In the Matter of Walter E. Carver, Respondent,v.State of New York, et al., Appellants.

Brief

N.Y.September 16, 2015

No. APL-2014-00157 To be arged by: VALERIE FIGUEREDO 20 minutes requested Supreme Court, Kings County, Index No. 12355/08 State of New York Court of Appeals In the Matter of the Application of WALTER E. CARVER, Petitioner-Respondent, For a Judgment Pursuant to Article 78 of the Civil Practice Law & Rules -against- THE STATE OF NEW YORK, THE NEW YORK STATE OFFICE OF TEMPORARY AND DISABILITY ASSISTANCE and DAVID A. HANSELL, Commissioner of the New York State Office of Temporary and Disability Assistance, Respondents-Appellants, -and- THE NEW YORK STATE DEPARTMENT OF TAXATION & FINANCE and ROBERT L. MEGNA, Commissioner of the New York State Department of Taxation & Finance, and THE NEW YORK STATE DIVISION OF LOTTERY and GORDON MEDENCIA, Director of the New York State Division of Lottery, Respondents. BRIEF FOR APPELLANTS BARBARA D. UNDERWOOD Solicitor General ANISHA S. DASGUPTA Deputy Solicitor General VALERIE FIGUEREDO Assistant Solicitor General of Counsel ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Appellants 120 Broadway New York, New York 10271 (212) 416-8019 (212) 416-8962 (facsimile) Dated: October 23, 2014 i TABLE OF CONTENTS Page TABLE OF AUTHORITIES ............................................................. iii PRELIMINARY STATEMENT ........................................................ 1 QUESTIONS PRESENTED ............................................................. 4 JURISDICTIONAL STATEMENT ................................................... 4 STATEMENT OF THE CASE .......................................................... 5 A. Statutory Background .................................................... 5 1. Vocational Training Requirements for Public-Assistance Recipients .................................. 5 2. New York’s Requirement That Public- Assistance Recipients Who Win the Lottery Reimburse the State for its Past Financial Assistance .............................................................. 10 B. Factual Background ...................................................... 12 1. Carver’s Receipt of Public-Assistance Benefits from the State ......................................... 12 2. The State Retains Half of Carver’s Lottery Winnings as Reimbursement for Its Past Financial Assistance .............................................. 15 3. Carver’s Article 78 Petition ................................... 16 ARGUMENT THE FAIR LABOR STANDARDS ACT’S MINIMUM- WAGE REQUIREMENTS DO NOT APPLY TO THE MONETARY GRANTS THE STATE PROVIDES TO PUBLIC-ASSISTANCE RECIPIENTS .................................... 18 ii A. Federal Law Looks to State Law in Determining Whether a State Public- Assistance Program Implicates the FLSA. ........ 18 B. Public-Assistance Recipients Are Required to Engage in Work Activities for Training, Not as Employment. ............................................ 20 C. The FLSA Does Not Apply to the State’s Public-Assistance Work-Experience Programs. ............................................................ 25 1. This Court determined in Brukhman that HRA’s work-experience program does not have the traditional indicia of employment. ................................................... 25 2. Carver’s allegations do not warrant a departure from this Court’s analysis in Brukhman. ...................................................... 28 D. Public-Assistance Recipients Do Not Qualify as Employees under the FLSA. ............. 33 CONCLUSION ................................................................................ 42 iii TABLE OF AUTHORITIES Cases Page(s) Blair v. Wills, 420 F.3d 823 (8th Cir. 2005)....................................................... 40 Brukhman v. Giuliani, 94 N.Y.2d 387 (2000) ......................................................... passim Bucci v. Vill. of Port Chester, 22 N.Y.2d 195 (1968) ............................................................ 28, 30 Carver v. City of N.Y., No. 08-cv-3677 (E.D.N.Y. Aug. 1, 2011) ..................................... 16 Carver v. State, 79 A.D.3d 1393 (3d Dep’t 2010) .................................................. 16 Chesterfield Assocs. v. N.Y. State Dep’t of Labor, 4 N.Y.3d 597 (2005) .................................................................... 30 Goldberg v. Whitaker House Co-op., 366 U.S. 28 (1961) ................................................................. 34, 40 Graves v. Women’s Professional Rodeo Ass’n, 907 F.2d 71 (8th Cir. 1990) ......................................................... 26 Hull-Hazard, Inc. v. Roberts, 72 N.Y.2d 900 (1988) ................................................................. 28 Johns v. Stewart, 57 F.3d 1544 (10th Cir. 1995) ............................................... 36, 37 Marshall v. Regis Educ. Corp., 666 F.2d 1324 (10th Cir. 1981) ................................. 34, 35, 38, 40 Matter of Siwek v. Mahoney, 39 N.Y.2d 159 (1976) .................................................................. 22 O’Connor v. Davis, 126 F.3d 112 (2d Cir. 1997) ...................................... 25, 26, 36, 39 iv Cases (cont’d) Page(s) Powell v. U.S. Cartridge Co., 339 U.S. 497 (1950) ..................................................................... 30 Preiser v. Rodriguez, 411 U.S. 475 (1973) ..................................................................... 33 Reich v. Parker Fire Protection Dist., 992 F.2d 1023 (10th Cir. 1993) ............................................. 38, 40 Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947) ............................................................... 30, 34 Tony & Susan Alamo Found. v. Secretary of Labor, 471 U.S. 290 (1985) ......................................................... 19, 25, 34 United States v. City of N.Y., 359 F.3d 83 (2004) ........................................................... 29, 31, 38 Walling v. Portland Terminal Co., 330 U.S. 148 (1947) ............................................................... 33, 40 Williams v. Strickland, 87 F.3d 1064 (9th Cir. 1996) ....................................................... 36 Laws State Ch. 714, 1959 N.Y. Laws 1716 .......................................................... 6 Ch. 926, 1942 N.Y. Laws 2033 .......................................................... 6 Ch. 101, 1971 N.Y. Laws 630 ............................................................ 6 Ch. 453, 1990 N.Y. Laws 3100 ...................................................... 7, 8 Ch. 568, 1970 N.Y. Laws 2129 .......................................................... 6 Ch. 593, 1962 N.Y. Laws 2835 .......................................................... 5 Ch. 53, 2014 N.Y. Laws (LRS) .................................................. 13, 38 v Laws (cont’d) Page(s) Labor Law § 821 ................................................................................ 6 Social Services Law § 2 ................................................................................................ 12 § 20 .............................................................................................. 12 § 34 .............................................................................................. 12 § 104 ............................................................................................ 11 § 104-b ......................................................................................... 11 § 105 ............................................................................................ 11 § 106 ............................................................................................ 11 § 131 ........................................................................................ 5, 21 § 131-a ................................................................................. passim § 131-r .............................................................................. 