Vasto et al v. Credico (USA) LLC et al
OPINION & ORDER re: 225 MOTION for Partial Summary Judgment filed by Alex Torres, Xiaoj Zheng, Philip Vasto, Zao Yang; 218 FIRST MOTION for Summary Judgment (Re-file per Notice 05/17/19) filed by Cromex, Inc., Mei xi Xu; 211 MOTION for Summary Judgment / Notice of Defendant Credico (USA) LLC's Motion for Summary Judgment filed by Credico (USA) LLC. For the foregoing reasons, the Court (1) denies plaintiffs' motion for partial sum mary judgment and (2) grants' defendants' cross-motions for summary judgment. The effect of this ruling is to grant summary judgment in favor of defendants on all claims. The Clerk of Court is respectfully directed to terminate the motions pending at Dkts. 211, 218, and 225 to close this case. SO ORDERED. (Signed by Judge Paul A. Engelmayer on 10/27/2017) (anc)
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 1 of 46
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
PHILIP VASTO, ZAO YANG, ALEX TORRES, AND :
XIAOJ ZHENG, individually and on behalf of all
others similarly situated,
CREDICO (USA) LLC, CROMEX INC., and MEIXI
15 Civ. 9298 (PAE)
OPINION & ORDER
PAUL A. ENGELMAYER, District Judge:
Plaintiffs Philip Vasto, Zao Yang, Alex Torres, and Xiaoj Zheng bring this action on
behalf of themselves and similarly situated persons, alleging violations of the Fair Labor
Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”), the New York Labor Law, N.Y. Lab. Law
§ 650, et seq. (“NYLL”), the Arizona Wage Act, Ariz. Rev. Stat. § 23-350, et seq. (“AWA”), and
the Arizona Minimum Wage Act, Ariz. Rev. Stat. § 23-362, et seq. (2015) (“AMWA”).
Plaintiffs served as field agents securing low-income customers to acquire wireless
telephones pursuant to a federal subsidy program. They claim primarily that they were
misclassified as independent contractors, as opposed to as employees, and therefore were denied
statutorily required minimum wage and overtime compensation. They seek to hold three parties
liable for this misclassification: Cromex, Inc. (“Cromex”), their direct employer, Meixi Xu,
Cromex’s owner, and Credico (USA) LLC (“Credico”), the company that subcontracted with
Cromex to administer the federal subsidy program. Plaintiff Torres also alleges that he was
denied minimum wage and timely payment of wages as required under Arizona law during his
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stint with another Credico subcontractor. Finally, plaintiffs Vasto and Yang separately allege
that they were terminated in retaliation for complaining about their classification as independent
Pending now are the parties’ cross-motions for summary judgment. These motions raise
four issues: (1) whether plaintiffs were employees rather than independent contractors under the
FLSA, NYLL, and AMWA; (2) if so, whether Credico and Xu may (or, in the case of Xu, must)
be considered plaintiffs’ employers; (3) whether, even if plaintiffs are employees, they are
exempt from FLSA and NYLL requirements as outside salespeople; and (4) whether plaintiffs
Vasto and Yang have adequately supported their retaliation claims so as to survive summary
The first three legal issues in this case coincide substantially with those addressed in this
Court’s recent decision in Martin v. Sprint United Management Co., No. 15 Civ. 5237 (PAE),
2017 WL 4326109 (S.D.N.Y. Sept. 27, 2017). To the extent the issues overlap, the facts here
compel the same result. For the reasons that follow, the Court holds that, even assuming
arguendo that plaintiffs were employees rather than independent contractors, (1) Credico cannot
be held liable as plaintiffs’ joint employer, and (2) the outside sales exemptions to the FLSA and
NYLL apply. Further, assuming arguendo that Xu was plaintiffs’ employer, plaintiffs have
failed to demonstrate a clear assertion of rights under the FLSA so as to sustain a retaliation
claim. These rulings collectively preclude liability for all defendants on all counts. The Court
therefore grants summary judgment in favor of defendants and denies plaintiffs’ cross-motion for
partial summary judgment.
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The federal government subsidizes provision of cell phones to low-income subscribers
through a program called Lifeline Assistance. JSF ¶¶ 96–100. Lifeline participants receive a
The Court draws its account of the underlying facts of this case from the parties’ submissions in
support of and in opposition to this motion, including: Credico’s memorandum of law in support
of its motion for summary judgment, Dkt. 214 (“Credico Br.”); Credico’s Local Rule 56.1
statement, Dkt. 213 (“Credico 56.1”); the declaration of Greta B. Williams in support of
Credico’s motion for summary judgment, Dkt. 212 (“First Williams Decl.”); Credico’s reply
memorandum of law in support of its motion for summary judgment and in opposition to
plaintiffs’ motion for partial summary judgment, Dkt. 234 (“Credico Reply Br.”); Credico’s
counter-statement to plaintiffs’ Local Rule 56.1 statement, Dkt. 233 (“Credico Counter 56.1”);
the declaration of Greta B. Williams in support of Credico’s reply memorandum of law in
support of its motion for summary judgment and in opposition to plaintiffs’ motion for partial
summary judgment, Dkt. 232 (“Second Williams Decl.”); Cromex’s memorandum of law in
support of its motion for summary judgment, Dkt. 219 (“Cromex Br.”); the declaration of Joseph
F. Tremiti in support of Cromex’s motion for summary judgment, Dkt. 220 (“Tremiti Decl.”);
Cromex’s reply memorandum of law in support of its motion for summary judgment and in
opposition to plaintiffs’ motion for partial summary judgment, Dkt. 235 (“Cromex Reply Br.”);
plaintiffs’ memorandum of law in support of their cross-motion for partial summary judgment
and in opposition to defendants’ motions for summary judgment, Dkt. 229 (“Pl. Br.”); plaintiffs’
Local Rule 56.1 statement, Dkt. 227 (“Pl. 56.1”); the declaration of Olena Savytska in support of
plaintiffs’ motion for partial summary judgment and in opposition to defendants’ motions for
summary judgment, Dkt. 226 (“First Savytska Decl.”); plaintiffs’ reply memorandum of law in
support of their motion for partial summary judgment, Dkt. 243 (“Pl. Reply Br.”); the declaration
of Olena Savytska in support of plaintiffs’ reply memorandum of law in support of their motion
for partial summary judgment, Dkt. 241 (“Second Savytska Decl.”); plaintiffs’ counter-statement
to Credico’s Local Rule 56.1 statement, Dkt. 228 (“Pl. Counter 56.1”); and the parties’ joint
statement of undisputed facts, Dkt. 205 (“JSF”). This opinion also refers to the declaration of
Philip Vasto in support of plaintiffs’ motion for conditional class certification, Dkt. 38-2 (“Vasto
Decl.”); the declaration of Alex Torres in support of plaintiffs’ motion for conditional class
certification, Dkt. 38-3 (“Torres Decl.”); the declaration of Xiaoj Zheng in support of plaintiffs’
motion for conditional class certification, Dkt. 38-4 (“Zheng Decl.”); and the declaration of Zao
Yang in support of plaintiffs’ motion for conditional class certification, Dkt. 38-5 (“Yang
Citations to a party’s Rule 56.1 statement incorporate by reference the documents cited therein.
Where facts stated in a party’s Rule 56.1 statement are supported by testimonial or documentary
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free wireless phone and a free preset bundle of minutes and messages, with the option to
purchase additional minutes and messages above this preset amount. See Credico 56.1 ¶ 140;
First Williams Decl., Ex. 56 at 2. Sprint, a telecommunications carrier, participates in the
Lifeline Assistance program through what Sprint calls the Assurance Wireless campaign. JSF
¶ 101. To conduct the Assurance Wireless campaign (i.e., to promote and market Lifeline
services), Sprint contracts with third-party Outreach Agencies (“OAs”). Id. ¶ 102.
Defendant Credico is one of those OAs, tasked with assisting Sprint in implementing the
Assurance Wireless campaign. Id. ¶¶ 113–17. To that end, in September 2013, Sprint and
Credico entered into an Amended and Restated Outreach Agency Agreement (the “OA
Agreement”) effective September 1, 2013, amending an original agreement dated September 15,
2012. Id. ¶ 114; First Williams Decl., Ex. 15 at 511. Attached to the OA Agreement was a copy
of Sprint’s Standard Operating Procedures (“SOPs”). JSF ¶ 106; First Williams Decl., Ex. 13.
Under the OA Agreement, Credico is authorized to solicit and collect applications for Sprint’s
Assurance Wireless Program within designated areas. JSF ¶¶ 113, 117. Instead of collecting
applications itself, however, Credico outsources sales and marketing to subcontractors, to which
evidence, and denied by a conclusory statement by the other party without citation to conflicting
testimonial or documentary evidence, the Court finds such facts true. See S.D.N.Y. Local Rule
56.1(c) (“Each numbered paragraph in the statement of material facts set forth in the statement
required to be served by the moving party will be deemed to be admitted for purposes of the
motion unless specifically controverted by a correspondingly numbered paragraph in the
statement required to be served by the opposing party.”); id. at 56.1(d) (“Each statement by the
movant or opponent . . . controverting any statement of material fact must be followed by
citation to evidence which would be admissible, set forth as required by Fed. R. Civ. P. 56(c).”).
The parties’ counter-statements of facts mark certain statements as “disputed” but, instead of
identifying an actual factual inconsistency, often only offer additional context or dispute the
relevance of the underlying facts. Where these counter-statements do not identify a true factual
dispute, the Court treats the statement as undisputed.
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it refers as “independent sales offices” (“ISOs”). Id. ¶¶ 14–15. ISOs, in turn, recruit and hire
individual “agents” who sell and market products on behalf of Credico’s clients. Id. ¶¶ 19–20.
Defendant Cromex is one such ISO, and it is owned by defendant Xu. Id. ¶¶ 29, 39. Xu
oversees Cromex’s day-to-day operations. Id. ¶ 40. Since it began operating in 2014, Cromex
has provided sales and marketing services for Credico’s clients only, and revenues generated
from the Assurance Wireless campaign account for a “significant portion” of Cromex’s income.
