Brain v. The Execu-Search Group, LLC

Background

Katie Brain brought a proposed collective and class action against The Execu-Search Group, LLC (ESG), asserting overtime claims under the federal Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL). Brain alleged that she worked for ESG as a Recruiter from approximately March 2019 through July 2021. ESG classified her as exempt from overtime requirements, paid her a monthly amount called an “advance commission,” and did not pay her overtime.

Brain alleged that she and other Recruiters regularly worked more than 40 hours each week without overtime pay. She estimated that she and an opt-in plaintiff worked 45 to 50 hours or more each week. She also alleged that the monthly payments were more like salaries than genuine commissions, supporting her position that Recruiters were improperly classified as exempt employees.

ESG moved to dismiss the Second Amended Collective and Class Action Complaint under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim.

FLSA overtime claim

The court held that Brain’s allegations were sufficient to plead an FLSA overtime claim. Although allegations that a worker “regularly” worked more than 40 hours may be insufficient by themselves, Brain also alleged that she worked more than 40 hours “each week” and estimated five to ten overtime hours per week. The court concluded that these allegations plausibly stated that her regularly scheduled workweek included more than 40 hours.

The court therefore DENIED ESG’s motion to dismiss Brain’s FLSA overtime claim in its entirety at the pleading stage.

Willfulness and the limitations period

The FLSA generally allows an overtime claim to be filed within two years after it arises. A three-year period applies to a willful violation, meaning the employer knew, or recklessly disregarded, whether its conduct violated the FLSA.

The court held that Brain did not plead enough facts to support willfulness. Her reference to an earlier lawsuit involving ESG did not show that ESG knew or recklessly disregarded the FLSA’s overtime requirements because that earlier lawsuit involved other employment-law claims, not FLSA overtime claims. The court also found that Brain’s allegations that ESG knew facts about her employment, invested in compliance, failed to track hours, and acted willfully were conclusory or unsupported by specific facts.

The court therefore GRANTED ESG’s motion to dismiss as to Brain’s failure to plead willfulness. The standard two-year FLSA limitations period applies. Because Brain filed her initial complaint on September 26, 2022, she cannot maintain an FLSA claim based on ESG’s conduct before September 26, 2020. For opt-in plaintiffs, the relevant period will be measured from the date each plaintiff files written consent to join the action.

The court also rejected Brain’s argument that New York executive orders issued during the COVID-19 pandemic extended the federal FLSA limitations period. The court ruled that those orders did not affect the limitations period supplied by federal law.

NYLL claim and result

The court exercised supplemental jurisdiction, meaning authority to hear a related state-law claim alongside a federal claim, over Brain’s NYLL overtime claim. Because the NYLL claim used the same general overtime framework as the FLSA claim, and because the FLSA claim was not dismissed, the court concluded that the relevant factors favored retaining the NYLL claim.

The court DENIED ESG’s motion to dismiss the NYLL claim. Overall, the motion to dismiss was GRANTED in part and DENIED in part. The FLSA and NYLL overtime claims continue, but Brain’s FLSA claim is limited to conduct occurring on or after September 26, 2020, and the FLSA willfulness theory was dismissed.