In the Matter of Walter E. Carver, Respondent,v.State of New York, et al., Appellants.BriefN.Y.September 16, 2015No. APL-2014-00157 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. REPLY 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: January 13, 2015 TABLE OF CONTENTS Page TABLE OF AUTHORITIES ............................................................. ii INTRODUCTION AND SUMMARY ............................................... 1 ARGUMENT ................................................................................... 3 PARTICIPATION IN HRA’S PUBLIC-ASSISTANCE WORK-EXPERIENCE PROGRAM DID NOT MAKE CARVER A CITY EMPLOYEE SUBJECT TO THE MINIMUM-WAGE REQUIREMENTS OF THE FAIR LABOR STANDARDS ACT. ..................................................... 3 A. Carver Cannot Distinguish Brukhman as a Matter of Law. ...................................................... 3 B. Carver Has Not Shown As a Matter of Fact that the Economic Realities of his Work- Experience Participation Made Him a City Employee for FLSA Purposes. ........................... 11 C. Congress Did Not Intend to Extend the FLSA to Public-Assistance Recipients. .............. 20 D. Prior State Practice under a Different Statutory Regime Cannot Establish That Carver Was an “Employee” For Purposes of the FLSA’s Minimum-Wage Requirement. ....... 27 CONCLUSION ............................................................................... 29 i TABLE OF AUTHORITIES Cases Page(s) Archie v. Grand Cent. P’ship, Inc., 997 F. Supp. 504 (S.D.N.Y. 1998) .............................................. 18 Brown v. N.Y. City Dep’t of Educ., 755 F.3d 154 (2d Cir. 2014) ............................................. 6, 11, 15 Brukhman v. Giuliani, 94 N.Y.2d 387 (2000) ......................................................... passim Corp v. State, 257 A.D.2d 742 (3d Dep’t 1999) ................................................... 6 Demore v. Kim, 538 U.S. 510 (2003) .................................................................... 22 Elwell v. Weiss, 2007 WL 2994308 (W.D.N.Y. Sept. 29, 2006) ........................... 10 Goodarzi v. City of N.Y., 217 A.D.2d 683 (2d Dep’t 1995) ................................................... 6 Hofrichter v. N. Shore Univ. Hosp., 271 A.D.2d 649 (2d Dep’t 2000) ................................................... 6 Johns v. Stewart, 57 F.3d 1544 (10th Cir. 1995) ............................................ passim Matter of Entergy Nuclear Indian Point 2, LLC v. N.Y. State Dep’t of Envtl. Conservation, 23 A.D.3d 811 (3d Dep’t 2005), lv. dismissed in part and denied in part, 6 N.Y.3d 802 (2006) .......................................... 19 Matter of Gast v. Ozanam Hall of Queens, 259 A.D.2d 862 (3d Dep’t 1999) ................................................... 5 Matter of Gianvecchio v. NYS Newark State Sch., 19 A.D.2d 760 (3d Dep’t 1963) ..................................................... 6 ii TABLE OF AUTHORITIES (cont’d) Cases Page(s) Matter of Maiceo v. City of Yonkers, 288 N.Y. 689 (1942) ..................................................................... 5 Matter of Walker v. Shang, 66 A.D.2d 6 (2d Dep’t 1979) ....................................................... 27 McLaughlin v. Ensley, 877 F.2d 1207 (4th Cir. 1989) .................................................... 18 Nationwide Mutual Insurance v. Darden, 503 U.S. 318 (1992) .................................................................... 26 Roberts v. City of N.Y., 20 A.D.3d 44 (1st Dep’t 2005) .................................................... 17 Rutherford Food Corp v. McComb, 331 U.S. 722 (1947) .............................................................. 21, 26 Stone v. McGowan, 308 F. Supp. 2d 79 (N.D.N.Y. 2004) ...................................... 9, 10 Tony & Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290 (1985) .................................................................... 18 United States v. City of N.Y., 359 F.3d 83 (2d Cir. 2004) ............................................. 4, 7, 8, 24 Constitutional Provisions N.Y. Const., art. 17 ........................................................................... 8 State Laws Ch. 436, 1997 N.Y. Laws 2806 ....................................................... 27 Ch. 453, 1990 N.Y. Laws 3100 ....................................................... 27 iii TABLE OF AUTHORITIES (cont’d) State Laws Page(s) Social Services Law § 131 ........................................................................................... 16 § 131-a .............................................................................. 8, 12, 19 § 131-r ........................................................................................ 27 § 332 ........................................................................................... 13 § 335-b ........................................................................................ 