10, 11, 15 § 137 ............................................................................................ 37 § 137-a ......................................................................................... 37 § 153 ............................................................................................ 38 § 157 ............................................................................................ 13 § 158 ...................................................................................... 13, 21 § 159 ...................................................................................... 13, 21 § 330 ............................................................................................ 15 § 331 ............................................................................................ 14 § 332 ............................................................................ 8, 14, 22, 35 § 332-a ......................................................................................... 23 § 333 ............................................................................................ 32 § 335 ............................................................................ 7, 10, 15, 19 § 335-a ................................................................................. passim § 335-b ................................................................................... 14, 23 § 336 .................................................................................... passim § 336-a ..................................................................................... 8, 19 § 336-c .................................................................................. passim § 336-d ..................................................................................... 8, 19 § 341 ............................................................................................ 25 § 342 ............................................................................................ 25 § 350-e (1976) ................................................................................ 6 § 350-f (1976) ................................................................................. 6 § 350-g (1976) ................................................................................ 6 § 358 ............................................................................................ 38 vi Laws (cont’d) Page(s) Tax Law § 1613-b ....................................................................... 11, 15 Federal Pub. L. No. 100-485, 102 Stat. 2343 .............................................. 6-7 Pub. L. No. 104-193, 110 Stat. 2105 (1996) ...................................... 8 29 U.S.C. (Fair Labor Standards Act) § 201 et seq. ................................................................................... 2 § 202 ............................................................................................. 30 § 203 ................................................................................. 19, 25, 33 § 206 ....................................................................................... 18, 25 42 U.S.C. § 601(a) .................................................................................... 8, 19 § 602 ................................................................................... 8, 19, 32 § 603 ............................................................................................. 38 § 604 ......................................................................................... 9, 19 § 607 ................................................................................... 9, 23, 33 § 608 ................................................................................. 24, 25, 31 § 616 ............................................................................................. 32 § 681 (1992) ................................................................................... 6 Regulations State 18 N.Y.C.R.R. § 350.1 .................................................................................... 12, 15 § 350.2 .......................................................................................... 36 § 350.3 .................................................................................... 12, 36 § 350.4 .......................................................................................... 12 § 351.1 .................................................................................... 12, 36 § 351.2 .............................................................................. 12, 35, 36 § 351.8 .......................................................................................... 12 § 352.1 ........................................................................ 12, 21, 35, 36 § 352.2 .................................................................................... 21, 35 vii Regulations (cont’d) Page(s) 18 N.Y.C.R.R. §§ 352.2–352.7 ............................................................................. 21 § 381.1 ......................................................................................... 38 § 381.3 ......................................................................................... 38 § 385.6 ......................................................................................... 23 § 385.7 ................................................................................... 22, 23 § 385.9 ................................................................................... 22, 24 Federal 20 C.F.R. § 416.1124 ....................................................................... 37 45 C.F.R. § 233.20 ....................................................................................... 32 § 261.2(e) ....................................................................................... 9 § 261.30 ......................................................................................... 9 Legislative History (by year) Governor’s Mem., reprinted in Bill Jacket for ch. 568 (1970) ............................................................................................. 5 Senate Mem. in Support, reprinted in Bill Jacket for ch. 321 (1984) ................................................................................ 5 Senate Mem. In Support, reprinted in Bill Jacket for ch. 453 (1990) ................................................................................ 7 Budget Report on S. 4763-C, reprinted in Bill Jacket for ch. 453 (1990) .......................................................................... 7 Governor’s Approval Mem., reprinted in Bill Jacket for ch. 81 (1995) ............................................................................ 5, 20 Sen. Mem. in Support, reprinted in Bill Jacket for ch. 340 (2003) .................................................................................... 10 viii Miscellaneous Authorities Page(s) Human Res. Admin., Family Indep. Admin., Employment Process Manual (updated through Oct. 2011), available at http://onlineresources.wnylc.net/ nychra/docs/employmentprocessmanual.pdf ................. 22-24, 37 IRS Publication No. 525: Taxable & Nontaxable Income (1995–2013 eds.), available at http://apps.irs.gov/ app/picklist/list/priorFormPublication.html (Find 525 in Product Number) ............................................................. 37 Intracity Cooperative Agreement between N.Y. City Human Res. Admin. and N.Y. City Dep’t of Sanitation (Aug. 9, 2011), available at http://www.nyc.gov/html/dsny/downloads/pdf/about/ MOU/COOP2.pdf. ....................................................................... 41 U.S. GAO, Welfare to Work: State Programs Have Tested Some of the Proposed Reforms (July 1995), available at http://gao.gov/assets/230/221442.pdf ................ 