Id. ¶¶ 30–31. The subcontractor agreement between Credico and Cromex extends to Cromex the
contractual obligations that Credico owes to Sprint and sets forth the territories in which Cromex
is authorized to operate. Id. ¶¶ 50, 54. It requires further that Cromex (1) comply “with all
applicable federal, state, county, and local laws, ordinances, regulations and codes”; (2) “comply
and have its own employees comply with the Credico USA Code of Business Ethics and
Conduct,” as well as “any Credico USA Client Dress Code, Conduct Policy, and Operational
Requirements”; (3) “[a]dher[e] to any Client pre-conditions to performing Services, such as drug
testing and background checks with authorized providers and compliance with Client branding”;
(4) “[t]rain its employees in accordance with Credico USA’s Client requirements which may
include, but [are] not limited to, attending class periodically”; and (5) “[s]olicit business on
behalf of Credico USA Clients regarding their products or services . . . using the techniques and
information as set out in Credico USA Clients’ Training Guides.” Credico 56.1 ¶¶ 51–53.
Plaintiffs were hired by Cromex as field agents to work on the Assurance Wireless
campaign. JSF ¶¶ 10, 139, 193. Vasto worked for Cromex in New York from approximately
March 2015 through May 2015. Id. ¶ 2. Yang did the same from approximately February 2015
through April 2015, Torres from approximately January 2015 through mid-March 2015, and
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Zheng from approximately February 2015 to August 2015. 2 Id. ¶¶ 4, 7, 11. Field agents like
plaintiffs were referred to as “account executives” and could later be promoted to “corporate
trainers.” Id. ¶¶ 128–29. Plaintiffs Yang, Zheng, and Torres were all promoted to corporate
trainers, and Zheng was subsequently promoted to senior corporate trainer. Id. ¶¶ 200–01.
The Responsibilities of Field Agents
Field agents on the Assurance Wireless campaign solicited and collected applications
from potentially qualifying Lifeline Program applicants. Id. ¶¶ 149, 181–84. Agents worked on
only one campaign at a time. First Savytska Decl., Ex. 1 at 175.
As set forth in the OA Agreement, field agents were required to “inform and educate
potential [c]ustomers about Assurance Wireless, seek to determine and advise on an individual’s
qualification for the program and engage the eligible [c]ustomers in the [a]pplication process for
Assurance Wireless.” First Williams Decl., Ex. 15 at 512. Field agents distributed Sprintprovided materials, visiting “targeted community locations and attending public or private
community events.” Id.
In initially addressing potential applicants for phones pursuant to the Lifeline Program,
field agents were required, as set forth in the SOPs, to begin by “utiliz[ing] an approved pitch
that meets [Assurance Wireless] standards and clearly indicates only qualified applicants may
receive . . . lifeline service.” Id. at 536. One such pitch, for example, could be: “Would you like
to find out if you qualify for free lifeline service from Assurance Wireless?” Id. The SOPs also
address the remainder of the interaction between field agents and potential applicants. For
Torres also worked for another Credico ISO in Arizona, Vaeley Marketing Group (“Vaeley”),
from approximately mid-March 2015 through June 2015. Id. ¶¶ 8, 220. While at Vaeley,
Torres’s relationships with Credico and his supervisors tracked his experience at Cromex, id.
¶¶ 210–14, 228–29, and plaintiffs contend that Torres’s work at Vaeley was otherwise consistent
with his work at Cromex in all relevant respects, Pl. 56.1 ¶ 81.
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example, the SOPs state that field agents “must ask potential applicants if they currently have a
lifeline phone” and “if they have applied with [Assurance Wireless] or any lifeline carrier
recently.” Id. at 537.
Using their Credico-provided tablets, field agents uploaded completed Lifeline Program
applications to a third-party vendor called Solix so that the applications could be either approved
or denied. JSF ¶¶ 153–59. If an applicant was approved, the enrollee received a free phone, and
the government would pay Sprint, via subsidy, for providing that service. Id. ¶¶ 96, 100.
Agents, for their part, would receive a commission from Cromex. Id. ¶ 187. If an applicant was
determined not to be qualified, the agent received no pay for that customer. Id. ¶ 188.
The Schedules of Field Agents
Plaintiffs reported to work at Cromex’s New York City office. Credico 56.1 ¶¶ 27, 94.
The parties dispute whether agents were required to come to work every day. Defendants point
to testimony suggesting scheduling flexibility, see id. ¶¶ 89, 106, while plaintiffs rely on
Cromex’s Account Executive Manual, which provided field agents with a daily schedule and
prohibited unexplained absences, see Pl. 56.1 ¶¶ 37, 41. Plaintiffs claim they typically worked
between 60 and 70 hours per week. Pl. 56.1 ¶ 71. In any event, it is undisputed that agents
working on the Assurance Wireless campaign picked up tablets each day from the Cromex office
and participated in morning “atmosphere” meetings, during which agents received guidance as to
how to solicit Assurance Wireless applications. JSF ¶¶ 155, 167–69.
Agents like plaintiffs spent the majority of their time soliciting and accepting applications
in the field. Id. ¶ 181; see also Vasto Decl. ¶¶ 11–12; Torres Decl. ¶ 8; Zheng Decl. ¶ 4; Yang
Decl. ¶ 5. Plaintiffs were supervised by (and communicated exclusively with) Cromex
personnel, who would assign agents a particular location (in New York City) in which to begin
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their day. JSF ¶¶ 148, 202–18; Pl. 56.1 ¶ 51; Credico Counter 56.1 ¶ 51. Upon their return to
the Cromex office at the end of the work day, agents would report their application numbers and
either return their tablets or take them home. JSF ¶¶ 170–71; Pl. 56.1 ¶ 42; Credico Counter 56.1
¶ 42. Credico, like Cromex, received agents’ application data. Credico 56.1 ¶ 156. 3
The Hiring of Field Agents
Cromex was directly responsible for its own hiring decisions. JSF ¶ 19. To that end,
Cromex conducted its own recruitment and interviews. Id. ¶ 127. Cromex also made its own
promotion decisions. Id. ¶ 133. Accordingly, Cromex recruited, interviewed, hired, and
promoted plaintiffs. Id. ¶¶ 192–93, 200.
As part of their onboarding, Cromex field agents signed “Independent Sales
Representative Agreements.” Id. ¶ 196. These agreements allowed either party to terminate the
agreement at will. Id. ¶ 198. The agreements also permitted plaintiffs to offer their services to
other companies engaged, like Cromex, in direct sales, provided that this other work did not
interfere with ongoing work performed for Cromex. Id. ¶ 197. Sprint’s SOPs also required that
field agents collecting Lifeline Program applications on the Assurance Wireless campaign
submit to background checks. Id. ¶ 108.
The Training of Field Agents
Cromex was responsible for training its field agents, including plaintiffs. Id. ¶¶ 134, 169
199. Field agents also participated in a “Management Training Program” devised by Credico but
implemented through subcontractors. Pl. 56.1. ¶ 33–34; First Savytska Decl., Ex. 1 at 71.
Plaintiffs also claim that Xu personally assigned agents to territories, recorded the daily number
of customer sign-ups, and informed plaintiffs of the office’s hours and dress code. Pl. 56.1 ¶¶ 5–
7. The materials that plaintiffs cite, however, do not support these propositions.
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Credico also conducted in-person audits of ISOs to ensure compliance with clients’
requirements. JSF ¶ 56.
The Classification and Compensation of Field Agents
Specific ISOs like Cromex would decide independently whether to classify agents as
independent contractors or employees. Credico 56.1 ¶ 166; Pl. Counter 56.1 ¶ 166. In this case,
plaintiffs’ Independent Sales Representative Agreements classified each plaintiff as an
independent contractor, Credico 56.1 ¶ 69, and Cromex paid them as such, JSF ¶ 145. After this
lawsuit was filed, however, Credico decided that it would no longer contract with ISOs that
classified agents as independent contractors. JSF ¶ 75.
As Cromex agents, plaintiffs were paid on commission, receiving $10 per approved
Assurance Wireless application. Id. ¶ 139. These payments came from Cromex, id. ¶ 143, but
the parties dispute who determined agents’ pay. Defendants contend based on the deposition
testimony of presidents of other ISOs that ISOs independently determined their agents’ pay rates.
Credico 56.1 ¶ 161–62. Plaintiffs counter that Credico provided ISOs with commission
schedules listing individual agents’ pay rates and mandated that ISOs pay commissions pursuant
to the established rates. Pl. Counter 56.1 ¶ 161–62; First Savytska Decl., Ex. 37 at 31098.
Vasto earned an average of $136 per week during his time at Cromex. Pl. 56.1 ¶ 84.
Zheng earned an average of approximately $466 per week. First Savytska Decl., Ex. 84. Three
of Yang’s pay statements are in the record, showing weekly earnings of $40, $220, and $590. Pl.
56.1 ¶ 85; Credico Counter 56.1 ¶ 85. Torres has no pay statements, but estimates his average
weekly pay was approximately $300 per week. Pl. 56.1 ¶ 86.
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The Suspension and Termination of Field Agents
The parties dispute the precise contours of Credico’s ability to suspend or terminate field
agents. It is undisputed that Credico had the authority to “deactivate”—i.e., remove from the
Assurance Wireless campaign—a field agent suspected of fraud or failure to abide by the SOPs.
JSF ¶ 179; Credico 56.1 ¶ 46. Credico in fact exercised that authority in deactivating Cromex
agents. JSF ¶ 180. But plaintiffs also assert that Credico has “suspended” agents and “required”
their termination. Pl. 56.1 ¶¶ 137, 139, 144, 146–47; First Savytska Decl., Ex. 62 (Credico email
instructing offices to “eliminate 20% of their lowest performers”); First Savytska Decl., Ex. 67
(Credico “Compliance Improvement Plan” describing agent misconduct that could trigger
mandatory probation or termination); First Savytska Decl., Ex. 64 (Credico email indicating an
agent would be suspended). Credico responds that it had no authority to terminate agents; rather,
“deactivated” agents were merely removed from the Assurance Wireless campaign and not
necessarily terminated. Credico Counter 56.1 ¶¶ 137, 144, 147; First Williams Decl., Ex. 4 at
131–32 (Credico president Jesse Young testifying ISOs owners could remove somebody from
the Assurance Wireless campaign without Credico’s approval). Credico suggests further that it
deactivated agents only to prevent fraud and noncompliance with client requirements. Credico
56.1 ¶ 46.
The Terminations of Vasto and Yang
Both Vasto and Yang repeatedly complained about their treatment as independent
contractors. Pl. 56.1 ¶¶ 89–90. Rather than seek reclassification as employees, however, each
sought greater professional latitude in their positions, consistent with their expectations regarding
independent contracting work. Vasto, for example, “complained that [he] had the right as an
independent contractor to conduct business on the terms of an independent contractor, i.e., to
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have more freedom.” First Williams Decl., Ex. 28 at 198. Vasto objected specifically that he
could not “choose [his] days,” “could not chose the time [he] worked,” “could not choose [his]
break period,” and “could not control anything.” Id. Yang, for his part, “constantly present[ed]
proposals to be an independent contractor” so that he could pursue his own ideas for event
marketing. First Savytska Decl., Ex. 41 at 241–42. 4
Vasto and Yang claim that they were terminated as a result of these complaints. See Pl.
