August 08, 2025|Publications
August 8, 2025 | U.S. District Court for the Southern District of New York | Report & Recommendation (Unpublished)
Executive Summary
In an unpublished Report & Recommendation, Magistrate Judge Gary Stein of the Southern District of New York addressed motions to dismiss a sweeping class and collective action brought by flaggers and spotters working on Con Edison jobsites. Plaintiffs alleged violations of the FLSA, NYLL, New York City’s Freelance Isn’t Free Act, and prevailing wage requirements. Con Edison and CE Solutions Group entities argued the complaint relied on impermissible “group pleading” and failed to establish joint employer status. The court found that the Second Amended Complaint cured earlier defects and plausibly alleged joint employment, sustaining core wage and hour claims and allowing plaintiffs to amend further on prevailing wage theories.
Relevant Background
Eight named plaintiffs—working as flaggers or spotters between 2018 and 2023—alleged they were jointly employed by Con Edison, CE Solutions Group and affiliates, and a web of subcontractors. The complaint describes a layered structure in which CESG contracted exclusively with Con Edison to supply flagging and spotting services, then delegated to subcontractors but retained operational control.
The allegations present a textbook “kitchen sink” of joint employer theories:
- Assignments and Scheduling: Con Edison allegedly dictated how many workers were needed, where they were needed, and for how long. CESG managers then contacted workers directly, or directed subcontractors to do so, assigning shifts via phone calls, a hotline, or a CESG-maintained smartphone app.
- On-Site Supervision: Plaintiffs alleged that Con Edison supervisors were physically present at jobsites, gave them their daily tasks, and decided when shifts ended. CESG supervisors also made rounds, monitored performance, and required approval before breaks.
- Hiring and Discipline: Workers were allegedly interviewed and hired either by subcontractors or CESG managers in CESG’s Brooklyn office. Plaintiffs claimed CESG and Con Edison shared authority to discipline, suspend, or terminate, including directing subcontractors to carry out discipline on their behalf.
- Wages and Hours: Con Edison and CESG allegedly set hourly rates ($15–$17 for flaggers, $10–$12 for spotters) and confirmed hours worked. Con Edison paid CESG, which in turn funneled wages through subcontractors. Workers were classified as independent contractors and issued 1099s rather than W-2s.
- Employment Records: Plaintiffs alleged CESG and subcontractors, on behalf of Con Edison, kept onboarding paperwork, IDs, tax forms, and training certificates. Timesheets were issued under CESG’s name, and the smartphone app tracked workers’ time and location.
- Exclusivity: Plaintiffs claimed they worked full time, often 60–80 hours per week, exclusively for Con Edison through this system. CESG allegedly contracted solely with Con Edison for these services, reinforcing the integration of operations.
Based on these allegations, plaintiffs sought relief under the FLSA, NYLL, FIFA, and prevailing wage provisions, claiming unpaid overtime, misclassification, late and incomplete wages, and failure to provide compliant notices.
Decision
Judge Stein found the Second Amended Complaint sufficiently specific to overcome the earlier “group pleading” defect. By attributing concrete conduct to Con Edison and CESG, the pleading gave each defendant fair notice of its alleged role. The court noted examples: CESG employees interviewing plaintiffs in Brooklyn; CESG supervisors monitoring jobsites; Con Edison supervisors directing where workers stood, when they could leave, and when shifts ended.
On the core joint employer issue, the court applied the Second Circuit’s Carter factors and concluded the complaint plausibly alleged that both Con Edison and CESG had authority over hiring and firing, controlled schedules and conditions of employment, determined rates and methods of pay, and maintained employment records. Allegations that Con Edison supervisors dictated assignments and required approvals for breaks and shift completion went beyond safety oversight and into direct labor control.
The court declined to dismiss alternative FIFA claims at this stage, reasoning that they were pled only if FLSA/NYLL claims failed. On prevailing wages, the court recognized workers’ theory that Con Edison’s DOT permits required agreements under Admin. Code § 19-142 mandating payment of prevailing wages. It sustained those claims against Con Edison and recommended granting leave to amend in light of Santana, which held that “comply with all laws” clauses can support prevailing wage obligations despite disclaimers. As to CESG, the court dismissed claims tied solely to Con Edison–City agreements, but allowed amendment to pursue the alternative contract theory.
Finally, the court held plaintiffs adequately alleged standing for NYLL § 195 notice and statement claims, tying the lack of accurate records to their inability to detect and recover underpayments.
Looking Forward
The court’s recommendations are procedural, but the allegations themselves are the real signal. Plaintiffs’ counsel checked every conceivable box of “direct and immediate control”: hiring at CESG’s office, Con Edison dictating jobsite tasks, supervisors from both entities controlling breaks and shift length, pay rates tied to Con Edison’s contracts, timesheets and apps bearing CESG’s name, and records maintained across the system.
This is a model of how plaintiffs attempt to rope upstream companies into wage and hour litigation. The lesson is not in the outcome, but in the breadth of allegations: plaintiffs can and do allege joint control over every stage of the employment relationship—hiring, discipline, scheduling, wages, supervision, and records—to keep multiple defendants in the case through the pleading stage. Franchisors and other employers should expect to see this “kitchen sink” approach replicated, and should view it as insight into plaintiffs’ strategies rather than proven fact.
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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