20-21 PRELIMINARY STATEMENT The State of New York provides public assistance, including money grants, to provide for the basic needs of persons who are unable to support themselves or their families. Subject to certain statutory exemptions, both federal and state law have long required that the recipients of such assistance must participate in activities designed to develop and maintain their workplace readiness skills, and improve their ability to achieve economic independence. Petitioner Walter E. Carver is a former recipient of state public assistance who participated in a work-experience program administered by his local social services district, the New York City Human Resources Administration (HRA), under the supervision of the New York State Office of Temporary and Disability Assistance (OTDA). After Carver won the state lottery, OTDA notified him that state law required the agency to intercept a portion of his lottery award as reimbursement for the past public assistance he had received. Carver challenged OTDA’s determination administratively and then through separate 2 lawsuits in the Court of Claims, Supreme Court, and federal district court. In the article 78 petition giving rise to this appeal, Carver alleges, among other things, that the requirement that he reimburse the State for its public assistance violates the federal Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. He mistakenly claims that his participation in HRA’s work-experience program made him an employee for purposes of the FLSA, and thus his public-assistance grant cannot be retroactively reduced to a level below the federal minimum wage. Supreme Court, Kings County (Schneier, J.) dismissed the petition in its entirety. In rejecting Carver’s FLSA claim, Supreme Court relied on this Court’s holding in Brukhman v. Giuliani that public-assistance recipients participating in government work- experience programs are recipients of government aid, not government employees. See 94 N.Y.2d 387, 395-96 (2000). The Appellate Division, Second Department reinstated Carver’s FLSA claim, holding that Carver’s participation in HRA’s work- experience program made him a de facto City of New York 3 employee subject to the FLSA’s minimum-wage requirements. (See Appendix (A.) 11-19.) This Court should reverse the Appellate Division’s reinstatement of Carver’s FLSA claim. As this Court concluded in Brukhman, public-assistance recipients participating in government-administered work-experience programs are recipients of government assistance, not government employees. The monetary grants that such persons receive are based on statutory criteria of economic need, rather than on the number of hours they participate in a work-experience program. And their grants are not subject to the federal, state, or local taxes that apply to wage income. Carver’s public-assistance grant was governed by exactly these considerations and his circumstances are indistinguishable from those of the petitioners in Brukhman. The Appellate Division thus erred as a matter of law in concluding that Carver’s participation in a City of New York work-experience program transformed him into a city employee for purposes of the minimum-wage requirements of the federal Fair Labor Standards Act. 4 QUESTIONS PRESENTED Are public-assistance recipients who participate in government-administered work-experience programs government “employees” subject to the Fair Labor Standards Act’s minimum- wage requirements? JURISDICTIONAL STATEMENT This Court has jurisdiction under C.P.L.R. 5602(a)(1)(ii) to review an order of the Appellate Division (A. 11-19) which necessarily affects the final judgment. This Court granted the appellants’ motion for leave to appeal on June 26, 2014. (A. 1-2.) The sole issue raised in this appeal was raised before Supreme Court and decided by the Appellate Division. (A. 13-18; see A. 76; Resps. Mem. of Law in Support of Cross-Mot. to Dismiss at 11.) 5 STATEMENT OF THE CASE A. Statutory Background 1. Vocational Training Requirements for Public-Assistance Recipients The New York Legislature has concluded that programs designed to help public-assistance recipients “develop new aptitudes and skills for the purpose of preparing [them] for gainful employment” are a “vital tool in helping recipients move from public dependency to self-support.” See Social Services Law (SSL) § 131(5)(a)-(b) (repealed) (enacted by Ch. 593, 1962 N.Y. Laws 2835); Senate Mem. in Support, reprinted in Bill Jacket for ch. 321 (1984), at 8 (authorizing social services district to develop and implement local welfare-employment programs); Governor’s Mem., reprinted in Bill Jacket for ch. 568 (1970), at 2; Governor’s Approval Mem., reprinted in Bill Jacket for ch. 81 (1995), at 7, 11 (work requirements will “help employable welfare recipients develop the basic skills needed to enter the private sector work force”). Accordingly, the State’s public-assistance system has long required that potentially employable welfare recipients develop 6 and maintain their work skills as a condition of receiving public benefits. See Ch. 926, 1942 N.Y. Laws 2033 (establishing temporary work-relief program); Ch. 714, 1959 N.Y. Laws 1716; Ch. 568, § 1, 1970 N.Y. Laws 2129, 2129 (amending SSL § 131 to permit social services districts to refer employable recipients to “occupational training”); see generally SSL §§ 350-e, 350-f, 350-g (1976) (repealed) (work relief for public-assistance recipients with dependent children); Labor Law § 821 (permitting commissioner of labor to refer public-assistance recipients to occupational training); Ch. 101, 1971 N.Y. Laws 630 (first imposing work requirement). Congress has similarly concluded that programs providing vocational education and training may assist employable public- assistance recipients “to avoid long-term welfare dependence.” See 42 U.S.C. § 681 (1992) (repealed 1996). In 1988, Congress required States receiving federal funding for their public-assistance programs to create opportunities for “improv[ing] the employability of participants through actual work experience and training.” See Family Support Act of 1988, Pub. L. No. 100-485, 7 § 201, 102 Stat. 2343, 2365 (codified at 42 U.S.C § 682(f) (repealed)). Congress’s goal was to ensure that state public- assistance programs would help employable recipients transition “into regular employment.” Id. In 1990, the New York Legislature amended the Social Services Law to create the Job Opportunities and Basic Skills Program, a welfare-to-work program designed to comply with the requirements of the federal Family Support Act. See Ch. 453, 1990 N.Y. Laws 3100; Budget Report on S. 4763-C (Subject & Purpose) reprinted in Bill Jacket for ch. 453 (1990), at 7; Senate Mem. In Support (Purpose), reprinted in Bill Jacket for ch. 453, supra, at 11. The Legislature sought to provide employable public- assistance recipients with “education, training and employment opportunities,” so that such individuals could “secure unsubsidized employment that will assist [them] to achieve economic independence.” Ch. 453, § 1, 1990 N.Y. Laws at 3101 (adding § 331, policies and purposes). Under the new program, social services districts were required to assess the employability of public-assistance recipients (SSL § 335), and provide recipients 8 with vocational counseling and skills training (SSL §§ 336-a, 336- d). Recipients who were not exempt because of illness, disability, or age (SSL § 332(1)) were required to participate in work- experience programs and on-the-job training to continue receiving public assistance (SSL §§ 336, 336-c). See Ch. 453, § 1, 1990 N.Y. Laws at 3101-02, 3104-10. In 1996, Congress enacted further requirements for vocational training to be provided by state public-assistance programs receiving federal funding. See Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), Pub. L. No. 104-193, 110 Stat. 2105 (1996) (codified at, inter alia, 42 U.S.C. § 601 et seq). The PRWORA gave States greater flexibility