Court Opinion

ID: 8408638
Source: CourtListenerOpinion
Date Created: 2022-11-02 16:45:33.993664+00
Date Added: 2024-06-11T16:47:35.903990
License: Public Domain

JACOBS, Circuit Judge,
dissenting.
I respectfully dissent.
Participants in New York City’s Work Experience Program (“WEP”) are not covered by Title VII because they are not “employees” of the City of New York. Under the settled principles set out in this opinion: (1) a person is not an employee unless she is “hired” by an employer (and is not an independent contractor); (2) a person is hired only if she receives direct or indirect remuneration for services rendered; (3) the remuneration must be substantial; and (4) remuneration includes wages and benefits but excludes benefits that are incidental to the work.
The welfare benefits received by WEP participants are not wages because the Personal Responsibility and Work Opportunity Reconciliation Act (“PRWORA”) says they are not: “A penalty imposed by a State against the family of an individual by reason of the failure of the individual to comply with a requirement under the State program funded under [PRWORA] shall not be construed to be a reduction in any wage paid to the individual.” 42 U.S.C. § 608(c). And the several other small accommodations afforded to participants are' incidental to their WEP assignments. Thus carfare and child care reimbursements merely facilitate the recipient’s appearance at work and forestall excuses for nonappearance; and workers’ compensation advantages the City by limiting its liability for accidents at- a workfare site. As the majority notes, these supposed benefits “are necessary only because the [welfare] recipient works.” Maj. Op. at 95-96. As *103our case law demonstrates, however, things that are needed only because someone does work (such as the provision of a desk or a parking space) do not count in assessing whether a person is receiving “substantial benefits” amounting to remuneration.
Thus, an intern at a psychiatric hospital who receives a federal work study grant is not an employee, O’Connor v. Davis, 126 F.3d 112, 115-16 (2d Cir.1997); nor is a lawyer volunteering her services to a bar association. York v. Assoc. of the Bar, 286 F.3d 122, 125-126 (2d Cir.2002). For the same reasons, a WEP participant assigned to the City for work experience is not a City employee.
The majority’s conferral of employee status on WEP participants offers no incremental protection from sex discrimination. That protection is already secured by state law. Congress directed the states to establish remedies for discrimination claims arising out of programs funded under the PRWORA, 42 U.S.C. § 603(a)(5)(I)(iv). In particular, New York State law prohibits the discrimination that is alleged by these plaintiffs. See N.Y. Soc. Serv. Law § 331(3) (prohibiting “discrimination on the basis of race, color, national origin, sex, religion or handicap, in the selection of [WEP] participants, their assignment or reassignment to work activities and duties, and the separate use of facilities or other treatment of [WEP] participants”). The holding of the majority opinion is therefore unnecessary to protect the plaintiffs; for the same reason, the section of the majority opinion that recounts “in some detail” the repellent facts of the discrimination alleged by each individual is gratuitous. See Maj. Op. at 88-90.
Since the protection against sexual discrimination afforded by the majority opinion is redundant, the only likely impact of this case will be to frustrate important welfare reforms by impairing the flexible and temporary nature of WEP assignments. PRWORA was designed, inter alia, to assist state programs that allow welfare recipients to move from dependency to gainful employment via training and workplace experience. 42 U.S.C. § 601(a)(2). If WEP participants are “employees” under federal common law, it may then follow — and it will certainly be argued — that they have a right, like other employees, to unionize, see 29 U.S.C. § 157 (“Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing .... ”), a development incompatible with the statutory goal of a transitional work experience. And there are no doubt other implications under state law of turning thousands of WEP participants into City employees. Cf. Brukhman v. Giuliani, 94 N.Y.2d 387, 705 N.Y.S.2d 558, 727 N.E.2d 116 (2000) (discussing, inter alia, employee status under the New York State Constitution).