16 § 336 ......................................................................... 17, 19, 20, 23 § 336-c ................................................................................ passim Federal Laws 26 U.S.C. § 32 ................................................................................. 14 29 U.S.C. § 201, et seq. ................................................................................ 1 § 202 ........................................................................................... 21 42 U.S.C. § 607 ......................................................................... 14, 16, 22, 23 § 608(c) ................................................................................. 22, 23 § 682(1994)(repealed 1996) ........................................................ 22 Employee Commuting Flexibility Act of 1996, Pub. L. No. 104-188, 110 Stat. 1755 (1996) .................................................. 20 State Regulations 18 N.Y.C.R.R. § 350.3 ........................................................................................ 15 § 351.1 .................................................................................. 15, 16 § 351.2 .................................................................................. 12, 16 § 352.1 .............................................................................. 8, 12, 16 § 352.17 ...................................................................................... 12 § 385.7 ........................................................................................ 19 § 385.8 ........................................................................................ 16 § 385.9 ........................................................................................ 19 iv INTRODUCTION AND SUMMARY In this article 78 proceeding, petitioner Walter E. Carver, a former recipient of public assistance from the State of New York, challenges a state-law requirement that he remit part of his lottery winnings to the State as reimbursement for the past public assistance he has received. Carver claims that his public- assistance grant constituted wages for his participation as an employee in the work-experience component of New York’s public- assistance program, and that requiring him to repay those public- assistance grants would deny him the minimum wage guaranteed to him as an employee by the federal Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq. As the State Office of Temporary and Disability Assistance (OTDA) showed in its opening brief (Br. for Appellants (“OTDA Br.”) at 21, 26-28, 34-41), he is mistaken. In every meaningful respect Carver was not a city employee. The New York City Human Resources Administration (HRA) did not control the amount of Carver’s monthly public-assistance grant (his purported “wage”) or the number of hours of Carver’s work-experience assignment. Under state law, Carver could not displace a city employee or perform a substantial portion of such an employee’s work, and his continuation in the work-experience program was dependent on his continued eligibility for public assistance—not on any evaluation of the quality of his performance. Under federal law, Carver’s public-assistance grant was not taxable income. As this Court reasoned in Brukhman v. Giuliani, 94 N.Y.2d 387, 395-96 (2000), public-assistance recipients are simply not “in the employ of anyone” when they participate in a government- administered work-experience program. 1 As we demonstrate below, Carver has not distinguished Brukhman on either the law or the facts, nor can he do so. Nor can support for his position be found in the text or legislative history of the FLSA, or in prior administrative practices of New York’s OTDA under a different statutory regime. Accordingly, Carver cannot state a cognizable FLSA claim under the circumstances 1 The Appellate Division concluded that Carver was an “employee,” but did not identify his purported employer. (Appendix (“A.”) 17.) 2 presented. This Court should therefore order the dismissal of that claim and of this article 78 proceeding. ARGUMENT PARTICIPATION IN HRA’S PUBLIC- ASSISTANCE WORK-EXPERIENCE PROGRAM DID NOT MAKE CARVER A CITY EMPLOYEE SUBJECT TO THE MINIMUM-WAGE REQUIREMENTS OF THE FAIR LABOR STANDARDS ACT. A. Carver Cannot Distinguish Brukhman as a Matter of Law. As OTDA explained in its opening brief (OTDA Br. at 26-28), this Court’s decision in Brukhman considered the economic reality of the same HRA-administered work-experience program at issue in this case, and concluded that the program did not have the “traditional indicia of employment.” 