Picorelli v. Watermark Contractors Inc.

Background

Jason Picorelli sued his former employer, Watermark Contractors Inc., and Kevin Maher and Hugh Harris under the Fair Labor Standards Act, the New York Labor Law, and a New York wage regulation. Picorelli alleged that he regularly worked more than 40 hours per week but was paid his regular hourly rate instead of the required overtime rate. He also alleged violations involving wage statements, notices, and payroll records. He brought the case for himself and proposed groups of similarly situated hourly employees.

The parties submitted a Proposed Settlement Agreement for court approval. Under the agreement, the defendants would pay $30,000: $10,000 to Picorelli and $20,000 to his attorneys for fees and costs. The court had previously denied approval of the agreement without prejudice and asked for additional information.

Settlement Amount

The court again concluded that it could not determine whether the $10,000 payment to Picorelli was fair and reasonable. Picorelli alleged that he generally worked about 26 overtime hours per week and identified one week in which he allegedly worked about 61 overtime hours, but the parties did not provide documentation showing the total overtime hours, the maximum possible recovery, or the methodology used to calculate the settlement. The later letters submitted by the parties did not supply that information.

The court also noted that the parties did not explain why wage and hour records were unavailable. The parties argued that immediate payment and the possibility of future employment earnings made the settlement preferable to continued litigation, but the court held that litigation costs and uncertainty alone did not justify approval without supporting data.

Attorney’s Fees

The court considered the requested $20,000 in attorney’s fees, which represented approximately two-thirds of the settlement. It explained that courts in the district commonly approve fees of about one-third of an FLSA settlement, although there is no automatic maximum percentage. The court found no extraordinary circumstances supporting a fee twice that customary amount, especially because the case settled in a short time with little, if any, discovery or motion practice.

The attorneys also argued that their fees were justified under the lodestar method, which estimates a reasonable fee by multiplying reasonable hours by reasonable hourly rates. The court found that the requested hourly rates were substantially higher than the rates generally awarded to experienced wage-and-hour attorneys in the district and that the parties had not provided enough information about the attorneys’ backgrounds and experience to support those rates. The billing statement supplied dates, hours, and descriptions of work, but did not resolve the court’s concerns about the fee amount and hourly rates.

Disposition

Judge Kenneth M. Karas denied without prejudice the parties’ request for approval of the Proposed Settlement Agreement. The court stated that the parties may reapply with a more detailed explanation of how the settlement amount was calculated and documentation justifying the requested attorney’s fees.