September 24, 2025|Franchise Frontlines
September 24, 2025 | U.S. District Court for the Southern District of New York | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge Jennifer L. Rochon of the Southern District of New York adopted a Report and Recommendation with modifications and held that plaintiffs plausibly alleged joint-employer status and wage violations against multiple entities associated with Con Edison. The court denied Con Edison’s motion to dismiss, granted the CESG Defendants’ motion only as to prevailing-wage claims, and reached the merits of alternative claims under the New York City Freelance Isn’t Free Act (FIFA). The court concluded that plaintiffs plausibly alleged that Con Edison qualified as a “hiring party” under FIFA, even though the workers were hired by subcontractors. The ruling allows the core FLSA, NYLL, and FIFA claims to proceed.
Relevant Background
According to the allegations in the Second Amended Complaint, hundreds of individuals worked as flaggers and spotters on Con Edison job sites in New York City and Westchester County. The plaintiffs alleged that CESG contracted with Con Edison to provide traffic-control personnel and that a group of subcontractors recruited, onboarded, and paid the workers. Plaintiffs further alleged that these entities collectively classified them as independent contractors rather than employees.
The complaint asserts that the workers routinely logged between 40 and 90 hours per week while performing core safety functions for Con Edison. The plaintiffs alleged that Con Edison supervisors were physically present at job sites, directed aspects of the daily work, controlled access to the worksite, and influenced wage rates through agreements with CESG. The workers were allegedly paid on 1099 forms generated by subcontractors who, according to the allegations, operated “on behalf of” Con Edison.
The lawsuit includes FLSA and NYLL causes of action for unpaid overtime, late payment, wage-statement violations, and retaliation. Because plaintiffs alleged they were misclassified as independent contractors, they asserted alternative FIFA claims on the theory that if they were properly classified as freelancers, they were still entitled to timely and complete compensation under FIFA. Defendants denied these allegations and sought dismissal of most claims.
Decision
The court adopted the magistrate judge’s recommendation that the plaintiffs plausibly alleged FLSA and NYLL violations. The allegations of joint supervision, shared control over schedules and pay, and extensive work for Con Edison created factual disputes inappropriate for resolution at the pleading stage. Because the complaint included detailed allegations regarding rates, supervision, and operational oversight, the court found that the workers’ core wage-and-hour claims could proceed.
The court granted the CESG Defendants’ motion to dismiss only with respect to the prevailing-wage claims but provided plaintiffs leave to amend those claims. The remaining wage claims were not dismissed.
Con Edison’s principal objection concerned the magistrate judge’s recommendation to defer analysis of the alternative FIFA claims. The court instead reached the merits. It conducted an extensive statutory-interpretation analysis of the terms “retain” and “hiring party” as used in FIFA. Con Edison argued it could not be considered a hiring party because it did not directly hire the workers, who were brought on by subcontractors. The court found that FIFA separately uses the terms “hire” and “retain,” meaning they must have distinct meanings. The statute defines “hiring party” as anyone who “retains a freelance worker,” and “freelance worker” as one who is “hired or retained” to provide services in exchange for compensation. Collapsing “retain” into “hire,” the court noted, would render part of the statutory language superfluous.
After comparing the statutory text, dictionary definitions, and legislative purpose, the court concluded that plaintiffs plausibly alleged that Con Edison retained their services to provide traffic-control functions essential to Con Edison’s operations. The court noted allegations that Con Edison supervisors were present at job sites, that Con Edison determined or influenced wage rates through agreements with CESG, and that money paid by Con Edison to CESG flowed to the subcontractors who paid the workers. Although the court made no factual findings on these allegations, it held that they were sufficient at this stage to allege that Con Edison retained the workers’ services and therefore could be a FIFA “hiring party.”
The court also observed that FIFA does not require a direct contract between a freelancer and the entity alleged to be a hiring party. The court relied on New York appellate authority finding that freelancers may pursue FIFA claims against entities for whom they performed services even when an intermediary handled the formal hiring.
Because the plaintiffs plausibly alleged that Con Edison retained their services, and because the complaint alleged late or unpaid compensation, the FIFA claims survived the motion to dismiss.
Looking Forward
This ruling may illustrate how courts approach joint-employer theories in complex operational structures where multiple affiliated or unaffiliated entities contribute to worksite direction, payment, and supervision. Courts may allow wage-and-hour claims to proceed when the allegations describe coordinated control over schedules, compensation, work assignments, or the day-to-day conditions under which the work is performed. The decision underscores that early motions to dismiss may face challenges in cases involving layered contractor relationships or overlapping operational responsibilities.
The decision also indicates that courts may interpret freelancer-protection statutes broadly when statutory language or legislative purpose supports that approach. Even where an entity does not directly hire workers, a court may consider whether the entity retained the benefit of their labor, supervised aspects of their work, or influenced their compensation. Because FIFA and similar statutes continue to develop nationwide, businesses may wish to ensure clarity in how work is assigned, documented, and compensated, especially in multi-entity arrangements.
Finally, the ruling suggests that alternative claims premised on independent-contractor status may be evaluated on their own terms even when a plaintiff’s primary theory asserts employee status. The viability of alternative claims may depend on distinct statutory frameworks and factual allegations, and courts may require each claim to independently meet pleading standards. As with all similar cases, the ultimate outcome will depend on jurisdiction-specific interpretations and the factual record developed through discovery.
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.
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.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