The only other circuit court to consider the question, discussed infra Section IV.C, has rejected the idea that workfare participants are employees. See Johns v. Stewart, 57 F.3d 1544, 1557-59 (10th Cir.1995) (holding that workfare participants are not employees under the Fair Labor Standards Act).
I
Title VII defines an “employee” as “an individual employed by an employer,” 42 U.S.C. § 2000e(f), a definition that we have called “unhelpful[ ],” Pietras v. Bd. of Fire Comm’rs, 180 F.3d 468, 473 (2d Cir.1999), and “circular,” O’Connor, 126 F.3d at 115. “Courts have assumed, however, that in using the term employee Congress had in mind ‘the conventional master-servant re*104lationship as understood by common-law agency doctrine.’ ” Pietras, 180 F.3d at 473 (quoting Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322-23, 112 S.Ct. 1344, 117 L.Ed.2d 581 (1992)). In ascertaining whether WEP participants are “employees” for purposes of Title VII, we therefore look to “the cluster of ideas” attached to that term under the common law. See INS v. St. Cyr, 533 U.S. 289, 312 n. 35, 121 S.Ct. 2271, 150 L.Ed.2d 347 (2001) (quoting Morissette v. United States, 342 U.S. 246, 263, 72 S.Ct. 240, 96 L.Ed. 288 (1952)).
Much of the common law on this subject differentiates employees from independent contractors, see, e.g., O’Connor, 126 F.3d at 115, a distinction that is irrelevant here. This Court has pointed out, however, that independent contractors and employees share an essential feature: both are “hired parties.” Id. (quoting Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989)). “[T]hus, a prerequisite to considering whether an individual is one or the other under common-law agency principles is that the individual have been hired in the first instance. That is, only where a ‘hire’ has occurred should the common-law agency analysis be undertaken.” Id.; see Reid, 490 U.S. at 743, 109 S.Ct. 2166 (“[I]n using the term ‘employee,’ ... Congress meant to refer to a hired party in a conventional employment relationship.”) (emphasis added); cf. Clackamas Gastroenterology Assocs. v. Wells, 538 U.S. 440, 123 S.Ct. 1673, 1680, 155 L.Ed.2d 615 (2003) (stating that “[t]he employer can hire and fire employees”).
In O’Connor, we articulated the requirement that a Title VII plaintiff be “hired in the first instance.” O’Connor, 126 F.3d at 115. In that case, a college student sued a hospital in which she had been working as an intern, alleging sexual harassment in violation of Title VII. Id. at 113. In rejecting the intern’s Title VII claim, we held that she had never been hired as a hospital employee because she was owed no “direct or indirect economic remuneration” amounting to “compensation” for her work. Id. at 116. We specifically relied on the fact that the plaintiff received “no salary or other wages, and no employee benefits such as health insurance, vacation, or sick pay, nor was she promised any such compensation.” Id. We explicitly rejected the arguments [i] that receipt of federal work study funding (based on the number of hours she worked at the hospital) was sufficient to make her a hospital employee and [ii] that such a governmental benefit could be considered compensation. Id. at 116 n. 2. In dismissing the Title VII claims, we explained that “although ‘compensation by the putative employer to the putative employee in exchange for his services is not a sufficient condition, ... it is an essential condition to the existence of an employer-employee relationship.’ ” Id. at 116 (quoting Graves v. Women’s Prof'l Rodeo Assoc., 907 F.2d 71, 73 (8th Cir.1990)).
The majority opinion attempts to distinguish O’Connor on the ground that here “the City is both the payor and the recipient of the plaintiffs’ services.” Maj. Op. at 95. Casting the City as “payor” glides over the dispositive question: just what is being paid? As O’Connor holds, unless the payee is being paid compensation, the payee is not an employee. As the New York Court of Appeals has held, the “agencies and entities” to which WEP participants are assigned “simply do not pay a salary to the Program participants.” Brukhman, 94 N.Y.2d at 396, 705 N.Y.S.2d at 563, 727 N.E.2d 116 (internal citation omitted).
