Opinion ID: 4565511
Heading Depth: 1
Heading Rank: 2

Heading: Appellants’ NYLL Claims Against BFBD

Text: After granting summary judgment in favor of Bimbo on Appellants’ FLSA claims, the district court also granted summary judgment on Appellants’ state-law NYLL claims. The record is silent regarding whether diversity jurisdiction would support Appellants’ NYLL claims. But even if supplemental jurisdiction is the only basis for supporting Appellants’ NYLL claims, the district court did not abuse its discretion in refusing to dismiss those claims after deciding Appellants’ federal claims on the merits. See Kroshnyi v. U.S. Pack Courier Servs., Inc., 771 F.3d 93, 102 (2d Cir. 2014) (holding that the district court did not abuse its discretion in exercising supplemental jurisdiction over state labor law claims after dismissing FLSA claims, where “discovery had been completed, dispositive motions had been submitted, and the case would soon be ready for trial”). In determining whether a worker is an employee or an independent contractor under the NYLL, courts consider the factors outlined in Bynog v. Cipriani 10 Grp., Inc., namely: “whether the worker (1) worked at his own convenience, (2) was free to engage in other employment, (3) received fringe benefits, (4) was on the employer’s payroll and (5) was on a fixed schedule.” 1 N.Y.3d 193, 198 (2003). Although these factors are similar to those considered under the FLSA inquiry, the focus of the Bynog test is slightly different: “the critical inquiry in determining whether an employment relationship exists [under the NYLL] pertains to the degree of control exercised by the purported employer over the results produced or the means used to achieve the results.” Id. We have already discussed all factors relevant to the NYLL inquiry except whether Appellants received fringe benefits or were on Bimbo’s payroll. Appellants concede that Bimbo “did not provide [Appellants] with benefits or put them on their payroll,” but they argue that these factors should not weigh against them because it is precisely Bimbo’s failure to pay benefits or characterize them as employees that is being challenged. While this argument has some merit, Appellants themselves “claimed expenses and took deductions from their taxes for tens of thousands of dollars in business expenses for their distributorships.” 2019 WL 2866168, at . Under New York law, “the manner in which the relationship is treated for income tax purposes is certainly a significant consideration,” 11 although “it is generally not singularly dispositive.” Gagen v. Kipany Prods., Ltd., 812 N.Y.S.2d 689, 691 (3d Dep’t 2006). Thus, while Appellants can hardly be faulted for claiming tax benefits associated with independent contractor status, as that was how Bimbo labeled their relationship, the third and fourth Bynog factors do still weigh against them. As IOs, Appellants set their own schedules (Factor 5) and worked at their own convenience (Factor 1). And although Appellants did not generally work for any companies other than Bimbo or carry other companies’ products, the distribution agreements made clear that they were free to engage in other employment (Factor 2). Most importantly, Bimbo exercised a minimal “degree of control” over Appellants’ day-to-day operations and the ultimate success of their distributorships. Bynog, 1 N.Y.3d at 198. All five Bynog factors therefore weigh in favor of concluding that Appellants were independent contractors, not BFBD’s employees, under the NYLL. III. Appellants’ FLSA and NYLL Claims Against BBUSA Although it is not entirely clear from its opinion, the district court also appears to have held that Appellants were not BBUSA’s employees under the FLSA or NYLL. The district court refers to BFBD and BBUSA, collectively, as 12 “Bimbo” throughout its opinion, and it held that “the economic reality of the relationship between [Appellants] and Bimbo is that [Appellants] were independent contractors” under the FLSA. 2019 WL 2866168, at . The district court nevertheless went on to hold that, because BBUSA was not a “joint employer with BFBD[,] . . . all claims against BBUSA [were dismissed] as a matter of law.” Id. The district court’s opinion appears to confuse two issues related to employer status. As we explained in Zheng v. Liberty Apparel Co., we apply “two different tests to determine whether an employment relationship exists” under the FLSA. 355 F.3d 61, 66 (2d Cir. 2003). One test examines whether an entity is an employee’s “joint employer,” and it applies when it is undisputed that the worker is already employed by one entity, but there is a question over whether that worker is also employed by the putative employer. See id. at 67 & n.2. The other test – the Superior Care test – has “been used primarily to distinguish independent contractors from employees” because it “help[s] courts determine if particular workers are independent of all employers.” Id. at 67–68. This case involves only that second question – whether Appellants were independent of both BFBD and BBUSA – so whether BBUSA is a “joint employer” is ultimately irrelevant. 13 Nevertheless, Appellants do not point to any facts that meaningfully distinguish their relationship with BBUSA from their relationship with BFBD. Thus, for the same reasons that BFBD was not Appellants’ employer under either the FLSA or the NYLL, BBUSA was also not their employer.