in designing and administering welfare-to-work programs, but conditioned federal funding on States’ meeting minimum benchmarks for the participation in work activities by eligible public-assistance recipients. See 42 U.S.C. § 601(a) (“purpose of this part is to increase the flexibility of States in operating a program”); id. § 602(a) (States submit a plan identifying work activities, including their implementation of 9 work experience); id. § 604 (giving States broad discretion in deciding who is eligible for welfare); id. § 607 (mandatory work requirements). The PRWORA defined the term “work activities” to include subsidized and unsubsidized employment, on-the-job training, job- search assistance, education, and participation in “work experi- ence.” Id. § 607(d); see 45 C.F.R. § 261.30. The federal and state authorities administering the PRWORA’s requirements have defined “[w]ork experience” as vocational activity “that provides an individual with an opportunity to acquire the general skills, knowledge, and work habits necessary to obtain employment.” See 45 C.F.R. § 261.2(e); see also A. 161-162 (providing OTDA’s definition of work experience); SSL § 336-c. Similar to vocational and educational training, see 42 U.S.C. § 607(d)(5)-(11), the purpose of work experience is to assist public-assistance recipients to achieve economic independence by “improv[ing] [their] employability,” 45 C.F.R. § 261.2(e). In New York, social services districts have established work- experience programs at nonprofits or public agencies or institutions 10 that serve a public purpose in areas such as health, public safety, or recreation. (A. 102.) A social services district may assign public- assistance recipients to participate in one kind of work activity, or a combination of work activities, based on an assessment of the skills and training a recipient needs to secure full-time employment. See SSL §§ 335, 335-a, 336. 2. New York’s Requirement That Public- Assistance Recipients Who Win the Lottery Reimburse the State for its Past Financial Assistance The Legislature has sought to ensure that the State is reimbursed for monetary grants made to a public-assistance recipient in the event the recipient proximately “receives any large sums of money.” Sen. Mem. in Support, reprinted in Bill Jacket for ch. 340 (2003), at 3. To that end, OTDA may intercept a portion of a recipient’s lottery winnings if the person wins more than $600 in the lottery and has received public assistance under the Social Services Law within the prior ten years. SSL § 131-r(1). This is consistent with state laws requiring public-assistance recipients who obtain other types of financial windfall to reimburse the State 11 for recently received public benefits. See id. § 104 (reimbursement from inheritance), § 104-b (reimbursement from insurance claim for personal injury), § 105 (reimbursement from life insurance); § 106 (liens on property). State law permits OTDA to recover an amount equal to the amount of public assistance a recipient has received, up to a maximum of half of the recipient’s lottery winnings. Id. § 131-r(1). OTDA is authorized to coordinate with the State Division of Lottery to facilitate the recovery. Tax Law § 1613-b. The Lottery informs the recipient of the amount of the lottery prize that is being credited against the public-assistance benefits. Id. § 1613- b(5). OTDA informs the recipient of the procedure for contesting the crediting of the lottery prize against the public-assistance benefits. Id. § 1613-b(6). 12 B. Factual Background 1. Carver’s Receipt of Public-Assistance Benefits from the State For purposes of the State’s Social Services Law, the Legislature has defined public assistance to include the monthly financial grants provided to eligible low-income New Yorkers through various state-supervised and locally administered programs, such as Safety Net Assistance, SSL § 159, Veterans Assistance, SSL § 170, and Family Assistance, SSL § 349 (see A. 90). See also SSL § 2(19) (defining public assistance). HRA administers the State’s public-assistance programs for New York City residents, under OTDA’s supervision (A. 90, 103). See also SSL §§ 20, 34. New York City residents must apply to HRA for public assistance, and HRA is responsible for investigating and determining an individual’s eligibility for assistance (see A. 91). See 18 N.Y.C.R.R. §§ 350.1, 350.3, 350.4, 351.1, 351.2, 351.8, 352.1; see also SSL § 131-a(1). From 1997 to 2000, Carver, a New York City resident, received Safety Net Assistance through HRA (A. 39). See SSL §§ 131-a (eligibility requirements and amount of monthly grants), 13 158, 159 (safety net assistance). Safety Net Assistance provides public-assistance benefits, including monetary grants, to individuals who are not eligible for federally subsidized assistance (see A. 99). See SSL §§ 157, 158(1)(b). It is funded with state and local dollars. See Ch. 53, 2014 N.Y. Laws (LRS), at pp. 444-47 (funding breakdown). Carver received $176 in Safety Net Assistance biweekly, for a total of $10,736 from 1997 to 2000.1 (A. 39-40, 56-60, 68, 93, 99.) In addition to that grant, Carver also received Supplemental Nutrition Assistance Program (SNAP) benefits2 in the amount of $122 to $127 per month. As mandated by state law, Carver participated in “work activities” to maintain his eligibility for public assistance3 (A. 39- 1 Between September 1997, and March 2000, Carver received sixty-one monetary grants each for $176, totaling $10,736. (A. 56-60.) 2 SNAP benefits were formerly known as “food stamps.” 3 Although the monetary grants provided to recipients through the State’s Safety Net Assistance program are not funded with federal monies, the State adheres to the same requirements that the PRWORA set forth for state public-assistance programs receiving federal funds, such as the State’s Family Assistance (continued on next page) 14 40, 81-82, 93, 99, 160). See also SSL §§ 331(1), 332(1), 336(1). After assessing Carver’s skills, education, and prior work experience, see SSL § 335-a, HRA created an employability plan for Carver, and assigned him to participate in its work-experience program. (A. 82, 102.) Carver alleges that he participated in HRA’s work- experience program for thirty-five hours each week.4 (A. 39-40, 161.) As part of that program, HRA assigned Carver to the Coney Island Hospital in Brooklyn, so that he could develop the workplace skills necessary to transition to employment. (A. 82.) program. See SSL §§ 330 (defining participant), 335, 335-a; see also 18 N.Y.C.R.R. § 350.1 (defining public assistance). 4 It is exceedingly unlikely that HRA assigned Carver to participate in work experience for thirty-five hours each week. Instead, based on the amount of Carver’s public-assistance grant, Carver would likely have been required to engage in work experience for approximately twenty-one hours per week, and would have been required to dedicate any additional hours to other work activities, such as job search, skills training, and educational programming (see A. 161). See SSL §§ 336(1)(g) (cap on hours in community-service programs), 336(4) (cap on overall hours in work activities), 335-b(1)(e)(ii) (required minimum hours spent in work activities), 336-c(2)(b) (cap on hours in work- experience programs). 15 After two years, HRA reassigned Carver to the Staten Island Ferry Terminal in Manhattan. (A. 82.) Carver performed janitorial tasks at the ferry terminal until 2000 when he stopped receiving public assistance. (A. 82.) 