94 N.Y.2d at 396. Carver argues that Brukhman is irrelevant to his case as a matter of law because Brukhman examined a claim brought under the State’s prevailing wage law, not the federal FLSA at issue here, and focused on the term “public work,” not the term “employee.” Br. for Respondent (“Carver Br.”) at 25-27. These arguments fundamentally misunderstand the basis for the Court’s holding in Brukhman. 3 Brukhman “rests on principles applicable to employment status generally.” United States v. City of N.Y., 359 F.3d 83, 105 (2d Cir. 2004) (Jacobs, J., dissenting). It examined the economic reality of a public-assistance recipient’s participation in HRA’s work-experience program—the issue of dispositive significance here. Brukhman, 94 N.Y.2d at 393, 395-96. And its holding was based on the Court’s determination that, as a matter of economic reality, public-assistance recipients participating in HRA’s work- experience program were not “employees” of the city agencies to which they were assigned. Id. at 393, 395-96. The factual allegations at issue in Brukhman were virtually identical to Carver’s factual claims here. Specifically, the Brukhman plaintiffs alleged that (1) public-assistance recipients were required to participate in work-experience programs operated by HRA, as a condition of their receipt of benefits; (2) HRA assigned recipients to city agencies where they performed a wide range of tasks; and (3) a recipient’s hours in the work- experience program were calculated, in part, by reference to the federal minimum wage. Compare Brukhman, 94 N.Y.2d at 391, 4 with A. 39-40. This case thus presents no basis for departing from Brukhman’s conclusion that the foregoing circumstances do not create an employer-employee relationship. 94 N.Y.2d at 395-96. Carver is not aided by his reliance on Matter of Maiceo v. City of Yonkers, 288 N.Y. 689 (1942). See Carver Br. at 25. That case concerns the very different issue of a public-assistance recipient’s entitlement to workers’ compensation for a physical injury sustained during workfare participation. Maceio, 288 N.Y. at 689. As the New York courts have recognized, coverage under the state’s worker-compensation laws is not limited to those who are entitled to a wage as employees. Rather, those laws have long covered even volunteers whose earnings are acknowledged to be properly assessed at zero. New York appellate courts have repeatedly approved Workers’ Compensation awards to volunteers whose earnings were zero, thus recognizing that a person may be entitled to workers’ compensation although not entitled to the minimum-wage protections of the federal FLSA. Matter of Gast v. Ozanam Hall of Queens, 259 A.D.2d 862, 862-63 (3d Dep’t 1999); 5 Brown v. N.Y. City Dep’t of Educ., 755 F.3d 154, 161-63 (2d Cir. 2014) (noting FLSA’s statutory carve-out for “volunteers”).2 The Legislature’s extension of workers’ compensation coverage to public-assistance recipients participating in work- experience programs, see SSL § 336-c(2)(c), therefore has little if any significance to the question of whether such persons are government employees for purposes of the FLSA. Workers’ compensation coverage is not limited to paid employees, and cannot “be deemed compensation in lieu of wages” because “[n]o person seeking gainful employment would accept as full 2 See also Hofrichter v. N. Shore Univ. Hosp., 271 A.D.2d 649, 650 (2d Dep’t 2000) (holding that “hospital volunteer” could be “relegated to Workers’ Compensation benefits as her exclusive remedy”); Corp v. State, 257 A.D.2d 742, 742-43 (3d Dep’t 1999) (same, with respect to “volunteer worker” at state university sporting event, and noting “policy of the State . . . that volunteer workers are covered while they donate their services to the State”); Goodarzi v. City of N.Y., 217 A.D.2d 683, 684-85 (2d Dep’t 1995) (“We are unpersuaded by the plaintiff’s argument that, as a volunteer, he believed that he was ineligible for workers’ compensation.”); Matter of Gianvecchio v. NYS Newark State Sch., 19 A.D.2d 760, 760 (3d Dep’t 1963) (recognizing entitlement to workers’ compensation of “the claimant, a volunteer worker” at a school). 6 compensation . . . insurance for on-the-job injury.” City of N.Y., 359 F.3d at 107-108 (Jacobs, J. dissenting); see also Brukhman, 94 N.Y.2d at 396 (city agencies providing work-experience opportunities “do not pay a salary” to work-experience participants). Indeed, because the extension of workers’ compensation coverage has the effect of preempting any suit for personal injury that could be brought by a public-assistance recipient injured during a work-experience assignment, that extension of coverage chiefly serves the interests of the government. City of N.Y., 359 F.3d at 107 (Jacobs, J. dissenting). Finally, as OTDA explained in its opening brief (OTDA Br. at 29-30, 38 n.10), the Second Circuit’s decision in United States v. City of New York likewise does not warrant a departure from this Court’s reasoning in Brukhman. In City of New York the Second Circuit held that public assistance