The majority attempts to distinguish Brukhman on the ground that it would be *105“foolhardy to assume that the New York Court of Appeals would extend its interpretation of the prevailing wage provision [of the New York Constitution] to Title VII.” 1 Maj. Op. at 95. However, Judge Bellacosa’s opinion is categorical on this point, and the court’s holding rests on principles applicable to employment status generally:
[WEP] participants simply are not “in the employ of’ anyone — that is the very reason they are receiving welfare benefits and required to participate in the Program, until they can find or be placed in jobs with the customary array of traditional indicia of employment. The Program’s policy and procedures manual directs that “participants are expected to seek paid employment.” Participants are “assigned” (Social Services Law § 336-a) to various “work site[s]” (Social Services Law § 336 — c), where they provide “valuable service” until they are able “to secure employment in the regular economy” (see, [WEP] Program Manual). While the agencies providing work assignment opportunities obviously employ some people, they are not “employing” Program participants (see, Social Investigator Eligibles Assn. v. Taylor, [268 N.Y. 233, 236-237, 197 N.E. 262 (1935) ] [work relief participants are not subject to the Civil Service Law]). These agencies and entities simply do not pay a salary to the Program participants — one of the fundamental requisites that sparks the prevailing wage entitlement [in the New York State Constitution].
Brukhman, 94 N.Y.2d at 393, 395-96, 705 N.Y.S.2d at 561, 563, 727 N.E.2d 116. The Bnikhman analysis is of course wholly consistent with PRWORA’s goal of promoting employment. See 42 U.S.C. § 601(a)(2).
In any event, the outcome of this appeal should not hinge on whether a City agency is the “payor” of funds that come from the federal government and the State of New York and that are earmarked by them for the purpose of paying WEP participants — ■ a hypertechnicality if there ever was one.2
II.
Although “an employment relationship within the scope of Title VII can exist even when the putative employee receives no salary,” see Pietras, 180 F.3d at 473, the usual compensation for work is wages. The majority emphasizes that the welfare benefits received by WEP participants equal the hours they work multiplied by the minimum wage, “an all too typical way of calculating compensation for work.” Maj. Op. at 95-96. But the inference— that Temporary Assistance to Needy Families (“TANF”) is wages — is unavailable; in O’Connor, we held that work study funding did not support an inference of employment even though the funding was calculated on the basis of the number of hours worked. 126 F.3d at 112 n. 2. The inference on which the majority relies is also blocked by statute:
A penalty imposed by a State against the family of an individual by reason of the failure of the individual to comply with a requirement under the State program funded under this part shall not be *106construed to be a reduction in any wage paid to the individual.
42 U.S.C. § 608(c) (emphasis added).
The majority explains away this unambiguous command by saying that it “only makes sense” if welfare benefits are wages, maj. op. at 96, i.e., that reduction in benefits could not be construed or misconstrued as a reduction in “any wage” unless it is a wage to begin with, and that “Congress could easily have said that the benefits at issue may not be considered wages.” Maj. Op. at 95-96 The holding of the majority opinion is thus the offspring of a negative pregnant. Moreover, the inference drawn by the majority is defective. Section 608(c) refers to “any wage” (which may account for receipt of payments in excess of the welfare benefits by some WEP participants in private sector assignments), and Congress could easily have said “the wage” instead of “any wage” if (as the majority argues) the WEP benefits constitute wages. The majority has simply rejected the most natural and direct reading of the text; no wording can be framed by Congress to withstand an aggressive misreading.
I subscribe to the conclusion in Brukhman: “These agencies and entities simply do not pay a salary to the [Work Experience] Program participants .... ” 94 N.Y.2d at 396, 705 N.Y.S.2d at 563, 727 N.E.2d 116.
Alternatively, the majority asserts that (even if TANF benefits are not wages) the carfare, child care and workers’ compensation incidental to WEP participation suffice alone to constitute remuneration. See Majority op. at 92-93. This idea is refuted in the following two sections.