56.1 ¶ 91. They cite two sources for this conclusion: (1) statements of supervisors that Yang was
a “troublemaker” and “not trying to follow the system,” First Savytska Decl., Ex. 41 at 239, and
(2) an audio recording of a Credico consultant informing Vasto that he was terminated because
he failed to sign up enough customers and his co-workers found him “difficult to work with,”
First Savytska Decl., Ex. 19.
On July 27, 2015, plaintiffs filed the initial complaint in this action, bringing claims
against Credico, Cromex, Xu, and Jesse Young in the Northern District of Illinois. Dkt. 1.
Plaintiffs amended three days later, Dkt. 6, and, in October of that year, moved for conditional
certification of a collective under the FLSA, Dkt. 38. Judge Shadur of the Northern District of
Illinois denied the motion. Dkt. 41. Plaintiffs thereafter moved to transfer the case to this
District, Dkt. 42, and Judge Shadur granted the motion, Dkt. 46. Plaintiffs again moved for
conditional certification, Dkt. 62, and this Court granted the motion as to all persons who
conducted face-to-face marketing work for Credico and its subcontractor ISOs in the United
There are no allegations that Vasto or Yang sought overtime or minimum wage. See Am.
Compl. ¶¶ 61–72.
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States, while classified as independent contractors, at any point during the three years preceding
the issuance of court-approved notice, Dkt. 113. 5 Meanwhile, defendant Young moved to
dismiss plaintiffs’ claims against him, Dkt. 106, and the Court granted the motion, Dkt. 161.
Following discovery, Credico, Dkt. 211, and Cromex and Xu, Dkt. 218, moved for
summary judgment. Plaintiffs opposed and cross-moved for partial summary judgment. Dkt.
225. At the time it resolved the summary judgment motions in the companion case of Martin v.
Sprint/United Management Co., No. 15 Civ. 5237 (PAE), the Court issued an order stating that
the decision on the motions here would issue in October. See Dkt. 246.
Applicable Legal Standards for a Motion for Summary Judgment
To prevail on a motion for summary judgment, the movant must “show that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). The movant bears the burden of demonstrating the absence of a
question of material fact. In making this determination, the Court must view all facts “in the
light most favorable” to the non-moving party. Holcomb v. Iona Coll., 521 F.3d 130, 132 (2d
Cir. 2008); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
If the movant meets its burden, “the nonmoving party must come forward with
admissible evidence sufficient to raise a genuine issue of fact for trial in order to avoid summary
judgment.” Jaramillo v. Weyerhaeuser Co., 536 F.3d 140, 145 (2d Cir. 2008). “[A] party may
not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion
for summary judgment.” Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (internal quotation
marks and citation omitted). Rather, the opposing party must establish a genuine issue of fact by
The Court later limited this collective to exclude individuals who worked for Wallace Morgan,
another Credico ISO which is the subject of the Martin lawsuit. See Dkt. 170.
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“citing to particular parts of materials in the record.” Fed. R. Civ. P. 56(c)(1)(A); see also
Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009).
“Only disputes over facts that might affect the outcome of the suit under the governing
law” will preclude a grant of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). In determining whether there are genuine issues of material fact, the Court is
“required to resolve all ambiguities and draw all permissible factual inferences in favor of the
party against whom summary judgment is sought.” Johnson v. Killian, 680 F.3d 234, 236 (2d
Cir. 2012) (quoting Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003)) (internal quotation
The parties’ cross-motions for summary judgment raise four issues: (1) whether plaintiffs
were employees rather than independent contractors under the FLSA, NYLL, and AMWA; (2) if
so, whether Credico and Xu may (or, in the case of Xu, must) be considered plaintiffs’
employers; (3) whether, even if plaintiffs are employees, they are exempt from FLSA and NYLL
requirements as outside salespeople; and (4) whether plaintiffs Vasto and Yang have adequately
supported their retaliation claims so as to survive summary judgment.
As in Martin, this Court holds that, even assuming arguendo that plaintiffs were
employees rather than independent contractors, (1) Credico cannot be held liable as plaintiffs’
joint employer, and (2) the outside sales exemptions to the FLSA and NYLL apply. These
rulings preclude liability altogether for Credico and compel dismissal of Torres’s claims under
Arizona law. They also compel dismissal of plaintiffs’ minimum wage and overtime claims
against Cromex and Xu. The Court then turns to plaintiffs’ claims of retaliation and holds that,
even assuming arguendo that Xu was plaintiffs’ employer, Vasto and Yang cannot sustain a
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 14 of 46
claim for retaliation under the FLSA. Accordingly, defendants’ motions must be granted and
plaintiff’s motion dismissed.
Credico as Joint Employer
Credico seeks summary judgment on the ground that the evidence would not permit a
finding that it was a “joint employer” of plaintiffs. In other words, it argues, even assuming
plaintiffs were employees, they were employees only of Cromex, and therefore only Cromex can
be held liable for any FLSA and NYLL violations. For the reasons that follow, the Court
1. Applicable Legal Standards
The FLSA defines “employer” as “any person acting directly or indirectly in the interest
of an employer in relation to an employee.” 29 U.S.C. § 203(d). The Supreme Court has
emphasized that this is an expansive definition with “striking breadth.” Nationwide Mut. Ins. Co.
v. Darden, 503 U.S. 318, 326 (1992). An individual may simultaneously have multiple
“employers” for the purposes of the FLSA, in which event, “all joint employers are responsible,
both individually and jointly, for compliance with all of the applicable provisions of the
[FLSA].” 29 C.F.R. § 791.2(a).
“[W]hether an employer-employee relationship exists for purposes of the FLSA should
be grounded in ‘economic reality rather than technical concepts.’” Barfield v. N.Y.C. Health &
Hosps. Corp., 537 F.3d 132, 141 (2d Cir. 2008) (quoting Goldberg v. Whitaker House Coop.,
Inc., 366 U.S. 28, 33 (1961)). Courts determine whether defendants are plaintiffs’ joint
The parties also cross-move as to Xu’s liability as an employer. Were the Court to reach this
issue, the relevant standards are those applied in this Section. See infra Section III(A)(1). The
Court need not address the question, however, as even assuming arguendo that Xu was
plaintiffs’ employer, she cannot be held liable in light of the holdings that follow.
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employers based on “the circumstances of the whole activity,” Rutherford Food Corp. v.
McComb, 331 U.S. 722, 730 (1947), viewed in light of “economic reality,” Goldberg, 366 U.S.
at 33; see also Barfield, 537 F.3d at 141–42 (employment is “to be determined on a case-by-case
basis by review of the totality of the circumstances”). “Above and beyond the plain language,
moreover, the remedial nature of the statute further warrants an expansive interpretation of its
provisions so that they will have ‘the widest possible impact in the national economy.’” Herman
v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999) (quoting Carter v. Dutchess Cmty.
Coll., 735 F.2d 8, 12 (2d Cir. 1984)).
“When it comes to ‘employer’ status under the FLSA, control is key.” Lopez v. Acme Am.
Envtl. Co., Inc., No. 12 Civ. 511 (WHP), 2012 WL 6062501, at *3 (S.D.N.Y. Dec. 6, 2012); see
also Herman, 172 F.3d at 135 (“[C]ontrol of employees is central to deciding whether appellant
should be deemed an employer.”). In assessing economic reality, the Second Circuit has
articulated two tests for evaluating whether an employment relationship existed for the purposes
of the FLSA: one relating to formal control and the other to functional control.
The formal control test inquires “whether the alleged employer (1) had the power to hire
and fire the employees, (2) supervised and controlled employee work schedules or conditions of
employment, (3) determined the rate and method of payment, and (4) maintained employment
records.” Carter, 735 F.2d at 12 (quoting Bonnette v. Cal. Health & Welfare Agency, 704 F.2d
1465, 1470 (9th Cir. 1983)).
Formal control does not require continuous monitoring of employees, looking
over their shoulders at all times, or any sort of absolute control of one’s
employees. Control may be restricted, or exercised only occasionally, without
removing the employment relationship from the protections of the FLSA, since
such limitations on control do not diminish the significance of its existence.
Hart v. Rick’s Cabaret Int’l, Inc., 967 F. Supp. 2d 901, 939 (S.D.N.Y. 2013) (citing Herman, 172
F.3d at 139) (internal quotation marks omitted).
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 16 of 46
As to the functional control test, the Second Circuit has identified a number of factors
pertinent to determining whether a person or entity, even if lacking formal control, exercised
“functional control” over an employee. In Zheng v. Liberty Apparel Co., 355 F.3d 61, 71–72 (2d
Cir. 2003), which involved an employer and its subcontractors, the Circuit identified the
following non-exclusive factors:
(1) whether [the alleged employers’] premises and equipment were used for the
plaintiffs’ work; (2) whether the [subcontractors] had a business that could or did
shift as a unit from one putative joint employer to another; (3) the extent to which
plaintiffs performed a discrete line job that was integral to [the alleged
employers’] process of production; (4) whether responsibility under the contracts
could pass from one subcontractor to another without material changes; (5) the
degree to which [the alleged employers] or their agents supervised plaintiffs’
work; and (6) whether plaintiffs worked exclusively or predominantly for [the
Id.; accord Barfield v. N.Y.C. Health & Hosp. Corp., 432 F. Supp. 2d 390, 392–93 (S.D.N.Y.
2006), aff’d, 537 F.3d 132 (2d Cir. 2008).
Under the NYLL, the standard for employer status is nearly identical to that of the FLSA.
Compare NYLL § 190(3) (“‘Employer’ includes any person, corporation, limited liability
company, or association employing any individual in any occupation, industry, trade, business or
service.”), with 29 U.S.C. § 203(d) (“‘Employer’ includes any person acting directly or indirectly
in the interest of an employer in relation to an employee . . . .”). Accordingly, courts in this
District regularly apply the same tests to determine whether entities are joint employers under the
NYLL and the FLSA. See Spicer v. Pier Sixty LLC, 269 F.R.D. 321, 335 n. 13 (S.D.N.Y. 2010);
see also Glatt v. Fox Searchlight Pictures Inc., 293 F.R.D. 516, 526–27 (S.D.N.Y. 2013)
(collecting cases); see also Hart, 967 F. Supp. 2d at 940 (citing Irizarry v. Catsimatidis, 722 F.3d
99, 117 (2d Cir. 2013)) (“To be sure, the New York Court of Appeals has not yet resolved
whether NYLL’s standard for employer status is coextensive with the FLSA’s, but there is no
case law to the contrary.”).
