August 21, 2025|Franchise Frontlines
August 21, 2025 | U.S. District Court, Southern District of New York | Unpublished Opinion
Executive Summary
In an unpublished decision, Chief Judge Laura Taylor Swain of the Southern District of New York refused to dismiss or sever wage-and-hour claims against CenterLight Healthcare, a managed long-term care plan. While the ruling arose in New York’s home care industry, it illustrates themes relevant to franchisors and franchisees: courts are willing to keep state and federal wage claims together when they arise from common compensation practices, and they often resist efforts to carve out individual defendants or sever claims. For franchisors, this underscores the risk that uniform compensation policies touching multiple operators can be framed as system-wide practices in litigation. For franchisees, it shows that state law wage claims are likely to remain in federal court when bundled with FLSA allegations, increasing the scope and cost of litigation. Against that backdrop, the court held that the New York Labor Law claims of a single aide overlapped with her co-plaintiffs’ FLSA claims, and it denied CenterLight’s motion to dismiss or sever.
Relevant Background
Plaintiffs were home care aides providing “live-in” 24-hour shifts to Medicaid recipients under New York’s managed long-term care system. GreatCare, a licensed home care services agency, contracted with CenterLight and other managed care organizations to staff these assignments. Plaintiffs alleged they regularly worked overnight without adequate sleep or rest periods but were only compensated for 13 hours of each 24-hour shift. They also alleged they were denied overtime pay, “spread of hours” pay, and accurate wage statements.
Ms. Li, age 63, worked through GreatCare and CenterLight from 2017 to 2021, providing weekly live-in care to an elderly patient in Queens. She claimed she rarely received more than two or three hours of sleep per night and was forced to sleep on a couch. Despite working shifts far longer than 10 hours, she was paid for no more than 13 hours and was denied overtime and other statutory compensation. Alongside her co-plaintiffs—who alleged both FLSA and NYLL violations—Ms. Li pursued only NYLL claims against CenterLight.
CenterLight moved to dismiss, arguing the court lacked jurisdiction because only state claims were asserted against it, any FLSA claims would be time-barred, and, alternatively, that Ms. Li’s claims should be severed into a separate lawsuit.
Decision
The court denied CenterLight’s motion in full.
First, citing City of Chicago v. International College of Surgeons, the Court found that Ms. Li’s NYLL claims “derive from a common nucleus of operative fact” as the FLSA claims brought by her co-plaintiffs. Because both sets of plaintiffs worked 24-hour live-in shifts under GreatCare’s staffing model and were allegedly compensated for only 13 hours despite providing uninterrupted care, the Court held that “the federal claims overlap factually with the state law claims and do not present significantly narrower issues.” Accordingly, supplemental jurisdiction was proper.
Second, citing the New York Labor Law’s six-year statute of limitations, the Court found that Ms. Li’s claims were timely. The Court noted that Ms. Li “concedes she is not making any FLSA claims against CenterLight and that she only makes New York Labor Law claims,” and CenterLight “does not dispute that Ms. Li’s NYLL claims are timely.”
Finally, citing Wave Studio, LLC v. General Hotel Management Ltd., the Court found that severance was unwarranted. In deciding severance motions under Rule 21, courts in the Second Circuit consider: (1) whether the claims arise out of the same transaction or occurrence; (2) whether the claims present some common questions of law or fact; (3) whether settlement or judicial economy would be facilitated; (4) whether prejudice would be avoided if severance were granted; and (5) whether different witnesses and documentary proof are required. Applying those factors, the Court explained that “none of the five factors favors severance in this case,” because Ms. Li’s claims were “related to, and present questions of law or fact in common with, the Federal Plaintiffs’ FLSA claims, so much so that severance and separate determination of them would be inefficient.”
Looking Forward
Although this case is rooted in New York’s home care industry, it may carry broader lessons. Courts in wage-and-hour disputes often look closely at whether state and federal claims arise from overlapping compensation policies, and where they do, judges may be less inclined to separate them. That approach gives plaintiffs’ attorneys tools to argue for keeping multiple claims and defendants together in one proceeding.
For franchisors, this decision suggests that system-wide policies that touch on compensation or scheduling could be portrayed as common practices in litigation. While every case turns on its own facts, this ruling shows that courts may be skeptical of arguments to narrow the scope of claims when uniform practices are alleged. For franchisees, particularly those defending wage-and-hour claims alongside others, the case illustrates that state law claims may remain tethered to FLSA litigation in federal court, depending on how the allegations are framed.
At the end of the day, while this dispute concerned Medicaid-funded home care services, it is a reminder that courts evaluate these issues through a fact-intensive lens. Each case will differ, but even opinions arising from industries far removed from franchising can signal how judges may approach arguments about supplemental jurisdiction and severance.
Thomas O’Connell is a Shareholder at Buchalter APC 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.
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