2. The State Retains Half of Carver’s Lottery Winnings as Reimbursement for Its Past Financial Assistance In 2007, Carver won a $10,000 prize from the state lottery. (A. 40, 61.) Pursuant to state law, $5,000 of the prize was withheld by the Lottery and sent to OTDA, to reimburse the State for public-assistance benefits Carver had received in the prior ten years (A. 40, 61-62, 99). See also SSL § 131-r; Tax Law § 1613-b. The Lottery informed Carver that half of his lottery prize would be withheld. (A. 61.) OTDA also sent Carver a Notice of Lottery Prize Intercept, which explained that $5,000 of the prize money would be credited against the amount of public assistance he received from the State. (A. 62.) In a written letter to OTDA, Carver administratively challenged the intercept of the lottery prize money, and OTDA denied the challenge. (A. 41, 63-64, 68-71.) 16 3. Carver’s Article 78 Petition Carver commenced an article 78 proceeding in Supreme Court, Kings County against the State, the State Department of Taxation & Finance, OTDA, the State Division of Lottery, and various state officials to challenge the recovery of a portion of his lottery prize.5 (A. 37-55.) As relevant here, Carver argued that his participation in HRA’s work-experience program made him an employee for purposes of the FLSA and the New York State Minimum Wage Act. (A. 46-47.) He asserted that OTDA’s interception of a portion of his lottery winnings violated those 5 Carver also commenced a suit against the State, state agencies, and state officials in the Court of Claims. The Court of Claims dismissed the suit for lack of subject-matter jurisdiction, and the Third Department affirmed. See Carver v. State, 79 A.D.3d 1393 (3d Dep’t 2010). In addition, Carver brought a federal suit against the City of New York, city agencies, and city officials in the U.S. District Court for the Eastern District of New York. The district court dismissed Carver’s claims without prejudice, stating that Carver could seek leave to reopen in the event that this action does not resolve his FLSA claim. See Minute Order, Carver v. City of N.Y., No. 08-cv-3677 (E.D.N.Y. Aug. 1, 2011). 17 laws because it retroactively deprived him of the state or federal minimum wage.6 (A. 46-48.) Supreme Court dismissed Carver’s claims that the State’s recovery of his lottery winnings violated federal and state minimum-wage laws.7 (A. 28-30.) Relying on this Court’s decision in Brukhman v. Giuliani, 94 N.Y.2d 387 (2000), Supreme Court concluded that Carver was not an employee, and thus was not receiving wages, when he participated in HRA’s work-experience program. (A. 28-30.) The Appellate Division, Second Department 6 Carver’s article 78 petition also alleges that OTDA’s actions violate the federal and state Takings Clauses, the Equal Protection and Due Process Clauses, and state law prohibiting deceptive business practices and fraud. (A. 42-46, 48-51.) He also claimed that OTDA’s notice did not adequately inform him of his right to challenge the intercept of his lottery prize. (A. 51-54.) None of those claims are at issue here because Carver did not appeal the Second Department’s affirmance of Supreme Court’s dismissal of those claims. (See A. 18.) 7 Supreme Court also granted the motions by the State Division of Lottery, the State Department of Taxation and Finance, the Commissioner of the Department of Taxation and Finance, Robert L. Megna, and the Director of the State Division of Lottery, Gordon Medencia, to dismiss Carver’s claims against them. (A. 24-25.) Carver did not appeal Supreme Court’s decision to dismiss the petition as against those respondents. (See A. 35.) 18 reinstated Carver’s claim that the actions of OTDA and the Commissioner of OTDA violated the FLSA, holding that Carver “was an employee within the meaning of the FLSA.” (A. 14, 17.) On remand, Supreme Court (Graham, J.) granted Carver’s article 78 petition. (A. 3-10.) The court subsequently approved the parties’ agreement concerning the payment of attorney’s fees, thereby resolving all of Carver’s claims. (A. 254-260.) ARGUMENT THE FAIR LABOR STANDARDS ACT’S MINIMUM- WAGE REQUIREMENTS DO NOT APPLY TO THE MONETARY GRANTS THE STATE PROVIDES TO PUBLIC-ASSISTANCE RECIPIENTS A. Federal Law Looks to State Law in Determining Whether a State Public- Assistance Program Implicates the FLSA. The FLSA establishes a federal minimum wage that “employers” must pay to all “employees” who participate in activities covered by the Act. See 29 U.S.C. § 206. The United States Supreme Court has explained that the economic reality of an individual’s relationship with a particular entity determines whether that individual qualifies to be treated as an “employee” 19 for purposes of the FLSA. See 29 U.S.C. § 203(e)(1) (defining employee); Tony & Susan Alamo Found. v. Secretary of Labor, 471 U.S. 290, 301 (1985) (economic-reality test). Carver claims to be an “employee” for FLSA purposes based on his relationship with the state and local government agencies from which he received public assistance. And under federal law, the attributes of a public-assistance recipient’s relationship to the entities providing him with public assistance are determined by the laws of the recipient’s State. Congress, in the PRWORA, gave States the authority to create and administer welfare-to-work programs for public- assistance recipients. See 42 U.S.C. §§ 601, 602, 604. Consistent with federal law, state law establishes the eligibility requirements for public assistance, determines the amount of any cash grants to recipients, defines the work activities in which they may be required to engage as a condition of receiving those grants, and limits the hours they may be required to participate in work activities. See SSL §§ 131-a, 335, 336, 336-a, 336-c, 336-d. State law therefore determines the economic reality of Carver’s 20 relationship with his local social services district—and federal law makes that economic reality the basis for determining when an individual is an employee for purposes of the FLSA. B. Public-Assistance Recipients Are Required to Engage in Work Activities for Training, Not as Employment. The State’s work-activity requirement aims to help public- assistance recipients “develop the basic skills needed to enter the private sector work force.” Governor’s Approval Mem., reprinted in Bill Jacket for ch. 81, supra, at 11; cf. Brukhman, 94 N.Y.2d at 396 (explaining that recipients participate until “they can find or be placed in jobs”). The Legislature reasonably determined that work-skills programs, like HRA’s work-experience program, are an effective means of providing public-assistance recipients with the practical skills and training they need to achieve economic independence through employment. Congress has come to a similar conclusion, based in part on an analysis of state public- assistance programs showing that “short-term training and job search interventions” have limited benefits for recipients with low skill levels. See U.S. GAO, Welfare to Work: State Programs Have 21 Tested Some of the Proposed Reforms 11 (July 1995); see id. at 1 (congressional request for study); id. at 3, 8-9 (results of study). No aspect of the State’s public-assistance program generally, or HRA’s work-experience program specifically, bears any resemblance to a typical employment relationship. The amount of a public-assistance grant is statutorily determined based solely on criteria of economic need enumerated in the Social Services law, such as available income and household size (see also A. 164-165). See SSL §§ 131(4), 131-a, 158; 18 N.Y.C.R.R. §§ 352.1, 352.2. Moreover, unlike wages that can be spent freely, a recipient’s total monthly public-assistance grant is composed of allowances to cover specific household expenses—a basic-needs allowance, an allowance for shelter, a home-energy allowance, and, if applicable, an allowance for fuel or heating costs. See 18 N.Y.C.R.R. §§ 352.2 to .7; see also SSL § 159. Because the grant amount is predeter- mined by statute, see SSL § 131-a, two similarly situated public- assistance recipients will be entitled to the same grant amount, even if one recipient is statutorily exempt from the State’s work- activity requirement because of illness, disability, or age. See SSL 22 §§ 131-a(3) (amount of public-assistance grant based on persons in household), 332(1) (exemptions). For public-assistance recipients in New York City who are not exempt from the work-activity requirement, HRA decides the type of assignment after an initial assessment in which HRA creates an “employability plan” reflecting the individual’s education, work experience, vocational skills, and employment goals (see A. 102-103, 163). See SSL §§ 335-a(1)-(2), (5); 18 N.Y.C.R.R. §§ 385.7, 385.9; HRA, Family Indep. Admin., Employment Process Manual (“HRA Manual”) at 2.11 (updated through Oct. 2011).8 The plan outlines the work activities to which the recipient will be assigned, the educational or vocational training opportunities for which the recipient qualifies, the local employment opportunities that HRA has determined to be an appropriate fit for the recipient, and the supportive services HRA will provide to assist 8 The Court may take judicial notice of HRA’s Employment Process Manual, which describes, in part, how the work- experience program operates because it is a publicly available document. See Matter of Siwek v. Mahoney, 39 N.Y.2d 159, 163 n.2 (1976). 