work-experience participants could potentially qualify as employees for purposes of Title VII’s ban on employment discrimination, even though they were not employees for purposes of New York’s prevailing wage law. The Court relied for that decision on the “difference in purpose” 7 between New York’s prevailing wage law and Title VII. See 359 F.3d at 95. But no similar distinction applies here because the FLSA and New York’s prevailing wage law—unlike Title VII— concern precisely the same economic right and were enacted to protect employees from the same types of harm: below-market wages and subnormal labor conditions. See OTDA Br. at 29-30. Moreover, even if the Second Circuit’s decision in City of New York were relevant—which it is not—it should not be extended beyond its precise holding, because it rests on an important mistake of fact: the incorrect belief that “the City is both the payor and the recipient of the services” provided by HRA work-experience participants. See 359 F.3d at 95. As discussed in OTDA’s opening brief (OTDA Br. at 21, 34-35, 37-38) and below (infra at B.1), HRA and the city agencies to which public- assistance recipients are assigned do not pay out public-assistance grants in the same way that the City pays wages to its employees. The amounts of public-assistance grants are determined by the Legislature, not the city, see SSL § 131-a; 18 N.Y.C.R.R. § 352.1; see also N.Y. Const., art. 17, § 1, and the grants are not funded 8 solely with city monies, as is true of the wages of city employees (see OTDA Br. at 37-38). To be sure, Carver has identified two federal district court decisions that treat City of New York as dispositive of whether public assistance work-experience participants are “employees” within the meaning of the FLSA. Carver Br. at 7-9 (citing Elwell v. Weiss, 2007 WL 2994308, at *3 (W.D.N.Y. Sept. 29, 2006) (stating that the “Court is bound to apply the holding and reasoning of [City of New York]”); Stone v. McGowan, 308 F. Supp. 2d 79, 86 (N.D.N.Y. 2004) (same)). But those decisions extend City of New York beyond its proper scope and should not be followed here. Indeed, the district court in Stone was not actually persuaded that the FLSA applies to the work-experience participation of public-assistance recipients. The court recognized that “[t]he notion that [such persons] are not public employees was validated by the New York Court of Appeals’ decision in Brukhman.” 308 F. Supp. 2d at 85. And it observed that federal law’s “emphasis on providing work experience . . . does not alter the nature of state ‘workfare’ programs as ‘benefit’ programs.” Id. 9 at 86 (discussing the 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)). Nonetheless, the Stone court mistakenly believed that it was “constrained” to allow the plaintiff’s FLSA claim in light of City of New York, 308 F. Supp.2d at 86, having failed to recognize that the FLSA was similar in purpose to New York’s prevailing wage law, at issue in Brukhman, rather than to Title VII, at issue in City of New York. See OTDA Br. at 28-30, supra at 7. The Elwell court similarly failed to recognize that similarity between the FLSA and the prevailing wage law, and failed to recognize that Brukhman had expressly addressed the economic realities of HRA’s work-experience program. 2007 WL 2994308, at *6 n.3. The Elwell court also failed to realize that in this context New York law—not the views of the federal agencies administering the FLSA—determine the realities of a New York public-assistance recipient’s relationship with his local social services district. Id. As OTDA’s opening brief explained (OTDA Br. at 18-20), under federal law, the attributes of a public- 10 assistance recipient’s relationship to the entities providing him with public assistance are determined by the laws of the recipient’s State. B. Carver Has Not Shown As a Matter of Fact that the Economic Realities of his Work-Experience Participation Made Him a City Employee for FLSA Purposes. Carver inexplicably contends that OTDA’s opening brief “never addresses the economic reality test required by the FLSA.” Carver Br. at 18. In fact, OTDA’s opening brief discusses at length the overall economic reality of Carver’s participation in HRA’s work-experience program. OTDA Br. at 21, 34-41. To be sure, there is no “single economic realities test consisting of uniform factors that should [be] applied” in every case. Brown, 755 F.3d at 167 (quotation marks omitted). Instead, “economic realities are assessed by reference to the particular situation with some factors more important than others depending on the FLSA question at issue and the context in which it arise.” Id. (quotation marks omitted) (listing some of the factors the Second Circuit has examined when assessing the economic reality of a relationship 11 for FLSA purposes); see also Johns v. Stewart, 57 F.3d 1544, 1558- 59 (10th Cir. 1995) (factors considered by Tenth Circuit when examining whether public assistance work-experience participants are employees for purpose of the FLSA). As OTDA’s opening brief demonstrated (OTDA Br. at 21, 34- 41), the economic realities of Carver’s circumstances establish that Carver simply was not an employee for FLSA purposes during his participation in HRA’s work-experience program. 