June 29, 2026|Franchise Frontlines
June 29, 2026 | United States District Court for the Northern District of New York | Slip Copy — Only the Westlaw Citation Currently Available (2026 WL 1864372)
Executive Summary
In a decision available only on Westlaw as a slip copy, U.S. District Judge Elizabeth C. Coombe of the Northern District of New York granted in part and denied in part two Rule 12(b)(6) motions in a putative class and FLSA collective wage-and-hour action brought by traffic-control Flagger Dominick Brandon. Brandon alleged that A.D.A. Traffic Control Ltd. (ADA), which specializes in supplying flaggers to New York State Electric & Gas Corporation (NYSEG), was his direct employer and that NYSEG, the utility on whose jobsites he flagged, was his joint employer under the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL); he also pleaded breach of contract for unpaid prevailing wages, unjust enrichment, and NYLL § 195 wage-notice and wage-statement claims. NYSEG argued that Brandon had not plausibly alleged it was his employer and that no contract obligated it to pay prevailing wages, while ADA challenged Brandon’s standing to bring the § 195 claims and the accuracy of its wage statements. Analyzing the four Carter formal-control factors, the court held on this record that Brandon plausibly alleged NYSEG was his joint employer and denied NYSEG’s motion; it allowed the prevailing-wage breach-of-contract claim to proceed on a third-party-beneficiary theory to the extent premised on alleged “Design Bid Build” agreements, dismissed that claim to the extent premised solely on NYSDOT permits, dismissed the unjust enrichment claim, and denied ADA’s motion to dismiss the § 195 claims.
Relevant Background
Plaintiff Dominick Brandon works as a traffic-control Flagger and was hired by ADA in November 2024. ADA is a company that, according to the complaint, “specializes in providing traffic control services to NYSEG” throughout upstate New York and entered into an agreement to supply NYSEG with Flaggers on NYSEG jobsites located on public roadways. Flaggers redirect traffic away from and cordon off access to those jobsites. Brandon brought this putative class action and FLSA collective on behalf of himself and other similarly situated Flaggers against ADA, which he identified as his direct employer, and NYSEG, which he alleged was his joint employer.
The complaint alleged that both defendants directed, controlled, and supervised the Flaggers’ work. It alleged that NYSEG determined the date, time, duration, and location of shifts; that a NYSEG supervisor would direct Flaggers to a second, third, or fourth jobsite when work finished early; that Flaggers needed a NYSEG supervisor’s permission to take breaks; and that the defendants used a proprietary smartphone application through which Flaggers checked for shifts and input their hours. It further alleged that the defendants jointly set hourly rates of $18.00 for regular hours and $27.00 for overtime, that NYSEG paid ADA an hourly rate pursuant to unit prices set in agreements between the two, and that ADA in turn paid the Flaggers. The complaint also alleged that ADA interviewed and hired Flaggers and that both defendants had the power to hire, fire, and discipline them.
Brandon asserted two FLSA claims for unpaid overtime and minimum wage, seven NYLL claims, a breach-of-contract claim premised on an alleged right to prevailing wages, and an unjust enrichment claim. His prevailing-wage theory relied on three asserted sets of contracts: permits NYSEG obtained from the New York State Department of Transportation (NYSDOT), alleged “Design Bid Build” agreements, and agreements between NYSEG and ADA. NYSEG moved to dismiss the complaint in its entirety under Rule 12(b)(6), and ADA moved to dismiss the breach-of-contract, unjust enrichment, and NYLL § 195 claims. The court noted that NYSEG had been sued as “Avangrid Networks, Inc. d/b/a New York State Electric & Gas Corporation” and directed the caption amended to reflect NYSEG’s proper name.
Decision
Applying the familiar Rule 12(b)(6) standard, the court accepted the well-pleaded factual allegations as true, drew all reasonable inferences in Brandon’s favor, and asked only whether the complaint stated claims plausible on their face under Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. On the central joint-employer question, the court explained that whether an employment relationship exists under the FLSA turns on “economic reality rather than technical concepts” and is a “fact-intensive”, totality-of-the-circumstances inquiry that is “rarely” resolved as a matter of law and “not suitable to resolution on a motion to dismiss,” citing Barfield v. New York City Health & Hospitals Corp. The court measured NYSEG’s alleged conduct against the four Carter factors bearing on the degree of formal control: the power to hire and fire, control over work schedules and conditions of employment, the rate and method of payment, and the maintenance of employment records.