23 the recipient in attaining his employment goal—for example, transportation or child care. See SSL §§ 332-a, 335-a(1), (2), (5); 18 N.Y.C.R.R. §§ 385.6, 385.7; see also HRA Manual, supra, at 2.11-2.14. The range of work activities to which HRA may assign a recipient is broad. At the time Carver was receiving public assistance, HRA, in addition to the work-experience program, operated other educational and vocational programs, such as the “Back to Work” program—which offers a combination of short- term training, job search, and job-placement services—or the “Begin Employment Gain Independence Now” program, which offers skills and educational training to individuals with linguistic or educational barriers to employment. HRA Manual, supra, at 2.12-2.13; see also A. 102. Public-assistance recipients without dependent children are generally required to engage in work activities (which encompass participation in work-experience as well as job search, skills training, and educational programming) for a minimum of thirty- five hours per week, up to a maximum of forty hours each week (A. 161). See SSL §§ 335-b(1)(e)(ii), 336(4); cf. 42 U.S.C. 24 § 607(c)(1)(B); HRA Manual, supra, at 1.1. But the maximum number of hours a recipient will be required to participate specifically in a work-experience program or community service will be less, and is determined by dividing the total amount of public assistance the recipient receives, including the value of any federal SNAP benefits, by the higher of either the federal or state minimum-wage rate. SSL §§ 336(1)(g), 336-c(2)(b). State regulations make clear that the monetary grant received by public-assistance recipients participating in work- experience activities is not “a wage for the performance of such activities.” 18 N.Y.C.R.R. § 385.9(a)(4). As OTDA has explained, “[t]he participant is not working off the grant, but is engaged in work activities as an element of his/her plan to become self- sufficient.” Id. Congress likewise did not intend for public-assistance grants to be treated like wages. Under the PRWORA, States may reduce a public-assistance grant if the individual “fails without good cause to comply” with a required work activity, as outlined in the recipient’s employment plan. See 42 U.S.C. § 608(b)(3); see also id. 25 § 608(b)(2)(A)(ii); cf. SSL §§ 341, 342. But the PRWORA expressly provides that such a reduction in public assistance should not be regarded as “a reduction in any wage paid to the individual.” 42 U.S.C. § 608(c). C. The FLSA Does Not Apply to the State’s Public-Assistance Work-Experience Programs. 1. This Court determined in Brukhman that HRA’s work-experience program does not have the traditional indicia of employment. By its express terms, the FLSA applies only to “employees.” See, e.g., 29 U.S.C. §§ 203(e)(1) (defining employee), 206 (setting minimum wage for employees). “The test of employment under the Act is one of economic reality.” Tony & Susan Alamo Found., 471 U.S. at 301 (internal quotation marks omitted); see also O’Connor v. Davis, 126 F.3d 112, 115 (2d Cir. 1997) (“[I]t is well established that when Congress uses the term ‘employee’ without defining it with precision, courts should presume that Congress had in mind ‘the conventional master-servant relationship as understood by the common-law agency doctrine.’” (quoting Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322–23 (1992) (quoting Cmty. for 26 Creative Non–Violence v. Reid, 490 U.S. 730, 739–40 (1989)).) But consideration of “the character of an economic relationship” comes into play “‘only in situations that plausibly approximate an employment relationship.’” O’Connor, 126 F.3d at 115 (quoting Graves v. Women’s Professional Rodeo Ass’n, 907 F.2d 71, 74 (8th Cir. 1990)). Where the traditional indicia of employment do not exist, federal courts have rejected claims of an employer-employee relationship as a threshold matter. As those courts have concluded, it would be unnecessary in such circumstances to apply the “factors courts have found relevant to discerning an employment relationship.” Graves, 907 F.2d at 73 (nonprofit rodeo association and its members); see also O’Connor, 126 F.3d at 113, 115 (college student participating in hospital internship program “as a component of her major”). Carver’s FLSA claim fails at the threshold level because, as this Court has recognized, HRA’s work-experience program does not have the “traditional indicia of employment.” Brukhman, 94 N.Y.2d at 396. The purpose of the work-experience program is to 27 prepare participants for paid employment, which would be unnecessary if they were already employed. Id. Participants in the program “simply are not in the employ of anyone—that is the very reason they are receiving welfare benefits and required to participate . . . until they can find or be placed in jobs.” Id. at 395- 96; see id. at 393. As this Court has noted, while the government and nonprofit entities “providing work assignment opportunities obviously employ some people, they are not ‘employing’ [work-experience] [p]rogram participants.” Id. at 396. Participants are “assigned” to work sites by HRA, not hired by the entity providing the work experience. Id. (quoting SSL § 336-a). And the entities where participants are assigned “simply do not pay a salary” to program participants. Id. Participants instead receive “money grants, pursuant to the statutory public assistance regimen.” Id. at 397. Carver participated in the same HRA work-experience program that this Court examined in Brukhman, and his allegations are indistinguishable from the facts in that case. Compare Brukhman, 94 N.Y.2d at 391, with A. 39-40. Carver’s 28 participation in HRA’s work-experience program thus lies entirely outside the application of the FLSA because it did not put him “‘in the employ of’ anyone.” Brukhman, 94 N.Y.2d at 395-96. 