Neor v. Acacia Network, Inc.

Background

Giitou Neor and Tyrone Wallace brought claims for themselves, a proposed collective under the Fair Labor Standards Act, and a proposed class under New York law against Acacia Network, Inc., Acacia Network Housing Inc., Promesa Residential Health Care Facility, Inc., and John Doe Corporations 1-100. They alleged violations of the Fair Labor Standards Act and the New York Labor Law, including unpaid work time, overtime, spread-of-hours pay, late payment of wages, and failures involving wage notices and wage statements.

Neor alleged that she worked during unpaid lunch breaks and after scheduled shifts but was sometimes required to clock out before finishing work. Wallace made similar allegations about working during lunch breaks and after his scheduled shift. Both plaintiffs also alleged that Acacia used a timekeeping policy that rounded clock-in times up and clock-out times down, systematically reducing the hours for which employees were paid. They further alleged that Acacia failed to provide required wage notices and accurate wage statements.

Acacia moved for partial dismissal under Federal Rules of Civil Procedure 12(b)(1), which concerns subject-matter jurisdiction, and 12(b)(6), which tests whether a complaint adequately states a claim. The motion addressed claims for untimely wage payments, non-neutral rounding, spread-of-hours compensation, and wage notices and statements. Plaintiffs withdrew the untimely-payment and spread-of-hours claims, so the court did not address them.

Rounding Claims

The court denied Acacia’s motion to dismiss the rounding claims under the Fair Labor Standards Act and New York Labor Law. Rounding can be lawful when it averages out so that employees are fully paid for their actual work time. But the plaintiffs alleged that Acacia’s system rounded clock-in times up to the next quarter hour and clock-out times down to the previous quarter hour.

The court found that these allegations described a policy that would necessarily and consistently underpay employees. For example, the complaint alleged that an 8:03 a.m. clock-in was treated as 8:15 a.m., while a 6:10 p.m. clock-out was treated as 6:00 p.m. The court held that the plaintiffs had pleaded enough facts for these claims to proceed past the motion-to-dismiss stage.

Wage Notices and Statements

The court granted Acacia’s motion to dismiss the claims under New York Labor Law § 195 concerning wage notices and wage statements. The court held that the plaintiffs had not plausibly alleged a concrete injury sufficient to establish constitutional standing. A statutory violation by itself is not necessarily a concrete injury.

The plaintiffs argued that inaccurate or missing notices and statements made it harder for employees to challenge Acacia’s wage calculations. The court rejected that argument because the complaint also alleged that Acacia provided wage statements showing fewer hours than the plaintiffs actually worked. In the court’s view, those inaccuracies would have alerted the plaintiffs that they were not being fully paid. The court therefore found that the plaintiffs had not shown a tangible injury or an injury closely related to a traditionally recognized legal claim.

Leave to Amend and Disposition

The court allowed the plaintiffs to replead their claims under New York Labor Law § 195. It concluded that another amendment was not clearly futile and that the plaintiffs had not previously received guidance from the court about the deficiencies in these claims during a motion-to-dismiss process.

The court’s conclusion was that Acacia’s motion for partial dismissal was granted in part and denied in part. The motion to dismiss the unlawful-rounding claims was denied. The motion to dismiss the wage-notice and wage-statement claims was granted. The plaintiffs were granted leave to file a Second Amended Complaint by March 9, 2023, and defendants were directed to answer or otherwise respond by March 30, 2023.