III.
Our employment cases recognize that unpaid workers may nevertheless receive enough “direct or indirect economic remuneration” to be “hired” if certain of their benefits' — those that are not merely incidental to the work — taken together, reach a sufficiently high level. See, e.g., York, 286 F.3d at 125-26; Pietras, 180 F.3d at 473.
In York, we dismissed a suit in which a lawyer working on committees of the Association of the Bar of the City of New York sued the Association under Title VII alleging sexual harassment. York, 286 F.3d at 123-124. We held that “in order to satisfy this Circuit’s remuneration test,” the plaintiff must show that the benefits received were (1) “sufficiently substantial” and (2) “not merely incidental to the activity performed.” Id. at 126. York received the following benefits: (i) workspace, (ii) clerical support, (iii) publicity, (iv) tax deductions for nonreimbursable expenses, (v) networking opportunities, and (vi) reimbursement for out-of-pocket expenses. Id. at 124. We held that these things were both insubstantial and incidental as contrasted with “salary, vacation, sick pay, or benefits such as health insurance, disability insurance, life insurance, death benefits, and retirement pension, all of which primarily benefit the employee independently of the employer.” Id. at 126.
In Pietras, a volunteer firefighter sued her department under Title VII, prevailing after a bench trial. On appeal, the fire department argued (for the first time) that she was not an employee under Title VII.3 The “significant benefits” she cited “included: (1) a retirement pension, (2) life *107insurance, (3) death benefits, (4) disability-insurance, and (5) some medical benefits.” Id. at 471, 473. Those benefits are of course among the ordinary, bargained-for emoluments of employment; the health and death benefits do not appear to have been limited to injury or death on the job; and all of these things “primarily benefit the employee independently of the employer.” York, 286 F.3d at 126. Even so, we held only that the firefighter’s status as a “hired person” was a “fact question [because she was] entitled to significant benefits.” Pietras, 180 F.3d at 473 (emphasis added). In so doing, we relied heavily on Haavistola v. Cmty. Fire Co., 6 F.3d 211 (4th Cir.1993), which held that disputed material facts precluded summary judgment on the question of whether a volunteer firefighter was an “employee” under Title YII. See Pietras, 180 F.3d at 473 (noting that the O’Connor court had distinguished Haavistola).
The WEP benefits cited by the majority opinion (reviewed in Section IV below) do not even raise an issue of fact: they are wholly incidental to WEP participants’ workfare assignments and they chiefly benefit the City. Such benefits cannot be deemed compensation in lieu of wages; no one needing gainful employment could work for such a package.
IV
Viewed in light of York, Pietras, and O’Connor, it is clear that plaintiffs are not “employees” under Title VII. Plaintiffs cannot prevail if the benefits they received as WEP participants were either [A] “not sufficiently substantial” such that they amount to “compensation,” or [B] “merely incidental to the activity performed.” York, 286 F.3d at 126; accord Pietras, 180 F.3d at 473; O’Connor, 126 F.3d at 115-16. And their claims are insufficient on both counts.
A
Benefits are “sufficiently substantial” only when they amount to a form of compensation. See O’Connor, 126 F.3d at 115-116 (“ ‘[C]ompensation ... is an essential condition to the existence of an employer-employee relationship.’ ” (internal citation omitted)). WEP participants receive continued eligibility for their welfare benefits, limited workers’ compensation benefits, and reimbursements for carfare to and from work and for child care during the working day. No doubt, WEP participants prefer to get transportation and child care benefits; but no one would think that such benefits amount to “compensation” for the work; they hardly •would induce anyone to spend his day maintaining City parks.
Workers’ compensation is chiefly a benefit for the employer: without it, WEP participants could sue the City for tort damages. See U.S. v. Demko, 385 U.S. 149, 152, 87 S.Ct. 382, 17 L.Ed.2d 258 (1966) (“[Wjhere there is a compensation statute that reasonably and fairly covers a particular group of workers, it presumably is the exclusive remedy to protect that group.”). True, the worker gets relief that is more sure and prompt, but that is no incremental advantage to WEP participants because their medical coverage would in any case be the responsibility of the government.
