Yuan v. & Hair Lounge Inc.

Background

Dong Yuan and Xuanhao Xu brought claims against & Hair Lounge Inc., & Hair Lounge II Inc., Min Fei Chen a/k/a Wendy Chen, Chen Lung Lu a/k/a Edison Lu, and other named defendants under the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL). The complaint alleged minimum-wage, overtime, spread-of-hours, and notice violations. The defendants moved for summary judgment on whether Yuan was an employee under the FLSA and NYLL.

The parties disputed nearly every material fact about Yuan’s relationship with the defendants. They agreed that the two salon companies operated hair salons in Manhattan. The defendants said Yuan worked for them from April 1, 2017, until after July 2018, while Chen testified that she hired him in August 2016 and Yuan said he worked for the defendants during periods from August 2016 through August 2017 and from April 2018 through October 2018. Yuan began with little salon experience, sometimes purchased goods for salon customers out of pocket, and was promoted to hair stylist in July 2018.

Summary-judgment standard

The court explained that summary judgment is appropriate only when the evidence shows no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. The court must view the evidence in the light most favorable to the party opposing the motion. A genuine dispute exists when a reasonable jury could decide the issue for that party.

FLSA analysis

Under the FLSA, whether a worker is an employee depends on the economic reality of the relationship. The court considers the total circumstances, including whether the alleged employer could hire and fire the worker, controlled work schedules or employment conditions, determined the rate and method of payment, and kept employment records. Courts may also consider the worker’s investment in client relationships, ability to work for others, skill and independent initiative, and related circumstances.

The defendants relied on a document identifying Yuan as an independent contractor and stating that he set his own rates and appointment schedule. Yuan denied signing it, and the defendants did not dispute that he never signed it. The court stated that, even if the document were admissible, the parties’ label would not decide whether Yuan was an employee.

The defendants also relied on text messages concerning one dreadlock-repair appointment. The messages showed Yuan setting a $100 rate, but they also showed him asking Chen for permission to schedule the appointment and asking what portion of the payment would go to the defendants. The court found that these messages did not eliminate factual disputes about the defendants’ control over Yuan’s work.

The parties disputed whether Yuan developed an independent client base. Although Yuan occasionally purchased goods for salon customers, he testified that he did so at other stylists’ direction. The court found that this testimony created a factual question about whether those purchases reflected independent client relationships. The defendants also submitted social-media posts advertising Yuan’s dreadlock services. The court found that Yuan clearly advertised independently, but held that this factor alone did not establish independent-contractor status.

The defendants argued that Yuan worked at other salons and took breaks at his own discretion. The court found that the evidence did not establish the absence of a factual dispute on these issues. Some evidence concerned times when Yuan said he was not working for the defendants.

The defendants further argued that Yuan had specialized dreadlock-styling skills. But Chen testified that Yuan was inexperienced in salon work when he began, Yuan testified that he rarely styled dreadlocks in the defendants’ salons, and the record did not clearly show whether he practiced that skill there. Because genuine factual disputes remained, the court denied the defendants’ motion for summary judgment on the FLSA employee-status issue.

NYLL analysis

For the NYLL, courts consider whether the worker worked at his own convenience, was free to take other employment, received fringe benefits, was on the employer’s payroll, and worked on a fixed schedule. The central question is the degree of control exercised by the alleged employer over the work’s results or the means used to achieve them.

For the same reasons discussed in the FLSA analysis, the court found significant disputes about whether Yuan controlled his own schedule and whether he was free to work elsewhere. The court therefore denied the defendants’ motion for summary judgment on the NYLL employee-status issue as well.

Disposition

The court denied the defendants’ motion for summary judgment. It directed the Clerk of Court to terminate the motion at ECF No. 110.