2. Carver’s allegations do not warrant a departure from this Court’s analysis in Brukhman. The Appellate Division purported to distinguish Brukhman on the grounds that the plaintiffs there had sued under New York’s prevailing-wage law rather than the FLSA. (See A. 17-18.) The Appellate Division reasoned that the FLSA, unlike the State’s prevailing-wage law, requires an “expansive interpretation of its provisions” for it to have the “widest possible impact.” (A. 18.) That is incorrect. This Court has interpreted the State’s prevailing-wage law expansively, explaining that it “must be construed with the liberality needed to carry out its beneficent purposes.” Bucci v. Vill. of Port Chester, 22 N.Y.2d 195, 201 (1968); see also Hull-Hazard, Inc. v. Roberts, 72 N.Y.2d 900, 904 (1988) (Alexander, J., concurring in part & dissenting in part) (explaining that the State’s prevailing-wage law is “broadly remedial in nature”). The Appellate Division was therefore incorrect in 29 disregarding Brukhman’s analysis of HRA’s work-experience program. The Appellate Division was also mistaken in inferring the FLSA’s applicability from the Second Circuit’s holding that work- experience participants “are employees within the meaning of Title VII of the Civil Rights Act of 1964.” (A. 17 (citing United States v. City of N.Y., 359 F.3d 83 (2004).) As the Second Circuit majority made clear in that case, its departure from Brukhman’s analysis reflected the “difference in purpose” between the State’s prevailing-wage law and Title VII. City of N.Y., 359 F.3d at 95 (“It is the difference in purpose between the New York constitutional provision and Title VII that best distinguishes Brukhma[n] from this case.”). The court explained that Title VII concerns “the basic civil right of freedom from discrimination” whereas the State’s prevailing-wage law “grants special economic rights to certain classes of workers.” Id. at 95. That distinction, of course, does not apply here. To the contrary, the purpose of the minimum-wage component of the FLSA puts it in the same category as the State’s 30 prevailing-wage law; it is not an antidiscrimination law like Title VII of the 1964 Civil Rights Act. The State’s prevailing-wage law and the minimum-wage component of the FLSA concern the same “special economic right” to a fair wage. See, e.g., Bucci, 22 N.Y.2d at 201 (state prevailing- wage law); Powell v. U.S. Cartridge Co., 339 U.S. 497, 509-10 n.12 (1950) (FLSA). And both laws were enacted to protect employees from the same economic harm: employers attempting to gain a competitive advantage by forcing workers to endure “subnormal labor conditions” and below-market wages. See, e.g., Rutherford Food Corp. v. McComb, 331 U.S. 722, 727 (1947); Chesterfield Assocs. v. N.Y. State Dep’t of Labor, 4 N.Y.3d 597, 601 (2005); see also 29 U.S.C. § 202(a). Accordingly, because the State’s prevailing-wage law and the minimum-wage component of the FLSA protect employees from the same harm and afford similar economic rights, there is no basis for distinguishing between the two statutes in determining whether they treat public-assistance work-experience participants as “employees.” The recipients of such assistance are not employees within the meaning of the 31 FLSA for the same reason that they are not employees within the meaning of the prevailing-wage law. The reasoning of this Court in Brukhman applies equally here. The PRWORA confirms that Congress did not intend to extend the FLSA to state public-assistance work-experience programs. Section 608(d) of the PRWORA lists several federal antidiscrimination laws that “shall apply” to state public- assistance programs receiving federal funding.9 The minimum- wage component of the FLSA is not among these laws and is readily distinguishable from them in protecting “economic rights” rather than “the basic civil right of freedom from discrimination.” City of N.Y., 359 F.3d at 95. 9 The four antidiscrimination provisions listed in Section 608(d) of the PRWORA are the Age Discrimination Act of 1975 (42 U.S.C. § 6101 et seq.), section 504 of the Rehabilitation Act of 1973 (29 U.S.C. § 794), the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.), and Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d et seq. (prohibiting discrimination on the basis of race, color, and national origin in programs and activities receiving federal financial assistance). See 42 U.S.C. § 608(d)(1)-(4). 32 Moreover, other provisions of the PRWORA separately protect public-assistance recipients from exploitative work require- ments. The PRWORA requires States to submit proposed work activities, including the parameters for any work-experience program, to the federal Department of Health and Human Services (HHS) for approval. See 42 U.S.C. § 602(a)(1)(A); see also id. § 616 (HHS designated as agency to administer the PRWORA); SSL § 333. In addition, under the regulations that HHS has promulgated to implement the PRWORA, the amount of a recipient’s public-assistance grant must be determined in accordance with statutory criteria of economic need. See 45 C.F.R. § 233.20; see also SSL § 131-a. The PRWORA thus sets forth detailed and specific requirements that govern the states’ administration of public- assistance work programs and provide a mechanism for oversight via the federal Department of Health and Human Services. Substituting the FLSA’s general requirements, which are overseen by the federal Department of Labor, would be inconsistent with the approach that Congress has prescribed. As 33 the United States Supreme Court has explained, where “Congress has passed a more specific act to cover [a] situation,” courts should not substitute the requirements and remedies of “a general one.” Preiser v. Rodriguez, 411 U.S. 475, 489 (1973) (rejecting inmate’s use of 42 U.S.C. § 1983’s general provisions to challenge his confinement because Congress enacted the federal habeas corpus statute to govern that specific circumstance). In any event, extending the protections of the FLSA to state public-assistance work programs is unnecessary because state law already limits the number of hours a recipient can be required to engage in work activities. See 42 U.S.C. § 607(c); see also SSL § 336(4). D. Public-Assistance Recipients Do Not Qualify as Employees under the FLSA. The FLSA defines an “employee” as “any individual employed by an employer,” 29 U.S.C. § 203(e)(1), and defines the term “employ” as “to suffer or permit to work,” id. § 203(g). Not all persons that are “suffer[ed] or permit[ted] to work” are “employees” under the FLSA. See, e.g., Walling v. Portland Terminal Co., 330 U.S. 148, 152 (1947) (railroad brakemen 34 trainees not employees of railroad); Marshall v. Regis Educ. Corp., 666 F.2d 1324, 1328 (10th Cir. 1981) (college resident-hall assistants are not employees). Whether an individual is an employee under the FLSA depends on the “economic reality” of the relationship between the purported employee and employer after assessing the totality of the circumstances. See Goldberg v. Whitaker House Co-op., 366 U.S. 28, 32-33 (1961); Rutherford Food, 331 U.S. at 730; see also Tony & Susan Alamo Found., 471 U.S. 290 at 301. An assessment of the totality of the circumstances alleged here demonstrates that the relationship between public-assistance recipients and social services districts is based on assistance, not employment. Simply put, public-assistance recipients are beneficiaries of government aid; they are not government employees. See Brukhman, 94 N.Y.2d at 395-96. First, as this Court recognized in Brukhman, public- assistance grants are not compensation for participation in a work-experience program or other work activity. See 94 N.Y.2d at 396 (stating that city agencies “simply do not pay a salary” to 35 work-experience participants). Rather, recipients receive grants in amounts based on economic need and household size. See SSL § 131-a; 18 N.Y.C.R.R. §§ 351.2, 352.1, 352.2; see also Brukhman, 94 N.Y.2d at 397. Thus, two recipients with similar economic need and household size will receive the same public-assistance grant even if one of those recipients is statutorily exempt from engaging in “work activities.” See SSL §§ 131-a, 332; 18 N.Y.C.R.R. §§ 351.2, 352.1, 352.2; compare Regis Educ., 666 F.2d at 1326 (resident assistants received fixed tuition credit and reduced room rate, rather than wages pegged to hours worked). Recipients, unlike employees, cannot “earn” a larger public- assistance grant by working additional hours. See SSL § 131-a (dictating grant amounts). The maximum number of hours a recipient may be required to participate in a work-experience program is set by statute. See SSL § 336-c(2)(b); see also SSL § 336(1)(g). And although the statutory formula for determining a recipient’s maximum