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 17 of 46
On the undisputed facts, Credico satisfies neither the formal nor functional control tests
for joint employer status.
Hiring and Firing
Plaintiffs concede that Credico “delegated to its subcontractors direct responsibility for
hiring and firing agents.” Pl. Br. at 36–37. They argue nevertheless that Credico maintained
“ultimate control” of the hiring process in that Cromex could not hire an agent unless and until
Credico generated an individual “activation code” for that agent. Id. at 37; see also JSF ¶ 50. It
is undisputed that Credico’s role in generating an activation code was limited to ensuring that the
agent successfully completed the onboarding process required by Credico’s clients. Credico 56.1
¶¶ 67–68; Pl. Counter 56.1 ¶¶ 67–68. The fact that Credico played a necessary, albeit
mechanical, role in the hiring process does not itself demonstrate control. Cf. Lawrence v.
Adderley Industries, Inc., No. 09 Civ. 2309 (SJF) (ETB), 2011 WL 666304, at *3 (E.D.N.Y.
2011) (telecommunications company lacks power to hire technicians employed by contractor
even though “[a] technician cannot work on a . . . job [for the company] without an identification
As for firing, plaintiffs argue that even though Cromex could terminate agents without
Credico’s consent, Credico maintained the right to terminate employees by prohibiting them
from working on the Assurance Wireless campaign. Pl. Br. at 37–38. This residual authority to
“deactivate” agents, however, has been held not to demonstrate joint employer control. In JeanLouis v. Metro. Cable Communications, Inc., for instance, the district court distinguished
between the power to fire and Time Warner’s “power to ‘de-authorize’ any Metro technician
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 18 of 46
from installing Time Warner services at customers’ home while employed by Metro.” 838 F.
Supp. 2d 111, 124 (S.D.N.Y. 2011). The district court reasoned that the power to de-authorize in
such a context differed from a firing decision because technicians could continue to perform
other work for Metro. See id. (“[I]t is undisputed that a Metro technician whom Time Warner
has prohibited from perform[ing] installation work while employed by Metro may continue
working for Metro in some other capacity, say as a dispatcher or warehouse worker, or leave
Metro and later perform installations while working as a technician for another company.”).
Time Warner’s exercise of its de-authorization power therefore was “not the same as a decision
to either (a) prevent a Metro technician from working for Metro altogether; or (b) prevent a
Metro technician from working for another service company that does installation work for Time
Warner,” and it was therefore “difficult to describe a decision by Time Warner that has neither
consequence as equivalent to a decision to fire a Metro technician.” Id.
The district court drew a similar distinction in Godlewska v. HDA, in which home
healthcare attendants employed by a not-for-profit contractor brought FLSA claims against the
contractor as well as a city agency that engaged the contractor to administer home attendant
services to city residents. 916 F. Supp. 2d 246 (E.D.N.Y. 2013), aff’d sub nom. Godlewska v.
Human Dev. Ass’n, Inc., 561 F. App’x 108 (2d Cir. 2014). In granting the city agency’s motion
for summary judgment on the ground that it was not a joint employer, the district court
distinguished between the agency’s power to direct the contractor to remove a home attendant
from a particular patient’s case and the power to terminate the home attendant. See id. at 258
(although the city agency could “direct [the contractor] to remove [a] home attendant from [a]
particular patient’s case,” there was “no evidence, . . . that [the city agency] ha[d] power . . . to
require [the contractor] to fire a home attendant entirely”).
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The same distinction also carried the day in Lawrence v. Adderley Industries, Inc., 2011
WL 666304 (E.D.N.Y. Feb. 11, 2011). There, the district court held that Cablevision had not
exercised formal control over technicians employed by a contractor, Adderley Industries, such
that Cablevision could be considered the technicians’ joint employer under the FLSA. Id. at *11.
Cablevision “maintain[ed] a list of approved workers, i.e., individuals authorized to install its
equipment, and any individual not on that list [could not] install Cablevision equipment.” Id. at
*3. Cablevision had the power to “direct Adderley not to assign an individual who was
previously employed by one of its other contractors and had been disciplined or fired for bad
performance to a Cablevision project” or to “remove technicians from its list of approved
workers.” Id. Notwithstanding this “de-authorization” power, the district court held that
“[b]ased upon the evidence in the record, there [was] no genuine dispute as to a material fact that
Cablevision did not . . . have the power to hire and fire [Adderly] technicians.” Id. at *8.
Plaintiffs counter that deactivation in this case amounted to termination because Cromex
worked exclusively for Credico and its clients. Pl. Br. at 38 n.36. But Cromex was permitted to
work with other entities, Credico 56.1 ¶ 55, and in any event, the record suggests Credico’s
deactivation authority was not absolute, as Xu testified that she declined to terminate a group of
agents notwithstanding Credico’s request, Second Williams Decl., Ex. 79 at 81.
Accordingly, the first formal control factor does not favor a finding of joint employer
Work Schedules and Conditions
The Court next assesses whether plaintiffs have adduced evidence sufficient to support a
finding that Credico supervised and controlled plaintiffs’ work schedules or conditions of
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The record is clear that Cromex, rather than Credico, controlled plaintiffs’ schedules.
Plaintiffs admit that Credico did not set agents’ hours or schedules except insofar as Cromex was
an agent of Credico. Pl. Counter 56.1 ¶ 110; see also Pl. Reply Br. at 6 (“Cromex provided
Plaintiffs with a daily schedule.”). Plaintiffs’ primary argument as to this factor—raised in a
footnote—is that Credico must have exercised scheduling control because, purportedly, “all of
Credico’s subcontractors throughout the country adhere to similar daily schedules and routine.”
Pl. Br. at 39 n.37. Because plaintiffs fail to provide record support for this factual assertion,
however, it may not be credited in evaluating the summary judgment motions. See Fed. R. Civ.
P. 56(c)(1). 7
The record is equally clear regarding supervision. Plaintiffs identified Cromex
representatives as their supervisors. JSF ¶ 202. They identified no Credico employees as having
supervised, directed, assigned, or otherwise controlled their work on the Assurance Wireless
campaign. Credico 56.1 ¶ 98. Cromex, not Credico, conducted training, determined daily sales
locations, oversaw work in the field, and reviewed sales numbers at the end of the day. JSF
¶¶ 131, 146–47, 169–70. Consistent with those facts, plaintiffs never communicated with
Credico employees save one Credico consultant, Pl. Counter 56.1 ¶ 136, and Yang, Torres, and
Zheng could not name a single Credico employee, JSF ¶¶ 206, 211, 215. Indeed, plaintiffs
apparently had “no means of contacting Credico.” Cr. 56.1 ¶ 192; see also JSF ¶¶ 212, 217.
Plaintiffs respond primarily that Credico nevertheless had the “right” to supervise agents.
Pl. Br. at 32–33 & n.31. Although plaintiffs are correct that joint employer status may be found
even where control is “exercised only occasionally,” id. at 32 n.31 (quoting Herman, 172 F.3d at
Plaintiffs argue further that the Management Training Program required “long hours” for
agents. Pl. Reply Br. at 21 n.36. Even assuming Credico mandated “long hours,” it remains
undisputed that Cromex dictated agents’ day-to-day schedules.
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 21 of 46
139), here Credico in fact did not exercise control over plaintiffs’ day-to-day operations. To be
sure, Credico did exercise some measure of quality control to ensure compliance with Sprint’s
SOPs. See id. at 31–33. But evaluation and monitoring to ensure productivity and compliance is
not tantamount to control. Again, Jean-Louis is instructive. Plaintiffs there presented extensive
evidence of monitoring by Time Warner, including:
that sixteen full-time Time Warner personnel conduct 800–900 random quality
control assessments per week on what amounts to some 4% of all jobs; that Time
Warner contracts to obtain real-time feedback regarding Metro installations
directly from Time Warner customers; that Time Warner uses its assessments and
the ECHO results to compile extensive and detailed data regarding these
assessments; and that Time Warner provides this data to Metro and discusses it
with Metro in monthly meetings.
838 F. Supp. 2d at 127. Nevertheless, the district court held, such efforts did not reflect a joint
employer relationship: “[A]ll of this evidence shows that Time Warner makes efforts to ensure
that Metro is providing quality service; the evidence does not show that Time Warner controls
the day-to-day manner in which technicians provide that service.” Id. It held further: “Plaintiff’s
evidence regarding Time Warner’s quality control assessments cannot establish control of work
schedules or conditions of employment under the law of this Circuit.” Id. at 128; see also Zheng,
355 F.3d at 75 (“[S]upervision with respect to contractual warranties of quality and time of
delivery has no bearing on the joint employment inquiry, as such supervision is perfectly
consistent with a typical, legitimate, subcontracting arrangement.”).
Other courts have similarly held that “[e]xercising quality control by having strict
standards and monitoring compliance with those standards does not constitute supervising and
controlling employees’ work conditions.” Godlewska, 916 F. Supp. 2d at 259; see also Chen v.
Street Beat Sportswear, Inc., 364 F. Supp. 2d 269, 286 (E.D.N.Y. 2005) (“[T]he Court will not
consider evidence plaintiffs present with respect to this factor to the extent it concerns the
presence of . . . quality control personnel.”). Courts instead have distinguished between
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 22 of 46
circumstances where the putative joint employer “‘maintains specific standards to which [its
contractors] and [the contractors’ employees] must adhere, and regularly monitors the
[contractor’s employees] to ensure that their performance satisfies [the putative joint employer’s]
expectations,’” which does not itself establish control of work conditions, and circumstances
where the putative joint employer “‘is . . . responsible for the day-to-day management of the
[contractor’s employees].’” Lawrence, 2011 WL 666304, at *9 (quoting Jacobson v. Comcast
Corp., 740 F. Supp. 2d 683, 692 (D. Md. 2010)).