The majority opinion emphasizes that WEP participants must work in order to maintain their eligibility for welfare benefits. But such reliance on the receipt of governmental- cash benefits runs afoul of O’Connor as well as 42 U.S.C. § 608(c), for reasons set forth in Section II of this opinion.
B
Benefits can be tantamount to remuneration only if they are sufficiently “substan*108tial,” in themselves or in tandem with a wage. The law therefore discounts benefits that are incidental to employment (i.e. benefits or accommodations that one needs only because one is working). Thus, non-cash benefits that are “merely incidental to the activit[ies] performed” are not compensation. York, 286 F.3d at 126.
WEP participants receive: carfare, which ensures the attendance of participants at WEP assignments, scattered throughout the City; and .child-care expense reimbursement, which is paid only while the participant is at. work. The majority concedes that “child care and transportation expenses ... are payments that are necessary only because the recipient works.” Maj. Op. at 95-96. ‘ Worker’s compensation, which covers only workplace injuries, is similarly incidental.
No person seeking gainful employment would accept as full compensation the cost of getting to work plus insurance for on-the-job injury:' thus, for example, a miner works for wages and benefits that profit the miner, not for rides on the mineshaft elevator, a head-lamp, and the canary.
C
The majority opinion creates a ■ circuit split; the only other circuit to consider the question now before us came out the other way. ..See Johns v. Stewart, 57 F.3d 1544, 1557-59 (10th Cir.1995) (holding, that workfare participants were not employees). The majority opinion declines to follow Johns on a number of grounds, none persuasive.
First, the majority opinion notes that Johns .was a case under the Fair Labor Standards Act (“FLSA”), not Title VII. See Maj. Op. at 94. The distinction proves too much, however, because the definition of “employee” in the FLSA is considerably more inclusive than the common law definition used in Title VII. See 29 U.S.C. §§ 203(g), (e) (defining “employ” under the FLSA as including “to suffer or permit to work” and “employee” as “any individual employed by an employer”); Frankel v. Bally, Inc., 987 F.2d 86, 89 (2d Cir.1993) (“Title VII do[es] not contain the same expansive definition of the term ‘employ’ used in the FLSA.”). The Johns analysis is therefore applicable a fortiori. Moreover, decisions in the FLSA context hold that individuals in programs designed to prepare them for employment are not employees, and thereby confirm that WEP participants are not employed.4
Second, the majority observes that the Department of Labor (“DOL”), the agency charged with interpreting the FLSA, has implicitly rejected Johns. Maj. Op. at 94. The apparent source of this purported rejection is a DOL “Guidance” in the form of questions and answers, which notes that “[wjelfare recipients would probably be considered employees [under FLSA] in *109many, if not most, of the work activities described in the new welfare law.” Similarly, the majority relies on a compliance manual promulgated by the EEOC-the agency charged with interpreting Title VII — to support its view that WEP participants are employees under 42 U.S.C. § 2000e(f). Maj. Op. at 94-95.
However, the majority concedes that a DOL guidance and an EEOC manual are entitled to no deference beyond their “power to persuade.” [Id.] (quoting Christensen v. Harris County, 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000)). The (hedged) assertion in the DOL guidance is without an express or implied basis; it is unpersuasive because that which does not explain cannot persuade. Nor am I persuaded by the EEOC compliance manual; and it wouldn’t matter if I were, because the EEOC’s interpretation cannot be squared with our precedent in O’Connor, Pietras, and York.