1. Compensation. Carver’s suggestion that HRA had control over the hours he worked and the amount of money he received (Carver Br. at 14) fundamentally misunderstands the operation of the State’s public-assistance system. HRA had no control over the amount of Carver’s monthly public-assistance grant. Instead, the amount of Carver’s grant was statutorily determined by the Legislature, based on factors such as household size and need. See SSL § 131-a; 18 N.Y.C.R.R. §§ 351.2, 352.1, 352.17; (A. 164-165).3 3 Thus, for example, two public-assistance recipients with equivalent need would receive the same public-assistance grant even if one was statutorily exempt from the requirement to 12 (continued on the next page) HRA also had no discretion over the maximum number of hours per week that Carver could be required to participate in work experience. State law set that amount through a formula pegged to the amount of Carver’s statutorily-determined public assistance benefits. See SSL § 336-c(2)(b) (maximum weekly work-experience hours determined by dividing total amount of public assistance received (including food stamps) by the higher of either the federal or state minimum wage); see also SSL § 336-c(2)(b) (same, for community-service work hours). Thus, unlike in an ordinary employment relationship based on hourly pay, Carver and HRA could not contract for Carver to obtain higher compensation by participate in work activities. See OTDA Br. at 34-35. Contrary to Carver’s claims (Carver Br. at 23), “equity and fairness” do not require the Legislature to treat the able-bodied unemployed more favorably than needy persons who are “ill, incapacitated, [elderly] or deemed to be disabled.” SSL § 332(1)(a); see also id. § 332(b)-(e) (providing an exception from the work-activity requirement to children under sixteen, full-time caregivers, and pregnant women “beginning thirty days prior to the medically verified date of delivery”). 13 working a greater number of hours. In stark contrast, HRA does in fact determine the wages and hours of people who are its employees. In addition, although Carver contends that the tax-exempt status of his public-assistance grant has no relevance to the FLSA issues presented here (Carver Br. at 19), the only federal appellate court to consider the issue disagrees. In Johns v. Stewart, 57 F.3d 1544 (10th Cir. 1995), the Tenth Circuit concluded that Utah’s public assistance work-experience participants were not employees for purpose of the FLSA in part based on its observation that “[s]tate and federal taxes are not withheld from [such persons’] benefits as they are from state employees’ salaries.” Id. at 1558. Under federal law, Carver’s public- assistance grant also was not considered earned income for purposes of calculating a federal earned-income tax credit. See 26 U.S.C. § 32(c)(2)(B)(v) (excluding from “earned income” public- assistance monies paid to welfare recipients participating in work- experience or community-service programs under 42 U.S.C. § 607(d)(4), (7)). There is no warrant for treating Carver’s 14 public-assistance grant as a wage for purposes of the FLSA when federal law does not treat it as a wage for any other purpose. Finally, Carver is mistaken to argue that his dependence on HRA for support somehow indicates that he was an HRA employee. Carver Br. at 16. All public-assistance recipients, whether or not they are required to engage in “work activities,” are dependent on their grants—that is the very nature of welfare. That dependency does not create or even suggest an employment relationship. See Brukhman, 94 N.Y.2d at 395-96 (participants in HRA’s work- experience program “simply are not in the employ of anyone—that is the very reason they are receiving welfare benefits . . . .”). 2. Power to hire and fire. HRA lacked any power to “hire and fire” Carver, in comparison with its ability to hire and fire its own employees. See Brown, 755 F.3d at 167 (“power to hire and fire” is relevant to the FLSA’s economic reality assessment); Johns, 57 F.3d at 1558 (same). Carver’s entry into HRA’s work-experience program followed his application for public assistance—not any application for a state or city job. See 18 N.Y.C.R.R. §§ 350.3(a) (discussing right to apply for benefits), 351.1 (procedure for 15 investigating eligibility). HRA had no “discretion” over whether to enter into a relationship with Carver. Nor did it have discretion to terminate its relationship with him. HRA was required to provide Carver with public assistance as long as he met the Legislature’s statutory criteria for need. See SSL § 131(1) (obligation to provide assistance); 18 N.Y.C.R.R. §§ 351.1, 351.2, 352.1 (eligibility requirements for assistance). 