The Second Circuit’s recent decision in Saleem v. Corporate Transportation Group, Ltd.,
854 F.3d 131 (2d Cir. 2017), is in accord. There, black-car drivers asserted FLSA and NYLL
claims against owners of black-car “base licenses” and certain affiliated entities. Id. at 134. The
black-car drivers had signed agreements with certain defendants that required the black-car
drivers to follow “Rulebooks.” Id. at 136. These were manuals that “set out certain standards
of conduct.” Id. The Rulebooks included, inter alia, prohibitions on “harassing customers or
other drivers and submitting fraudulent vouchers,” “a dress code, which required drivers to dress
neatly in specified business attire,” and “guidelines for keeping vehicles clean.” Id. The
defendants insisted upon compliance with the Rulebooks and could hold hearings and impose
penalties in the event of noncompliance. Id. Nevertheless, the Second Circuit held that the
Rulebooks did not render the black-car drivers defendants’ employees, as defendants “wielded
virtually no influence over other essential components of the business.” Id. at 149.
At bottom, Credico exercised no more than minimal control over plaintiffs’ work.
Absent meaningful control over plaintiffs’ schedules or conditions of employment, the second
formal factor inclines strongly in Credico’s favor.
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 23 of 46
Rate and Methods of Payment
There is no genuine dispute that Cromex, not Credico, determined whether agents were
classified as independent contractors or employees. Credico 56.1 ¶ 166. 8 Nevertheless, “the test
is whether a putative joint employer determines pay rates, not whether it affects them.” JeanLouis, 838 F. Supp. 2d at 129–30. The heart of this analysis, therefore, is whether Credico or
Cromex determined agents’ pay rate.
As to that question, Plaintiffs provide persuasive documentary evidence. A 2014 Credico
memorandum provides “[o]ffices must pay agent commission following the established rates on
the commission policy; no deviation on commission should be made.” First Savytska Decl., Ex.
37 at 31098. In turn, the March 8, 2015 Commission Schedule states “[i]n accordance with this
Schedule . . . and the Subcontractor Agreement, commissions shall be paid to Subcontractor and
Subcontractor shall pay commissions to its field representatives as follows:
Assurance Wireless - Approved Sale
First Savytska Decl. Ex. 79 at 3. Credico further maintains a database that tracks agents’ sales
data and produces pay reports for ISO owners. JSF ¶¶ 79–82.
Defendants counter with testimony by Credico employees that, in practice and as
understood by Credico and the ISOs, “[t]he rate specified in the commission schedules is merely
Plaintiffs suggest that Credico demonstrated its control over classification after this lawsuit was
filed by refusing to work with subcontractors who classified agents as independent contractors.
Pl. Br. at 40 n.39; JSF ¶ 75. But the mere fact that Credico could have exercised this form of
control over classification is insufficient to demonstrate formal or functional control. A
contractor is always free to choose a new subcontractor in order to redirect policy in any (lawful)
direction. Until the contractor exercises that authority in service of a particular policy, however,
it cannot be said to have exerted control over that policy; otherwise, control over every element
of managerial policy would be attributable to the contractor.
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 24 of 46
a suggestion, and the subcontractor owners are free to distribute their payments as they see fit.”
Credico Counter 56.1 ¶ 76. One ISO owner testified that he could and did decide payment rates
without restriction from Credico, and that he paid agents at rates that went above those set forth
in the Credico documents. First Williams Decl., Ex. 1 at 87 (“I can pay the [field agents]
whatever way I want and whatever amount I wish.”).
There is therefore a factual dispute on this issue, and it goes to the heart of this formal
control factor. If Credico’s Commission Schedule rates were mandatory, then Credico exercised
control over field agents’ rate of payment. If, however, these rates were merely suggestions,
such that Credico and Cromex understood that Cromex was free to set pay rates without
pushback, then such control did not clearly rest in Credico’s hands. On summary judgment, the
Court cannot resolve that dispute. For purposes of each side’s cross-motion on the joint
employment issue, the Court must assume, arguendo, that this factor is resolved contrary to the
As to Credico’s motion, however, that conclusion would not preclude a finding that
Credico lacked formal control over plaintiffs. Where the formal control factors considered as a
whole clearly disfavor a finding of such control, the Court may so find. In Godlewska, for
example, the district court held that the first, second, and fourth formal control factors weighed
against formal control while the third factor was inconclusive. 916 F. Supp. 2d at 262. On that
record, the court held, there was no formal control, even if the defendant were assumed to have
determined plaintiffs’ rate and method of payment:
[T]he [formal control] test is not satisfied because the [defendant] did not have the
power to hire and fire, did not supervise and control plaintiffs’ schedules and
conditions of employment, and did not maintain employment records. In light of
my finding that the first, second, and fourth [formal control] factors are not
satisfied, the record’s inconclusiveness as to the third [formal control] factor is
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Id. Therefore this Court—having held that the first and second factors disfavor formal control—
turns to the fourth factor.
Plaintiffs argue that Credico maintained employment records because it kept a database
listing agents’ contact information, sales data, and other information necessary for generating
pay records. Pl. Br. at 40–41. The parties do not dispute that Credico maintains a file containing
each agent’s name, date of birth, gender, start date, contact information, ISO, and number of
sign-ups recorded each day. Pl. 56.1 ¶¶ 44–45, 48; Credico Counter 56.1 ¶¶ 44–45, 48.
Nevertheless, Credico “never ‘maintained employment records on the matter most
relevant to overtime obligations under the FLSA: the hours worked’ by individual [field
agents].” Jean-Louis, 838 F. Supp. 2d at 130 (quoting Barfield, 537 F.3d at 144) (emphasis in
Jean-Louis). “This is not a case where a putative joint employer ‘signs off on’ time sheets
completed by each plaintiff, ‘verif[ies] the number of hours worked by each’ plaintiff and ‘then
provides records of the hours worked’ to the plaintiff’s contractor employer who uses the records
to compensate the plaintiff on a per-hour basis.” Id. (quoting Barfield, 537 F.3d at 136).
Moreover, Sprint’s SOPs required Credico to keep records of onboarding information to
comply with Lifeline Program regulations. See First Williams Decl., Ex. 13 at 540. Where a
putative joint employer’s activities with respect to employment records constitute “only an
extension of . . . quality control procedures,” this formal control factor is not satisfied.
Godlewska, 916 F. Supp. 2d at 262 (internal quotation marks omitted); see also Jean-Louis, 838
F. Supp. 2d at 131 (because Time Warner’s records . . . do not translate into Metro technicians’
per hour compensation but are instead maintained largely as part of Time Warner’s quality
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control process, those records do not weigh in favor of finding that Time Warner jointly employs
Accordingly, the fourth formal control factor does not favor joint employer status.
Because the first and second factors are likewise unsatisfied, Credico did not exercise formal
control of Cromex field agents. The Court turns next to the analysis of functional control.
Premises and Equipment
“[W]hether a putative joint employer’s premises and equipment are used by its putative
joint employees . . . is relevant because the shared use of premises and equipment may support
the inference that a putative joint employer has functional control over the plaintiffs’ work.”
Zheng, 355 F.3d at 72. “Although . . . shared premises . . . is [not] anything close to a perfect
proxy for joint employment (because they are . . . perfectly consistent with a legitimate
subcontracting relationship), the factfinder can use these readily verifiable facts as a starting
point in uncovering the economic realities of a business relationship.” Id.
The record is clear that plaintiffs never reported to or worked at any Credico office.
Credico 56.1 ¶ 95. Yang, Torres, and Zheng each could not name a single person who worked at
Credico. JSF ¶¶ 206, 211, 215. Indeed, Torres testified that he did not know where Credico’s
office was located. Id. ¶ 210. On the other hand, it is undisputed that Credico supplied certain
equipment—the tablets that plaintiffs used to collect applications—and that plaintiffs picked up
these tablets at the Cromex office before heading out into the field each day. Id. ¶¶ 153–55.
This functional control factor is therefore inconclusive. Credico’s separate premises
weigh against a finding of functional control, but plaintiffs’ use of Credico equipment weighs in
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 27 of 46
Whether Immediate Employer’s Business Shifts as Unit
The next functional control factor asks whether Cromex “had a business that could or did
shift as a unit from one putative joint employer to another.” Jean-Louis, 838 F. Supp. 2d at 132
(quoting Zheng, 355 F.3d at 72). “This factor ‘is relevant because a subcontractor that seeks
business from a variety of contractors is less likely to be part of a subterfuge arrangement than a
subcontractor that serves a single client.’” Id. (quoting Zheng, 355 F.3d at 72). “Nevertheless,
the Second Circuit has cautioned that ‘the absence of a broad client base,’ like ‘shared premises,’
is not ‘anything close to a perfect proxy for joint employment (because they are both perfectly
consistent with a legitimate subcontracting relationship).’” Id. (quoting Zheng, 355 F.3d at 72).
Here, it is undisputed that Cromex contracted only with Credico. JSF ¶ 30. Credico
responds that the terms of its subcontracting agreement expressly permitted Cromex to work
with other brokers on other campaigns, and that other ISOs did contract with other brokers.
Credico 56.1 ¶¶ 7, 55. Plaintiffs counter that the subcontracting agreement contained a noncompete clause prohibiting Cromex from working with any enterprises competing with Credico
in the telecommunications, energy, charity, merchant services, or credit card industries. Pl. Br.
at 29; First Williams Decl., Ex. 18 at 277–78. Other ISOs were bound by similar non-compete
agreements, Pl. Counter 56.1 ¶ 7, but it is unclear whether those ISOs worked with other
This factor, too, is therefore inconclusive. In holding that a group of black-car drivers
were independent contractors not subject to a franchisor’s control, the Second Circuit observed
not only that the drivers transported passengers for competitor black-car companies, but also,
“significantly,” that the drivers’ non-compete provisions did not prohibit them from doing so.
Saleem, 854 F.3d at 136, 141–42. Here, the effect of the non-compete provision is less clear.
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 28 of 46
Although Cromex indisputably had the contractual authority to shift contractors, its functional
ability to do so was limited by a broad non-compete clause that, to the extent enforceable, would
have required engaging a contractor in a substantially different segment of the market. Credico
Br. at 25. Whether as a result of that provision or not, Cromex did not work with other
contractors, and it is unclear whether other ISOs subject to the same provision were able to do
so. Under these circumstances, the evidence relating to the second functional control factor is
Whether Plaintiffs Have Discrete Line Jobs
The third functional control factor “examines the extent to which [p]laintiff[s] performed
a discrete line job that was integral to the purported joint employer’s process of production.”