Third, the majority opinion speculates that the Johns plaintiffs may not have “received the full range of benefits owing to WEP participants” and that they may not have been “required to perform useful work.” Maj. Op. at 94. The phrase “full range of benefits” is an absurd misdescription; and the relevant passage in Johns gives no support to the majority’s speculation about the nature of the benefits received or the work performed by the Johns plaintiffs:
[although [the workfare] participants may perform the same functions as regular employees at some of the projects to which they are assigned, they differ from state employees in that they do not receive the same salary, safe working conditions, job security, career development, Social Security, pension rights, collective bargaining, or grievance procedures as do the actual employees.
Johns, 57 F.3d at 1559 (quoting Klaips v. Bergland, 715 F.2d 477, 483 (10th Cir. 1983)).
Finally, the majority opinion suggests that Johns rested on an “artificial dichotomy” between employment and WEP participation. See Maj. Op. at 94-95. According to the majority, this assumption runs afoul of our decision in EEOC v. Johnson & Higgins, Inc., 91 F.3d 1529, 1539-40 (2d Cir.1996) (holding that plaintiffs, who were officers and directors of a corporation, could be employees in certain capacities even if they were not employees in other capacities). But the Johns court nowhere presumed that a welfare recipient could not be an employee; the Johns court stated — as a matter of fact, not presumption— that the workfare participants at issue were “completely unlike state employees in every respect.” Johns, 57 F.3d at 1558-59. Further, the Johns court focused (as we must under O’Connor, Pietras, and York) on whether the plaintiffs received compensation from their putative employer for the work they performed. Id. at 155859.
In short, here as in Johns, a person who cleans public parks or answers City phones to preserve welfare benefits is not working for wages, see 42 U.S.C. § 608(c); O’Connor, 126 F.3d at 116 n. 2, and is receiving no compensation even if the government picks up the person in the morning, drops her off at night, offers to watch her children (if any) during working hours, or provides her with work-clothes. The record in this case makes clear that, under our precedents, the benefits received by WEP participants are both [i] insubstantial and [ii] incidental to their workfare assignments. It follows that they have not been hired by the City of New York and they cannot be employees for the purposes of Title VII.
‡ ‡ ‡ ‡ ‡
*110For the reasons stated above, I would affirm the district court’s ruling that participants in New York City’s WEP program are not “employees” under the common law meaning of that term incorporated into Title VIL I therefore would not reach the City’s implied preemption arguments that are discussed and rejected in the majority opinion.

. Presumably, the majority opinion is likewise limited (to Title VII), and "it would be foolhardy to assume” that it may be read to extend in other directions for other uses.

. If designation of the "payor” is deemed critical, then (assuming that principle is conscientiously applied in the future) the various government agencies that conduct the WEP program could obviate the holding in this case by tinkering with who cuts the checks to welfare recipients.

. Pietras styled this as a challenge to the district court’s jurisdiction. York, 180 F.3d at 123-24. Prior and subsequent cases treat "employee” status as a merits rather than a jurisdictional question. See, e.g., York, 286 F.3d at 123 (affirming district court’s ruling granting defendants’ 12(b)(6) motion without discussion of jurisdiction).

. Even under the FLSA, "[a]n individual may work for a[n employer] and nevertheless not be an ‘employee.’ ” Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 300 n. 21, 105 S.Ct. 1953, 85 L.Ed.2d 278 (1985). In deciding whether individuals fall within the FLSA’s broad definition of “employee,” courts focus on the purpose of the program that is purported to create an employment relationship. Thus, a plaintiff who performed closely-supervised work nevertheless is not an employee under the “economic'realities” test if the plaintiff's reason for participating in the program is to further his own training or rehabilitation. See Williams v. Strickland, 87 F.3d 1064, 1067-68 (9th Cir. 1996); cf. Walling v. Portland Terminal Co., 330 U.S. 148, 153, 67 S.Ct. 639, 91 L.Ed. 809 (1947) (holding that plaintiffs who performed work under close supervision were nevertheless not "employees” under the FLSA, but were instead more like students in school, since they received no direct remuneration but instead received training for a short period, after which some were offered jobs).