3. Work Schedules & Conditions of Employment. In contrast to its control over the work schedules of its own employees, HRA had no ability to control the minimum or maximum number of hours that Carver was required to participate in work activities. The minimum number of hours Carver was required to participate in work activities was set by the Legislature, see SSL § 335-b(1); 18 N.Y.C.R.R. § 385.8, consistent with federal requirements established by Congress for public-assistance recipients receiving federal monies, see 42 U.S.C. § 607. And the maximum number of hours Carver could be required to participate in work activities, including work-experience, was also determined by the Legislature, based on the amount of his public assistance and the current state or federal 16 minimum wage. See SSL §§ 336(4), 336-c(2)(b). HRA thus had no control over any aspect of Carver’s work schedule. The conditions of Carver’s participation in HRA’s work- experience program were also outside HRA’s discretion. The Legislature limited the type of work activities in which Carver could be required to participate, see SSL § 336-c(2)(d), and it mandated that HRA provide Carver with workers’ compensation protection, see id. § 336-c(2)(c). The Legislature also prohibited the City from permitting work-experience participants to displace city employees, or even perform a substantial portion of the work of city employees.4 See id. § 336-c(2)(e). These anti-displacement requirements distinguish public-assistance work-experience 4 Carver argues that the City violated that statutory prohibition. Carver Br. at 21-22. The City is best able to respond to that allegation, but is not a party to this litigation. In any event, Carver offers no direct evidence of any violation. The statistical data Carver cites is unverifiable, and could be explained by other variables, such as budgetary constraints. Indeed, in a suit where plaintiffs relied on similar statistical evidence to press a claim that the City used workfare participants to replace City employee, the Appellate Division held that this evidence was insufficient to show any violation of the anti-displacement provision in SSL § 336-c(2)(e). See Roberts v. City of N.Y., 20 A.D.3d 44 (1st Dep’t 2005). 17 participants like Carver from the “trainees” or “volunteers” in the three cases that Carver cites (Carver Br. at 19, 21). See Tony & Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290, 292-93 (1985) (plaintiff’s business was “staffed largely” by “volunteers”); McLaughlin v. Ensley, 877 F.2d 1207, 1210 (4th Cir. 1989) (“trainees” hired as full-time employees following training period, and during training period performed “normal duties” of employees); Archie v. Grand Cent. P’ship, Inc., 997 F. Supp. 504, 513-14, 519-20 (S.D.N.Y. 1998) (program participants performed all employee tasks and served as replacement employees when employees were absent from work). Carver claims that HRA required him to work thirty-five hours each week and never offered him any training (Carver Br. at 16, 19), but that allegation squarely contradicts the operative statutory scheme, see SSL § 336-c(2)(b); (OTDA Br. at 14 n.4, 23-24), and Carver has offered no proof that HRA failed to comply with the requirements of New York’s Social Services Law. “[A]ctions undertaken by an administrative entity are cloaked with a presumption of regularity and are presumed to be valid unless proven otherwise.” 18 Matter of Entergy Nuclear Indian Point 2, LLC v. N.Y. State Dep’t of Envtl. Conservation, 23 A.D.3d 811, 813-14 (3d Dep’t 2005) (quotation marks & internal citations omitted), lv. dismissed in part and denied in part, 6 N.Y.3d 802 (2006). Under state law, work experience is only one aspect of the State’s comprehensive public-assistance program. See SSL §§ 131- a, 336; 18 N.Y.C.R.R. §§ 385.7, 385.9; see also Johns, 57 F.3d at 1558 (finding this factor significant when holding that Utah’s public assistance work-experience participants were not employees subject to the FLSA’s minimum-wage requirements). SSL § 336-c establishes the maximum number of hours HRA can require a public-assistance recipient to participate in a work- experience program. See SSL § 336-c(2)(b). That number is based on the monthly amount of the recipient’s public-assistance, including the value of any Supplemental Nutrition Assistance Program (SNAP) benefits,5 divided by the higher of the federal or state minimum wage. Id. 5 SNAP benefits were formerly known as “food stamps.” 