Hugee v. SJC Grp., No. 13 Civ. 0423 (GBD), 2013 WL 4399226, at *9 (S.D.N.Y. August 14,
2013). “Interpreted broadly, this factor could be said to be implicated in every subcontracting
relationship, because all subcontractors perform a function that a general contractor deems
‘integral’ to a product or service.” Jean-Louis, 838 F. Supp. 2d at 133–34 (quoting Zheng, 355
F.3d at 73) (emphasis in original). Accordingly, this factor is examined on a spectrum:
On one end of the spectrum lies piecework on a producer’s premises that requires
minimal training or equipment, and . . . [o]n the other end of the spectrum lies
work that is not part of an integrated production unit, that is not performed on a
predictable schedule, and that requires specialized skills or expensive technology.
Hugee, 2013 WL 4399226, at *9 (quoting Zheng, 355 F.3d at 73). “[C]ourts have questioned
whether this factor translates well outside of the production line employment situation.”
Godlewska, 916 F. Supp. 2d at 263 (internal quotation marks and alterations omitted); see also
Jean–Louis, 838 F. Supp. 2d at 134 (“[T]he third factor might apply with somewhat less vigor
where, as here, the parties are engaged in providing a service rather than manufacturing a
product.”). In part for that reason, courts are to consult “industry custom and historical practice”
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in weighing this factor, as “insofar as the practice of using subcontractors to complete a
particular task is widespread, it is unlikely to be a mere subterfuge to avoid complying with labor
laws.” Zheng, 355 F.3d at 73–74.
The facts here do not signal joint employment. To be sure, field agents’ work is in some
sense integral to Credico’s business: field agents solicit customers, and Credico ultimately
derives its revenue from those face-to-face interactions. Pl. 56.1 ¶ 95; Credico Counter 56.1
¶ 95. But the marketing and outreach services that the field agents provide are ultimately just
that, services, rather than discrete line jobs. Cf. Hugee, 2013 WL 4399226, at *9 (“As a security
guard, Plaintiff was a service provider and did not perform a discrete line job. . . . Thus, the third
[functional control] factor weighs against a finding of joint employment.”).
Further, there is no question that direct marketing and sales campaigns are commonly
outsourced. See Credico 56.1 ¶ 23. Credico, in fact, is just one of multiple OAs conducting
Sprint’s Assurance Wireless campaign. JSF ¶¶ 102–05. Plaintiffs offer no evidence to suggest
that this outsourcing model has been devised here or elsewhere to evade application of labor
Given the nature of plaintiffs’ work as providers of a service and the ubiquity of
outsourcing in the relevant industry, the third functional control factor does not favor a finding of
Whether the Contractors Are Fungible
The fourth factor examines “whether responsibility under the contracts could pass from
one subcontractor to another without material changes.” Zheng, 355 F.3d at 72. “[T]his factor
weighs in favor of a determination of joint employment when employees are tied to an entity . . .
rather than to an ostensible direct employer.” Id. On the other hand, where “employees work for
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an entity (the purported joint employer) only to the extent that their direct employer is hired by
that entity, this factor does not in any way support the determination that a joint employment
relationship exists.” Id.
“[T]he Second Circuit has stated that if the fourth factor ‘weigh[ed] in favor of joint
employment when a general contractor uses numerous subcontractors who compete for work and
have different employees,’ the fourth factor ‘would classify nearly all subcontracting
relationships as joint employment relationships—a result that finds no support either in the law
or in our country’s practices.’” Jean-Louis, 838 F. Supp. 2d at 135 (quoting Zheng, 355 F.3d at
74 n.11) (emphasis in original). Accordingly, “the fourth factor asks not whether all of the
putative joint employer’s contractors do the same work but whether, if the putative joint
employer hired one contractor rather than another, ‘the same employees would continue to do the
same work in the same place.’” Jean-Louis, 838 F. Supp. 2d at 135 (quoting Zheng, 355 F.3d at
74) (emphasis in original).
This factor is inconclusive. Favoring defendants, it is undisputed that ISOs, rather than
Credico, hire field agents. Credico 56.1 ¶ 67. In finding against joint employment, the court in
Jean-Louis noted that, because “the undisputed evidence shows that, rather than hiring
technicians, Time Warner hires contractors who hire technicians, all the evidence suggests that
when an Installation Company dissolves, technicians wishing to continue working on behalf of
Time Warner are required to apply and be hired for a position from another Installation
Company.” Id. (internal quotation marks and alterations omitted).
At the same time, plaintiffs offer evidence that Cromex field agents might not necessarily
work for Credico “only to the extent that their direct employer is hired by that entity.” Id.
(quoting Zheng, 355 F.3d at 72). Agents could transfer between ISOs on the same campaign by
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filling out a form and submitting it to Credico for review. JSF ¶ 125. Torres, for instance,
transferred from one Credico subcontractor to another, where he performed nearly identical
duties on the same schedule and with the same pay. Pl. 56.1 ¶ 81. There are also emails from
Credico employees referencing transfers of agents between offices. See, e.g., Second Savytska
Decl., Ex. 94. Accordingly, although the evidence is conjectural insofar as Credico and Cromex
in fact maintained their relationship, there is some evidence that could support an inference that
Cromex’s field agents “would continue [providing outreach services for Credico] if [Credico]
severed its relationship with [Cromex].” See Jean-Louis, 838 F. Supp. 2d at 135.
The fifth functional control factor assesses “the degree to which [Credico] or [its] agents
supervised plaintiffs’ work.” Zheng, 355 F.3d at 72. As reviewed above in connection with the
second formal control factor, plaintiffs have not adduced evidence sufficient to support a finding
that Credico played a significant role in supervising plaintiffs. See supra Section III(A)(2)(a)(ii).
“The inquiry under this factor is ‘largely the same’ as the inquiry under the second [formal
control] factor and is the most relevant factor in determining whether a purported joint employer
exercises functional control over plaintiffs.” Godlewska, 916 F. Supp. 2d at 264 (quoting JeanLouis, 838 F. Supp. 2d at 126 n.7). Although “there is evidence that [Credico] supervised
[Cromex field agents] in some minimal capacity[,] . . . on balance, even considering all of the
evidence in the light most favorable to Plaintiffs,” this functional control factor cannot support a
finding that Credico jointly employed plaintiffs. Jean-Louis, 838 F. Supp. 2d at 135.
Exclusive or Predominant Work
The sixth functional control factor assesses “whether plaintiffs worked exclusively or
predominantly for [Credico].” Zheng, 355 F.3d at 72. The record is clear that, during the
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relevant time period, plaintiffs worked only for Credico. JSF ¶ 139. This factor therefore
weighs in favor of joint control. See Jean-Louis, 838 F. Supp. 2d at 136 (“The parties do not
dispute that, during the time period at issue in this case, Metro technicians performed
installations only for Time Warner. Accordingly, this factor weighs in favor of finding that Time
Warner jointly employed Metro technicians.”).
Ultimately, after analyzing the relevant functional control factors, the Court finds that,
“on balance,” Godlewska, 916 F. Supp. 2d at 265, Credico did not exercise functional control
over Cromex field agents, see Zheng, 355 F.3d at 76–77 (“[T]he Court need not decide that every
factor weighs against joint employment.”) (emphasis in original). The first, second, and fourth
factors are inconclusive; the third and fifth disfavor a finding of functional control; and the sixth
alone favors such a finding. Of these factors, “[m]ost importantly, the fifth [functional control]
factor is not satisfied; [Credico] did not supervise plaintiffs’ work, manage plaintiffs on a day-today basis, or evaluate plaintiffs’ performance” beyond quality control assessments. Godlewska,
916 F. Supp. 2d at 265 (emphasis added). “In short, [Credico] did not relate to plaintiffs as an
employer.” Id. (finding no functional control where “the overlapping second, sixth, and, to a
lesser extent, fourth [functional control] factors are satisfied”).
Accordingly, the Court finds that Credico neither formally nor functionally controlled
Cromex field agents. It therefore cannot be held liable for the claimed FLSA and NYLL
violations as a joint employer.
Nor can Credico be held liable for any alleged violations of Arizona law. The parties
agree that the joint employer analysis under Arizona law is identical to that under the FLSA and
NYLL. See Credico Br. at 9 n.6; Pl. Reply Br. at 26 n.44. Federal courts in Arizona have
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embraced that position. See, e.g., Montoya v. 3PD, Inc., CV-13-8068 (PCT) (SMM), 2014 WL
3385116, at *1 n.2 (D. Ariz. July 10, 2014); Collinge v. IntelliQuick Delivery, Inc., 2:12-00824
(JWS), 2013 WL 6410164, at *1 n.6 (D. Ariz. Dec. 8, 2013) (“Both sides tacitly recognize—and
the court agrees—that if the . . . defendants are not employers within the broad definition of that
term under the FLSA, then they cannot be employers for purposes of [the AWA and AMWA].”).
This approach is also consistent with the statutory language, as the FLSA and AMWA define
“[e]mployer” identically as an entity acting “directly or indirectly in the interest of an employer
in relation to an employee.” FLSA § 203(d); AMWA § 23-362(B). In view of this authority, as
well as the AMWA’s express application of FLSA standards in defining “[e]mploy,” see AMWA
§ 23-362(D), the Court proceeds upon the parties’ agreement.
Like Cromex, Vaeley was a Credico ISO contracted to work on the Assurance Wireless
campaign. JSF ¶ 220. The parties agree that Torres had no greater contacts with Credico while
working at Vaeley than he did at Cromex. Id. ¶¶ 210–14, 228–29. Plaintiffs further concede that
Torres’s work schedule and compensation at Vaeley were consistent with those at Cromex. Pl.
56.1 ¶ 81. As plaintiffs have offered no basis to distinguish Vaeley from Cromex with respect to
Credico’s formal or functional control, they have not adduced sufficient evidence to demonstrate
that Credico served as Torres’s joint employer while he worked at Vaeley. Credico therefore
cannot be held liable as Torres’s joint employer, and because Vaeley has not been named a
defendant here, any claims arising out of Arizona law must be dismissed.
The Outside Sales Exception
The next issue raised by the cross-motions is whether, even if plaintiffs were employees
rather than independent contractors, the outside sales exception to the FLSA and NYLL apply.
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 34 of 46
Applicable Legal Standards
The FLSA’s minimum wage and maximum hour requirements for the payment of
employees do not apply to “an employee employed . . . in the capacity of an outside salesman.”
29 U.S.C. § 213(a)(1). The NYLL incorporates this “outside sales” exception. See NYLL § 651
(“‘Employee’ includes any individual employed or permitted to work by an employer in any
occupation, but shall not include any individual who is employed or permitted to work . . . as an
outside salesman[.]”); see also Kinney v. Artist & Brand Agency LLC, No. 13 Civ. 8864 (LAK)
(DF), 2015 WL 10714080, at *12 (S.D.N.Y. Nov. 25, 2015), report and recommendation
adopted, No. 13 Civ. 8864 (LAK), 2016 WL 1643876 (S.D.N.Y. Apr. 22, 2016); Gold v. N.Y.