The court found each factor at least plausibly alleged against NYSEG on this record. It treated the first factor as weighing “slightly” in Brandon’s favor, reasoning that although ADA did the hiring and NYSEG characterized its ability to bar particular Flaggers as mere “deauthorization power,” the case NYSEG relied on (Moses v. Consolidated Edison) was decided at summary judgment rather than on the pleadings. Drawing on Ortiz v. Consolidated Edison, the court held that allegations that NYSEG set the time and location of shifts, redirected Flaggers among jobsites, and controlled their breaks satisfied the second factor at the pleading stage; that allegations about the smartphone-app hours, unit-price payments, and jointly set rates satisfied the third under Barfield; and that the app’s hours data, used to confirm hours before NYSEG paid ADA, was enough on the fourth. Concluding that Brandon “plausibly alleged that NYSEG was his joint employer under the Carter factors,” the court found it unnecessary to analyze the Zheng functional-control factors and denied NYSEG’s motion to dismiss the FLSA and NYLL claims.
On the prevailing-wage claims, the court first declined to consider a “Master Services Procurement Agreement” NYSEG had submitted, finding it neither incorporated by reference in nor integral to the complaint. Turning to the merits, the court noted that NYLL § 220 supplies no private right of action but that workers may, “in some cases,” enforce the prevailing-wage requirement through a breach-of-contract claim “relying on their status as third-party beneficiaries,” quoting Walton v. Comfort Systems USA (Syracuse), Inc. It held that permits are not contracts and dismissed the breach-of-contract claim to the extent premised solely on NYSDOT permits, but found the alleged Design Bid Build agreements sufficient to state a third-party-beneficiary claim, reasoning that Brandon had identified the breached provision and plausibly alleged a “public work” contract under the three-prong test of De La Cruz v. Caddell Dry Dock & Repair Co. The court dismissed the unjust enrichment claim, agreeing that equitable relief is unavailable where an adequate remedy at law exists and emphasizing that Brandon failed to oppose the argument, which carried only a “modest” burden.
Finally, the court denied ADA’s motion to dismiss the NYLL § 195 wage-notice and wage-statement claims. On standing, it applied Guthrie v. Rainbow Fencing Inc., which requires a plaintiff to show a “causal connection” between inaccurate notices and a downstream harm rather than a bare “technical violation.” The court held that Brandon’s allegations — that the missing or inaccurate notices prevented him from realizing his true hours, recognizing the underpayment, and taking action to obtain payment — though “sparse,” plausibly alleged injury in fact “in this early procedural posture.” It also held that § 195(3) requires accurate wage statements and that Brandon stated a claim by alleging that his statements did not account for all hours worked.
Looking Forward
Although this case involved a regulated utility and its traffic-control staffing contractor rather than a franchise system, its mechanics may inform how courts approach joint-employer allegations against branded systems and other upstream principals. A worker employed by a downstream contractor named the upstream entity for whom the work was performed and pleaded that it was a joint employer under the FLSA and the NYLL. The court’s analysis was expressly a formal-control inquiry under the four Carter factors, and it declined even to reach the Zheng functional-control test. Franchisors, branded-system operators, and any business that engages contractors, subcontractors, or staffing intermediaries should read the decision as a reminder that, at least on the persuasive reasoning of one district court, allegations of control over scheduling, supervision, pay-setting, and hours records may be enough to keep an upstream principal in a wage case through discovery, even without any finding that it actually employed the contractor’s workers.
The most important practical point is the narrowness of what the court decided. It did not hold that NYSEG employed the Flaggers; it held only that the allegations, taken as true, were plausible enough to survive dismissal and proceed to an economic-reality inquiry on a developed record. Because joint employment is fact-intensive and, as the court stressed, “rarely” resolved on the pleadings, the durable protection for franchisors and principals may lie less in hoping for early dismissal than in the underlying operational record. On that score the decision is instructive for the defense: the court declined to credit the complaint’s group-pleaded “Defendants” allegations where no specific facts tied NYSEG to ADA’s hiring, noting that a repeated “on behalf of” refrain “does not plausibly allege NYSEG’s control.” Maintaining a clean separation of the contractor’s or franchisee’s authority over hiring, firing, discipline, scheduling, supervision, wage-setting, and recordkeeping — and documenting it — could make the difference when the economic-reality test is applied on a full record.
The ruling also offers defense-side lessons on the contract and equitable theories. The court confirmed that a regulatory permit is not a contract and cannot support a third-party-beneficiary breach claim, and it pared away the unjust enrichment claim as duplicative where adequate legal remedies existed — points principals may press to narrow these cases even when a joint-employer claim survives. At the same time, the court’s treatment of the alleged Design Bid Build agreements is a caution that project, service, and subcontractor agreements can create third-party-beneficiary exposure for workers who never signed them, particularly where prevailing-wage obligations may be read into public-work contracts. Franchisors and principals may wish to review the wage and benefit language in their upstream agreements with an eye toward who could later claim to be an intended beneficiary. The overall takeaway is measured: on this record the court let the joint-employer and § 195 claims proceed, so disciplined separation of employment functions and careful contract drafting remain the surest defense-side footing.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case. It was drafted with the assistance of an artificial intelligence system. AI systems can make mistakes, including in describing legal authority. Readers should independently confirm any legal authority before relying on it.
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