19 Under SSL § 336-c, HRA could require that Carver participate in its work-experience program for no more than approximately twenty-one hours each week.6 See id. § 336-c(2)(b); see also OTDA Br. at 14 n.4. Any additional time Carver claims he “worked” must have been spent in work activities other than HRA’s work-experience program, such as in educational training or job-skills training. See id. § 336(4) (limiting number of hours spent in work activities); id. § 336- c(2)(b) (limiting hours in work-experience program). C. Congress Did Not Intend to Extend the FLSA to Public-Assistance Recipients. There is no basis to Carver’s claims (Carver Br. at 13) that the work-experience component of New York’s public-assistance program perpetuates the type of harm that Congress sought to prevent when it enacted the FLSA. The FLSA was enacted to correct substandard labor conditions that constitute an “unfair 6 Carver received a total of $479 in monthly public assistance—the sum of $176 in semi-monthly public assistance (A. 39), and $127 in monthly food-stamp benefits. The federal minimum wage at the relevant time was $5.15. See Employee Commuting Flexibility Act of 1996, Pub. L. No. 104-188, § 2104, 110 Stat. 1755 (1996). 20 method of competition in commerce.” See 29 U.S.C. § 202; see also Rutherford Food Corp v. McComb, 331 U.S. 722, 727 (1947). But work-experience programs operated by city agencies do not place those agencies at a competitive advantage. To the contrary, the agencies must devote resources to training and supervising unskilled workers. OTDA Br. at 41. And agencies cannot replace employees with public-assistance recipients to reduce their labor costs. See SSL § 336-c(2)(e). Agencies also cannot rely on public- assistance recipients to perform a substantial portion of the work of an employee. Cf. Rutherford Food Corp., 331 U.S. at 728-29, 734 (meat boners at food-packing company were employees because they “did a specialty job on the production line” and their work was “a part of the integrated unit of production” at the company). In enacting the PRWORA, Congress did not intend for public-assistance recipients participating in “work activities” to be considered “employees” under the FLSA. This is shown by at least two features of the PRWORA. First, although the PRWORA expressly makes several federal statutes applicable to public- assistance work-experience participants, the minimum-wage 21 component of the FLSA is not among these. See 42 U.S.C. § 608(d).7 Relatedly, the PRWORA also does not require states to use the minimum-wage rate when calculating any part of a public- assistance recipient’s work requirements. See 42 U.S.C. § 607. Congress’s silence on this matter is significant because the federal statute that the PRWORA replaced—the Family Support Act of 1988—mandated that states consider the minimum wage when setting the number of hours a public-assistance recipient could be required to participate in a work-experience program. See 42 U.S.C. §682(f)(1)(B)(i) (1994) (repealed 1996); see also Demore v. Kim, 538 U.S. 510, 536 (2003) (O’Connor, J., concurring in part and concurring in the judgment) (Congressional silence can be significant if it results in the omission of something traditionally included). 7 Section 608(d) provides for public assistance work- experience participants to be covered by 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). 22 To be sure, New York law makes the minimum-wage rate a reference point for calculating the number of hours a New York public-assistance recipient is required to participate in work experience. See SSL § 336-c(2)(b). But a state-law provision cannot suggest any Congressional intent to treat welfare recipients as employees under the FLSA. Second, Congress’s intent that public-assistance grants not be treated as wages can be inferred from the PRWORA’s statement that a reduction in a recipient’s public-assistance grant due to noncompliance with a work requirement “shall not be construed to be a reduction in any wage paid to the individual.” 42 U.S.C. § 608(c) (emphasis added). Section 608(c) applies to all public-assistance work-experience participants, whether they are placed in a public-sector assignment or in subsidized employment in the private sector. See SSL § 336(1)(b) (listing subsidized private-sector employment as a permissible work-activity placement); 42 U.S.C. § 607(d)(2) (same). If Congress had understood public-assistance grants to be wages, section 608(c) would have referred to “the wage” (rather 23 than “any wage”) of a recipient, because even recipients in public- sector assignments would have a “wage” (their public-assistance grant). See City of New York, 359 F.3d at 106 (Jacobs, J., dissenting) (noting this point). Congress’s use of the term “any wage” signifies that some public-assistance work-experience participants—those in public-sector assignments—do not receive any money that Congress would consider a wage. In effect, section 