Life Ins. Co., 730 F.3d 137, 145 (2d Cir. 2013); Cangelosi v. Gabriel Bros, Inc., No. 15 Civ.
3736 (JMF), 2015 WL 6107730, at *2 (S.D.N.Y. Oct. 15, 2015).
“‘An employee employed in the capacity of an outside salesman’ is an employee (1)
whose ‘primary duty’ is ‘making sales,’ or ‘obtaining orders or contracts for services or for the
use of facilities for which a consideration will be paid by the client or customer,’” and (2) “[w]ho
is customarily and regularly engaged away from the employer’s place or places of business in
performing such primary duty.” Kinney, 2015 WL 10714080, at *12 (quoting 29 C.F.R.
“Primary duty” refers to “the principal, main, major or most important duty that the
employee performs.” 29 C.F.R. § 541.700(a).
“A sale ‘includes any sale, exchange, contract to sell, consignment for sale, shipment for
sale, or other disposition.’” Flood v. Just Energy Mktg. Corp., No. 15 Civ. 2012 (KBF), 2017
WL 280820, at *4 (S.D.N.Y. Jan. 20, 2017) (quoting 29 U.S.C. § 203(k)). “The U.S. Supreme
Court has explained that ‘other disposition’ must be interpreted to mean ‘those arrangements that
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are tantamount, in a particular industry, to a paradigmatic sale of a commodity.’” Id. (quoting
Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 164 (2012)).
“Courts also consider whether the employee bears indicia of an outside salesperson.”
Flood, 2017 WL 280820, at *4. As to that inquiry, courts consider the “hallmark activities” of
an outside sales employee, such as “(1) whether the employee generates commissions for himself
through his work, (2) the level of supervision of the employee, (3) the amount of work done
away from the employer's place of business, (4) whether the employee independently solicits
new business, and (5) the extent to which the employee’s work is unsuitable to an hourly wage.”
Chenensky v. N.Y. Life Ins. Co., No. 07 Civ. 11504 (WHP), 2009 WL 4975237, at *5 (S.D.N.Y.
Dec. 22, 2009). “The question of how an employee spends his time working is one of fact, but
the question of whether those activities exempt him from the FLSA is one of law.” Id.
For the reasons that follow, the Court holds that plaintiffs fall under the outside sales
exemption because (1) the field agents’ primary duty was sales, (2) the field agents customarily
and regularly engaged in that primary duty away from Cromex’s place of business, and (3) the
field agents bore the indicia of outside salespeople.
Sales as Primary Duty
Plaintiffs argue at the outset that it is unclear whether their “primary duty” was signing
up customers or “recruiting new agents and becoming leaders in the Management Training
Program.” Pl. Br. at 53–54. This is not a matter of genuine dispute. The parties agree that field
agents “spent the majority of their day” soliciting and collecting Assurance Wireless applications
from individuals seeking to enroll in the Lifeline Program. JSF ¶ 181. Each plaintiff has averred
“I participated in Cromex’s so-called ‘Management Training Program,’” but the “only work
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myself and my co-workers performed was to go out in the field and try to sign up new customers
for Assurance Wireless.” Torres Decl. ¶ 8; Zheng Decl. ¶ 4; Yang Decl. ¶ 5; see also Vasto
Decl. ¶¶ 11–12 (“I started the so-called ‘Management Training Program’ . . . . In reality, the only
work myself and my co-workers performed was to go out in the field and try to sign up new
customers for Assurance Wireless.”). Indeed, Yang confirmed that his “primary duty [was] to be
out in the field signing people up for the phones and the phone service.” Pl. Counter 56.1 ¶ 137.
Hence the Court proceeds on the understanding that plaintiffs’ primary duty was signing
up Assurance Wireless applicants. That task entailed approaching potential Assurance Wireless
applicants, engaging them with a “pitch” about Assurance Wireless, providing information
regarding Lifeline Program services, asking questions, and uploading applications via tablet.
JSF ¶¶ 158, 189–90; Credico 56.1 ¶¶ 137–41. Further, because a potential recipient of Lifeline
Program services may receive only one Lifeline Program enrolled mobile phone per household,
JSF ¶ 100, Sprint’s SOPs required field agents to “ask potential applicants if they currently have
a lifeline phone with [Assurance Wireless] or any other carrier” and “if they have applied with
[Assurance Wireless] or any lifeline carrier recently,” First Williams Decl., Ex. 15 at 537.
Plaintiffs were paid on a commission basis for approved Assurance Wireless applications, and
were thereby incented to collect as many successful applications as possible, whether from new
applicants or from applicants with existing enrollments through other carriers. JSF ¶ 187;
Credico 56.1 ¶¶ 141, 160.
The parties dispute whether this work is properly characterized as sales. As noted, this
question, one of applying law to fact, is for the Court. See Flood, 2017 WL 280820, at *4
(“[T]he question of how [plaintiffs] spent their working time is a question of fact. The question
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whether their particular activities excluded them from the overtime benefits of the FLSA is a
question of law.”) (internal quotation marks and alterations omitted).
Plaintiffs raise two principal arguments why their work as field agents seeking to induce
applicants to enroll in the Lifeline Program via Sprint’s particular brand of products and services
did not constitute sales. First, plaintiffs note, the products and services that the field agents
promoted were ultimately provided free of charge to qualifying applicants, and “no money was
exchanged.” Pl. Br. at 52. Second, they argue, the field agents did not obtain a binding
commitment from the potential applicant. In fact, at the conclusion of a field agent’s interaction
with an applicant, defendants would not have extended a binding offer to the applicant or even
made a decision whether the applicant was eligible under the Lifeline Program. See id. at 52–53.
Plaintiffs’ first argument is based on the fact that the qualifying applicants did not
themselves pay money to Sprint for its products and services. Instead, as beneficiaries of the
Lifeline Program, they received Sprint’s products and services gratis. But Sprint was otherwise
compensated for its each consummated sale: It was paid subsidies by the federal government—
through the Universal Service Administrative Company—for providing these products and
services pursuant to the Lifeline Program. Pl. Counter 56.1 ¶ 27. The field agents’ classification
as exempt outside salespeople is not precluded by the fact that a third party, the government, paid
the agents’ principal, Sprint. For purposes of the outside sales exemption, there is no
requirement that payment to outside salespeople come directly from the customer. See
Christopher, 567 U.S. at 165 (pharmaceutical sales representatives made sales when soliciting
nonbinding commitments from doctors to write prescriptions for patients who ultimately
purchased pharmaceuticals). Here, as counsel for Credico analogized at argument in Martin,
qualifying applicants effectively possessed (courtesy of the federal program) a “virtual voucher”
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for Lifeline Program services, and the field agents’ job was to persuade these applicants to spend
that voucher on Sprint. See Transcript of Oral Argument at 52, Martin v. Sprint United
Management Co., No. 15 Civ. 5237, Dkt. 319.
Plaintiffs’ second argument fails because an employee need not have created binding
sales or orders to be considered an outside salesperson. “There is nothing in the FLSA or the
NYLL that limits the definition of an outside salesperson to someone who has the unfettered
discretion to finalize a binding sale.” Flood, 2017 WL 280820, at *5; see also Baum v.
AstraZeneca LP, 605 F. Supp. 2d 669, 680 (W.D. Pa. 2009), aff’d on other grounds, 372 F.
App’x 246 (3d Cir. 2010) (“[T]he statutory language does not require a final sale, complete and
consummated.”). Rather, it is enough for employees to have “‘direct[ed] efforts toward the
consummation of a sale.’” Flood, 2017 WL 280820, at *5; see also Dailey v. Just Energy Mktg.
Corp., No. 14-cv-02012 (HSG), 2015 WL 4498430, at *3 (N.D. Cal. July 23, 2015) (an
“employee is clearly engaged in sales activity” where she “directs [her] efforts at persuading a
particular customer to purchase a product and is compensated on the basis of [her] success in
doing so”) (citation omitted).
Judge Forrest’s decision in Flood v. Just Energy Marketing Corp. is instructive. There,
the plaintiff brought FLSA and NYLL claims on behalf of himself and other door-to-door
workers who solicited new accounts for Just Energy Marketing Corp., Just Energy New York
Corp., and Just Energy Group, Inc. (collectively, “Just Energy”), companies that marketed and
sold gas and electricity. 2017 WL 280820. The plaintiff argued that he was not an outside
salesperson because he lacked authority to approve a new customer for an energy contract with
Just Energy; Just Energy had the final discretion whether to accept a new customer, and the
contracts for Just Energy services were not effective until Just Energy approved them. Id. at *2.
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Judge Forrest rejected that argument, reasoning: “If he was not making the sale, who was? No
one? This makes no sense. Indeed, he was paid commissions based directly on sales he had
made. The proof is in the pudding, so to speak.” Id. at *4.
Here, as in Flood, plaintiffs’ efforts were plainly directed toward the consummation of a
sale. Field agents’ job involved persuading potentially qualifying customers to fill out an
application for Lifeline Program services and to induce current Lifeline Program enrollees to
switch to Sprint’s Assurance Wireless brand from other Lifeline Program service providers that
competed with Sprint. If the customer was found qualified, he or she would receive products and
services from Sprint, and the field agent would receive a commission. See Sydney v. Time
Warner Entm’t-Advance/Newhouse P’ship, No. 13 Civ. 286 (FJS), 2017 WL 1167284, at *4-5
(N.D.N.Y. Mar. 28, 2017) (territory sales representatives’ “primary duty was making sales”
where “the entirety of their job was focused on acquiring new customers” for installation
services for which they were paid on commission).
Accordingly, the Court finds that the field agents’ primary duty while working at Cromex
Away From Employer’s Place of Business
It is undisputed that field agents spent the majority of their work hours performing their
duties in the field, away from the Cromex office. JSF ¶ 181. Accordingly, plaintiffs meet the
outside sales exemption’s requirement that they be “customarily and regularly engaged away
from [Cromex’s] place or places of business in performing [their] primary duty.” Kinney, 2015
WL 10714080, at *12 (quoting 29 C.F.R. § 541.500(a)).
