Cronk v. Hudson Valley Roofing & Sheetmetal, Inc.

Background

Thomas Cronk sued Hudson Valley Roofing & Sheetmetal, Inc., Palisades Equipment Co., Inc., Hayden Building Maintenance Corporation, and Gregory P. Hayden under the Fair Labor Standards Act (FLSA) and the New York Labor Law. According to the complaint, Cronk worked for the defendants from 1985 through January 24, 2020 and regularly worked about 55 hours per week. He alleged that the defendants failed to keep records of his hours, failed to pay the required overtime rate for hours above 40 per week, and failed to provide wage statements containing required information.

The parties first submitted a proposed settlement resolving the wage claims. In a January 2021 order, the court denied that proposal without prejudice because the parties had not provided enough information to evaluate whether the amount was fair and reasonable. The parties then submitted a revised settlement agreement and increased the proposed payment by more than $16,000. The parties also had a separate confidential agreement concerning Cronk’s discrimination claims, which the opinion says were still pending before the Equal Employment Opportunity Commission as of February 2021.

Court’s analysis

Because the FLSA requires court approval of certain settlements, the court reviewed whether the revised agreement was fair and reasonable. The agreement required the defendants to pay Cronk $20,000, consisting of $10,000 in wages and $10,000 in liquidated damages. Cronk’s counsel waived attorney fees related to the FLSA claim.

The court addressed the parties’ proposed use of the fluctuating-workweek method to estimate overtime damages. Under that method, an employee’s fixed weekly pay is divided by the total hours worked, and overtime is generally paid at an additional one-half of the resulting regular hourly rate. The court held that the Department of Labor regulation describing the method could not itself be applied retroactively to a misclassification dispute because the regulation’s requirements—including contemporaneous overtime payments and a clear mutual understanding that the salary excluded overtime premiums—were not satisfied here. But the court concluded that the Supreme Court’s decision in Overnight Motor Transportation Co. v. Missel independently supported using the method to calculate damages in this case.

The parties stipulated that Cronk’s hours fluctuated, that he received a fixed salary regardless of the hours worked, that the salary exceeded the applicable minimum wage when divided by the hours worked, and that the parties had agreed the salary covered all hours worked in a week. Based on those facts, the court found the method appropriate for estimating Cronk’s damages under both the FLSA and New York law.

The parties estimated Cronk’s maximum possible trial recovery at $155,306. The court found their calculations accurate and noted that the $20,000 settlement represented just under 13 percent of that estimate. The court considered the risks that Cronk could be found exempt from overtime requirements or that a jury could reject his account of his hours and compensation. In light of those risks, the court found the settlement amount fair and reasonable.

The court also found that the settlement was negotiated competently, in good faith, and at arm’s length, with no reason to believe there was fraud or collusion. The court was not aware of other similarly situated employees, so Cronk would be the only employee affected by the settlement and case closure. The release was approved because it covered only claims asserted in this action, which concerned wage-and-hour issues. The court did not need to review an attorney-fee request because Cronk’s counsel waived those fees.

Disposition

Judge Kenneth M. Karas granted the parties’ request to approve the revised settlement agreement. The court directed the Clerk of Court to close the case. This order approved a negotiated resolution and did not determine whether the defendants violated the FLSA or New York Labor Law.