hours takes account of the applicable minimum-wage rate, this does not convert the grant into wages and the grant recipient into a government employee. See 36 O’Connor, 126 F.3d at 116 n.2 (rejecting student’s claim that receipt of work-study grant in an amount based on hours worked converted her into an employee). Second, public-assistance recipients do not apply for jobs with their local government, they are not interviewed by the local government to fill a vacant position, and they are not “hired” by the local government. See, e.g., Johns v. Stewart, 57 F.3d 1544, 1558 (10th Cir. 1995) (contrasting welfare recipients in Utah’s work-experience program to typical employees); see also Williams v. Strickland, 87 F.3d 1064, 1067 (9th Cir. 1996) (plaintiff not an employee under the FLSA, in part because he was not “hired” by nonprofit but rather was admitted to nonprofit’s rehabilitation program). Instead, recipients apply to a social services district for public assistance. If statutorily required to participate in work activities, they may be “assigned” to a city agency as part of a work-experience program in the event that an assessment of their skill level, experiences, preferences, and goals demonstrates that such a placement will help prepare the recipient for paid employment. See 18 N.Y.C.R.R. §§ 350.2, 350.3, 351.1, 351.2, 352.1 37 (concerning application for public assistance and determination of eligibility); see also HRA Manual, supra, at 2.11; Brukhman, 94 N.Y.2d at 396. Third, public-assistance grants are not subject to taxes customarily applicable to wages, such as federal, state, and local taxes, or social security taxes (see A. 165). See also 20 C.F.R. § 416.1124(c)(2) (social security); IRS Publication No. 525: Taxable & Nontaxable Income (1995–2013 eds.) (public-assistance benefits not taxable income). Unlike income earned through employment, public-assistance grants cannot be used by a recipient to claim an earned-income tax credit on a tax return, and the grants cannot be garnished by creditors. See SSL §§ 131-a(8), 137, 137-a. Moreover, unlike the wages of city employees, the grants are not paid from city monies via a check issued by the city comptroller. See, e.g., Johns, 57 F.3d at 1558 (contrasting the payment of wages to the payment of public assistance). Instead, the grants are distributed on a monthly basis through an Electronic Benefit Transaction card, and funded through a combination of federal, state, and local 38 monies (see A. 165).10 See, e.g., SSL §§ 153, 358; 42 U.S.C. § 603; Ch. 53, 2014 N.Y. Laws (LRS), at p. 444 (funding sources). And whereas wages can be used freely by employees, the use of public- assistance grants may be “restricted” to certain purposes, such as payment for rent, fuel, or food. 18 N.Y.C.R.R. §§ 381.1, 381.3. The Legislature’s intent that public-assistance recipients not be treated as “employees” is evident from SSL § 336-c, which prevents the city from using work-experience participants to replace employees. Under SSL § 336-c, a recipient may work alongside employees and perform similar tasks, but a recipient is prohibited from performing “a substantial portion of the work ordinarily and actually performed by regular employees.” SSL § 336-c(2)(e); see also Reich v. Parker Fire Protection Dist., 992 F.2d 1023, 1028 (10th Cir. 1993) (firefighter trainees not employees, in part, because they did not assume duties of career firefighters); Regis Educ., 666 F.2d at 1327 (resident assistants 10 The Second Circuit majority in City of New York was incorrect in its belief that “the City is both the payor and the recipient” of any services provided by public-assistance recipients participating in HRA’s work-experience program. 359 F.3d at 95. 39 not employees, in part, because they did not displace other employees of the college). Recipients also may not displace employees, interfere with the promotional opportunities of employees, or otherwise interfere with the personnel management at a worksite. SSL § 336-c(2)(e). In sum, a city agency has no control over many aspects of its relationship with public-assistance recipients assigned to it through the work-experience program. See O’Connor, 126 F.3d at 115 (“In determining whether a hired party is an employee under the general common law of agency, we consider the hiring party’s right to control the manner and means by which the product is accomplished.” (quotation marks omitted)). The agency cannot change the amount of a recipient’s public-assistance grant, and therefore cannot dictate “compensation.” And the agency cannot determine the amount of hours a recipient works; that is governed by statute. A recipient is assigned to a city agency by HRA, not hired by the agency; recipients are prohibited from displacing employees or engaging in substantially the same work as employees; and a recipient’s ability to continue “working” at an 40 agency is dependent, not on the agency’s evaluation of his performance, but on his continued eligibility for public-assistance. See, e.g., Goldberg, 366 U.S. at 32-33 (discussing factors relevant to determination that workers were “employees” under FLSA). As broad as the definition of “employee” under the FLSA may be, it does not convert recipients of public assistance into employees, where their “work serves only [their] own interest” and their participation in the work-experience program is solely “for their own advantage.” Portland Terminal, 330 U.S. at 152 (explaining limits to the FLSA’s definition of employee). The mere fact that city agencies derive some economic value from the tasks performed by work-experience participants does not “override” the educational and training aspects of the program, and “is not dispositive of the ‘employee’ issue.” Regis Educ., 666 F.2d at 1327. Given that public-assistance recipients perform add-on tasks that might not otherwise be completed—because they cannot displace regular employees nor perform a substantial part of their work— the benefit to the agency is de minimis. See Parker Fire, 992 F.2d at 1028-29; see also Blair v. Wills, 420 F.3d 823, 829 (8th Cir. 41 2005) (students required to perform chores, such as lawn-mowing, brush-clearing, or painting, not employees under FLSA even though school would have incurred costs in hiring employees to perform such tasks). Indeed, the very structure of HRA’s work-experience program demonstrates that it provides no more than de minimis benefits to the city agency providing the work-experience opportunity. In some instances, New York City agencies are compensated by the city in exchange for their agreement to participate in the work-experience program.11 Such agreements between social services districts and city agencies further confirm that operating a work-experience program provides very little independent benefit to the agency. These compensation agree- ments also show that the city agencies providing work-experience opportunities do not consider work-experience participants to be 11 See Intracity Cooperative Agreement between N.Y. City Human Res. Admin. and N.Y. City Dep’t of Sanitation, Arts. II & IV (Aug. 9, 2011). 42 employees, because employers typically are not compensated in this way when hiring employees. CONCLUSION For all of the reasons discussed, this Court should conclude that public-assistance recipients are not employees for purposes of the FLSA, and reverse the Second Department’s decision and order to the extent it reinstated Carver’s fourth cause of action. Dated: New York, NY October 23, 2014 BARBARA D. UNDERWOOD Solicitor General ANISHA DASGUPTA Deputy Solicitor General VALERIE FIGUEREDO Assistant Solicitor General of Counsel Respectfully submitted, ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Appellants By: ____________________________ VALERIE FIGUEREDO Assistant Solicitor General 120 Broadway New York, NY 10271 (212) 416-8019 Reproduced on Recycled Paper