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 40 of 46
Indicia of Outside Salesperson
The field agents also bore many indicia of outside salespeople. They independently
solicited new business in the form of new applications for Lifeline Program services through
Assurance Wireless. They received a commission-based salary. JSF ¶ 139. The field agents
“worked away from the office, with minimal supervision, and they were rewarded for their
efforts with incentive compensation.” Christopher, 567 U.S. at 166.
These characteristics of the field agents’ work resemble the circumstances of Chenensky
v. New York Life Insurance Co., in which the district court found that the outside sales exemption
applied where the plaintiff “solicited new business, presented available products to prospects,
obtained a commitment to purchase, and ultimately received a commission-based salary.” 2009
WL 4975237, at *6. The district court there also found persuasive the fact that the plaintiff
“spent a majority of his time outside of the New York Life office, free from a manager’s day-today supervision.” Id.
Similarly, in Nielsen v. Devry Inc., a district court in Michigan held that the outside sales
exemption applied to “field representatives” employed by Devry, Inc., “a for-profit company that
provides career-oriented, technology-based higher education at more than 25 campuses
nationwide.” 302 F. Supp. 2d 747, 750 (W.D. Mich. 2003). The field representatives’ job was
“to identify potential students, persuade them to apply, and follow through with them to ensure
they ultimately pay tuition and begin classes.” Id. In finding that the outside sales exemption
applied, the district court relied in part on the fact that the field representatives were paid a salary
with a “commission-like feature.” Id. at 757. The district court reasoned that “[c]ompensation
based wholly or in significant part on commissions correlates with a finding that the employee
does sales work.” Id.
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To be sure, compared to some outside salespeople, the work of Cromex field agents was
not inherently “unsuitable to an hourly wage.” See Pl. Br. at 47–48. Inasmuch as the field
agents had to report to the Cromex office at the beginning and end of each workday to receive
and return their tablets, JSF ¶¶ 154, 170, an hourly wage arrangement was presumably
administratively feasible. But the presence of ample other “hallmark activities” of outside
salespeople supports finding that this exemption applies. Chenensky, 2009 WL 4975237, at *5.
Further, to the extent that plaintiffs’ apparently low earnings distinguish this case from Flood
and Dailey, see Pl. Br. at 51 n.49, nothing in the FLSA sets a compensation floor for the outside
sales exemption, and indeed the exemption’s regulatory history reveals that the Department of
Labor expressly rejected applying a minimum salary requirement, see Defining and Delimiting
the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer
Employees, 69 Fed. Reg. 22122-01, 22175–76, 2004 WL 865626 (Apr. 23, 2004) (“Since outside
sales employees are not subject to the standard salary level test, it would not be appropriate to
apply the highly compensated test to these employees.”).
Accordingly, the Court holds that, even if plaintiffs were employees of Cromex, they
were exempt under the FLSA and NYLL as outside salespeople.
Plaintiffs Vasto and Yang also allege retaliation under the FLSA. To wit, they claim that
Cromex terminated them as a result of their complaints about their status as independent
contractors. Although plaintiffs originally brought claims under both the FLSA and NYLL
Section 740, they withdrew the latter claim in their opposition brief, proceeding instead under the
FLSA alone. Pl. Br. at 57. Defendants move for summary judgment on the issue.
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The FLSA provides that it is “unlawful for any person . . . to discharge or in any other
manner discriminate against any employee because such employee has filed any complaint or
instituted or caused to be instituted any proceeding under or related to [the FLSA].” 29 U.S.C.
§ 215(a)(3). The Court evaluates an FLSA retaliation claim under the familiar three-step burdenshifting framework established by McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973).
First, a plaintiff must establish a prima facie case of retaliation by showing “(1) participation in
protected activity known to the defendant, like the filing of an FLSA lawsuit; (2) an employment
action disadvantaging the plaintiff; and (3) a causal connection between the protected activity
and the adverse employment action.” Mullins v. City of New York, 626 F.3d 47, 53 (2d Cir.
2010). If the plaintiff does so, “the burden shifts to the defendant to articulate a ‘legitimate, nondiscriminatory reason for the employment action.’” Id. (quoting Weinstock v. Columbia Univ.,
224 F.3d 33, 42 (2d Cir. 2000)). The plaintiff must then produce “sufficient evidence to support
a rational finding” that defendants’ proffered rationales “were false, and that more likely than not
discrimination was the real reason for the employment action.” Id. at 53–54 (internal quotation
Plaintiffs falter at the first step, as they fail to show they participated in a “protected
activity known to the defendant.” See id. at 53. To satisfy that element of a prima facie case, an
employee’s “complaint must be sufficiently clear and detailed for a reasonable employer to
understand it, in light of both content and context, as an assertion of rights protected by the
statute and a call for their protection.” Greathouse v. JHS Sec., Inc., 784 F.3d 105, 116 (2d Cir.
2015) (quoting Kasten v. Saint–Gobain Performance Plastics Corp., 563 U.S. 1, 14 (2011)). An
“employee need not invoke the Act by name,” and “oral complaints made to an employer” will
suffice, but the employee must “make the assertion of rights plain.” Id.
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In this case, Vasto averred in his deposition that he was “retaliated against, because time
and time again” he told his supervisors that he “was an independent contractor.” First Williams
Decl., Ex. 28 at 198. He complained that he “had a right as an independent contractor to conduct
business on the terms of an independent contractor, i.e., to have more freedom.” Id. at 199.
Specifically, he sought the flexibility to choose his location, his hours, his days, and his break
period. Id. at 197–199. Yang, too, alleges retaliation “based on the fact that [he] was constantly
presenting proposals to be an independent contractor,” seeking to pursue his own ideas for
marketing events. First Savytska Decl., Ex. 41 at 241–42.
The parties dispute whether a worker’s complaint that he was “misclassified” as an
independent contractor qualifies as protected activity absent a specific invocation of the rights
associated with employee status. At least one court in this district has held it does not. See
Landeata v. N.Y. & Presbyterian Hosp., Inc., No. 12-4462, 2014 WL 836991, at *8–9 (S.D.N.Y,
March 4, 2014). Vasto and Yang’s claims, however, fail for a more fundamental reason: because
they complained only that they were entitled to more workplace “freedom” as independent
contractors, neither sought to be treated as an employee under the FLSA, let alone to invoke the
rights enjoyed by such an employee.
Independent contractors are “outside the reach” of the FLSA. See Hart, 967 F. Supp. 2d
at 911. Although the Act provides employees with certain protections, such as the right to a
minimum wage, 29 U.S.C. § 206, or extra pay for overtime, id. § 207, it contains no
corresponding protections for independent contractors. As such, plaintiffs did not make “an
assertion of rights protected by the statute.” Kasten, 563 U.S. at 14.
Plaintiffs’ cited cases are not to the contrary. In one, the plaintiff complained to
management on eight separate occasions that the company “was not in compliance with the
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FLSA” because it underpaid employees, going so far as to provide “copies of the statute on some
occasions.” Rosenfeld v. GlobalTranz Enters., Inc., 811 F.3d 282, 288 (9th Cir. 2015). In
another, the plaintiff had written a letter to her employer stating “she was misclassified as
exempt under the FLSA, and was entitled to overtime pay.” Valerio v. Putnam Assocs., Inc., 173
F.3d 35, 45 (1st Cir. 1999). In these cases, the employee put the employer on notice of a
complaint under the FLSA, even if the complaint conveyed little more than that the employer
was “breaking some sort of law” by paying low wages. See E.E.O.C. v. Romeo Cmty. Sch., 976
F.2d 985, 989 (6th Cir. 1992). The cases thus share a common thread: the plaintiff complained
that she (or others) ought to receive the legal benefits attendant to employee status.
In this case, by contrast, plaintiffs never sought overtime or minimum wage, let alone
raised express complaints to that effect. Instead, they embraced their status as independent
contractors—a status outside the ambit of the FLSA—and requested only that their duties
conform to that status. And the comments that plaintiffs claim were the impetus for retaliation
cannot be interpreted as expressing a desire to vindicate rights protected under the FLSA. To the
contrary, they sought “time and time again” to reaffirm their status as independent contractors
and thereby secure workplace freedoms to which they were not entitled under the FLSA. A
reasonable employer would understand these complaints not as assertions of rights under the
FLSA, but rather as complaints about working conditions or the terms of plaintiffs’ “employment
contract as [they] understood it.” Dunn v. Sederakis, 143 F. Supp. 3d 102, 114 (S.D.N.Y. 2015)
(holding generalized complaints about overtime compensation insufficient to state a claim for
FLSA retaliation). Indeed, as plaintiffs’ own authority reveals, “not all abstract grumblings will
suffice to constitute the filing of a complaint with one’s employer.” Valerio, 173 F.3d at 44; see
also Lambert v. Ackerley, 180 F.3d 997, 1007 (9th Cir. 1999) (“[N]ot all amorphous expressions
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 45 of 46
of discontent related to wages and hours constitute complaints filed within the meaning of
§ 215(a)(3).”). In short, plaintiffs’ complaints were far from being “sufficiently clear and
detailed” articulations of FLSA-relevant grievances to put Cromex on notice that plaintiffs
sought “protection” under the FLSA. See Kasten, 563 U.S. at 14. As such, they fail to establish
a prima facie case of retaliation. The Court therefore grants defendants’ motion for summary
judgment on that claim. 9
Employees vs. Independent Contractors
As noted, the cross-motions for summary judgment also raise the issue whether plaintiffs
were properly classified as independent contractors rather than employees under the FLSA and
NYLL. Were the Court to reach this issue, the same principles articulated in Martin would
apply. See 2017 WL 4326109, at 32–33. But here, as in Martin, the Court has no occasion,
under either statute, to examine whether plaintiffs were employees or independent contractors.
The Court’s ruling that the outside sales exemption applies precludes plaintiffs’ minimum wage
and overtime claims, and plaintiffs’ claims against Credico are separately interred by the Court’s
ruling that, even if plaintiffs were employees of Cromex, Credico was not a joint employer.
For the foregoing reasons, the Court (1) denies plaintiffs’ motion for partial summary
judgment and (2) grants’ defendants’ cross-motions for summary judgment. The effect of this
ruling is to grant summary judgment in favor of defendants on all claims.
The Court therefore need not reach defendants’ alternative arguments that (1) Cromex had a
legitimate, non-retaliatory reason for terminating Vasto and Yang that plaintiffs cannot show is
pretextual, and (2) that Vasto and Yang waived any FLSA retaliation claim by bringing claims
under NYLL Section 740. See Credico Br. at 45–50; Cromex Br. at 25–30.
Case 1:15-cv-09298-PAE Document 247 Filed 10/27/17 Page 46 of 46
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