation notice requirements.

Disposition

Judge Liman ordered that the defendants’ motion to dismiss was GRANTED IN PART and DENIED IN PART. The court denied the motion as to the first, second, fourth, fifth, seventh, and eighth claims against WANDRD. The court granted without prejudice the motion to dismiss all claims against Cope and the third and sixth claims. Collison was given 30 days from the date of the opinion to file an amended complaint addressing the dismissed claims. The opinion stated that it did not resolve the merits of the defendants’ separate request for sanctions.