Bemejo v. Shaker Contractors, Corp.

Background

Marco Bemejo and the other plaintiffs sued Shaker Contractors, Corp. and the other defendants under the Fair Labor Standards Act and the New York Labor Law. They alleged seven wage-related claims, including that they were not paid the required overtime rate and that they were paid every two weeks even though New York law required weekly payment for manual workers.

The defendants were served but did not appear, answer, or otherwise respond. The court therefore ordered the plaintiffs to seek a default judgment, which is a judgment based on a defendant’s failure to participate in the case. At a June 16, 2022 hearing, the court determined that the complaint adequately stated all seven claims and that the defendants had notice of the filings and proceedings. The court decided that the plaintiffs were entitled to a default judgment on liability but withheld the damages award while it reviewed the plaintiffs’ calculations.

Regular Rate and Overtime Damages

The plaintiffs generally received a flat daily wage. They proposed calculating their regular hourly rate by dividing the daily wage by eight. The court rejected that method under both the federal and New York rules applicable here.

For purposes of the Fair Labor Standards Act, the court held that a daily-paid employee’s regular hourly rate is calculated by dividing total compensation received during the workweek by the total hours worked during that week. The court reached the same conclusion under the New York Labor Law because the complaint did not allege facts showing that the hospitality, building-services, or farm-worker wage orders applied. The court determined that the miscellaneous-industries wage order governed instead, and that order also required dividing total weekly earnings by total weekly hours worked. Segundo Tacuri, who was alleged to have been paid hourly, was not affected by this particular calculation issue.

The plaintiffs also calculated unpaid-overtime damages by multiplying overtime hours by the full overtime rate of one and one-half times the regular rate. The court rejected that approach for employees paid a daily wage. It concluded that the daily payments compensated the plaintiffs at their regular rate for all hours worked, including overtime hours. Therefore, the additional unpaid overtime amount was one-half of the regular rate multiplied by the overtime hours, representing the difference between the regular rate and the required overtime rate.

Liquidated Damages

Liquidated damages are an additional amount authorized by law for certain wage violations. The court held that, under the New York Labor Law, liquidated damages for late payment could not exceed the amount of wages actually paid late. The plaintiffs had calculated late-payment liquidated damages using the daily wage divided by eight, which produced an amount greater than the late payments they actually received.

The court divided the compensation due over a two-week period into regular pay and overtime additions for each week. It concluded that the first week’s regular pay was paid late, the overtime additions for both weeks were not paid, and the second week’s regular pay was paid on time. Because liquidated damages could not exceed the total wages found to be due, the plaintiffs’ liquidated damages for late payment could not exceed the first week’s regular wages. Those damages had to be calculated using each plaintiff’s actual regular rate—weekly compensation divided by weekly hours—and the hours worked during the week.

Disposition

The court stated that the plaintiffs were entitled to a default judgment on all counts of the complaint. It also stated that the damages requested in the default-judgment motion were not authorized by the Fair Labor Standards Act and the New York Labor Law. The court ordered the plaintiffs to submit, by December 12, 2022, a revised damages calculation and proposed default judgment consistent with the order. It further ordered plaintiffs’ counsel to appear by telephone on December 21, 2022, to confirm the recalculated damages award. The opinion does not state a final dollar amount of damages.