608(c) permits a local social services district to temporarily reduce the grant paid to a public-assistance recipient assigned to subsidized private-sector work, if the recipient fails to participate in a required work activity, without having that reduction treated as a diminution in the wage paid to the recipient by the private- sector employer. Carver is simply mistaken in asserting (Carver Br. at 17) that treating him as outside the scope of the FLSA would contradict “75 years of established FLSA law.” No federal appellate court has concluded that public-assistance recipients participating in such programs are employees under the FLSA, despite the widespread use of workfare programs. To the contrary, 24 the only court to have addressed the question, concluded that such public-assistance recipients are not employees under the FLSA. See Johns, 57 F.3d at 1558-59. As the court in Johns observed, public-assistance work-experience participants “are completely unlike state employees in every respect,” including because they “apply for public assistance, not for a state job”; “receive their financial assistance checks through [the public assistance system], not from the state payroll”; do not accrue sick or annual leave like state employees; and do not have state and federal taxes withheld from their grants even though taxes are withheld from state employees’ salaries. Id. at 1588; see also id. at 1559 (noting that public-assistance work-experience participants “differ from state employees in that they do not receive the same salary, . . . job security, career development, Social Security, pension rights, collective bargaining, or grievance procedures . . . .”). Although Carver argues that the Supreme Court has interpreted the FLSA’s definition of “employee” expansively, the two cases upon which he relies concern a type of worker unlike Carver and other public-assistance recipients assigned to 25 workfare. Carver Br. at 5, 7. In Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947), the Supreme Court interpreted the term “employee” for purposes of the FLSA to include workers at a meat- packing company who were performing work that was “part of the integrated unit of production,” and “in its essence” indistinguishable from that of the company’s employees. Id. at 729. Similarly, the work performed by the insurance agent whose status was at issue in Nationwide Mutual Insurance v. Darden, 503 U.S. 318 (1992), was so valuable that his contract included a noncompete clause. Id. at 320. By contrast, a New York public- assistance recipient participating in a work-experience program can never supply an integrated or highly valuable service because such workers are statutorily prohibited from performing “a substantial portion of the work” of “a currently employed worker.” SSL § 336-c(2)(e); see also OTDA Br. at 38-39. 26 D. Prior State Practice under a Different Statutory Regime Cannot Establish That Carver Was an “Employee” For Purposes of the FLSA’s Minimum-Wage Requirement. State law requires public-assistance recipients to reimburse the State for past public assistance if the recipient receives a financial windfall, such as a lottery prize. See SSL § 131-r(1). Prior to 1997, OTDA permitted public-assistance recipients to reduce their public-assistance debt by participating in a work-experience program. That policy was adopted in response to an appellate division decision, and subsequently incorporated into the Social Services Law. See SSL § 336-c (Ch. 453, § 1, 1990 N.Y. Laws 3100, 3101-02); Matter of Walker v. Shang, 66 A.D.2d 6 (2d Dep’t 1979). As Carver acknowledges (Carver Br. at 10-11), the Legislature amended the Social Services Law in 1997 to eliminate the requirement that OTDA “credit” public-assistance recipients for time spent participating in a work-experience program. Compare Ch. 453, § 1, 1990 N.Y. Laws at 3101-02 with Ch. 436, § 148, 1997 N.Y. Laws 2806, 2928-29. And Carver does not dispute that since 1997, no other state law provision has required OTDA to “credit” a 27 recipient’s time participating in a work-experience program against the amount of past public assistance owed to the State. A past requirement that the Legislature has eliminated cannot override the actual economic realities of a public-assistance recipient’s work-experience participation. And here, as discussed above and in OTDA’s opening brief, Carver’s overall relationship with HRA was organized around “assistance, not employment,” Johns, 57 F.3d at 1558. 28 CONCLUSION For the reasons discussed, this Court should reverse the Appellate Division’s holding that public-assistance recipients are employees for purposes of the FLSA. Dated: New York, NY January 13, 2015 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, 25th Floor New York, NY 10271 (212) 416-8019 valerie.figueredo@ag.ny.gov Reproduced on Recycled Paper 29