Case 1:14-cv-06905-JBW-VMS Document 216 Filed 11/01/17 Page 1 of 39 PageID #: 5347
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`
`MEMORANDUM, ORDER &
`JUDGMENT
` 14-CV-6905
`
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
`
`VICTORIA LEEVSON, MICHAEL
`LEIBZON, MATANA ENTERPRISES,
`LLC, KATHERINE TSIGEL, VADKAT,
`INC., VLADISLAV PUSTOV, and
`IMPERIAL ENTERPRISE SERVICES,
`INC.,
`
`
` Plaintiffs,
`
` – against –
`
`
`AQUALIFE USA, INC., AQUALIFE, INC.,
`ALEX GITELMAN, YAKOV SIONOV, and
`VLADIMIR GORBACH,
`
`
` Defendants.
`
`
`
`
`
`
`ON BEHALF OF PLAINTIFFS:
`
`
`
`Svetlana Sobel
`Sobel Law Offices
`175 Eileen Way
`Syosset, NY 11791
`516-496-1903
`Fax: 631-532-4828
`Email: ssobel@sobellawpc.com
`
`
`
`
`
`
`
`
`
`
`
`
`ON BEHALF OF DEFENDANTS:
`
`Robert Bondar
`Law Office of Robert Bondar
`28 Dooley Street
`3rd. Floor
`Brooklyn, NY 11235
`347-462-3262
`Fax: 347-462-3261
`Email: rbondar@bondarlaw.com
`
`Emanuel Kataev
`Milman Labuda Law Group, PLLC
`3000 Marcus Avenue
`Suite 3W8
`Lake Success, NY 11042
`516-328-8899
`Fax: 516-328-0082
`Email: emanuel@mllaborlaw.com
`
`Joseph M. Labuda
`Milman Labuda Law Group, PLLC
`3000 Marcus Ave
`Suite 3W8
`New Hyde Park, NY 11042
`
`1
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`

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`Case 1:14-cv-06905-JBW-VMS Document 216 Filed 11/01/17 Page 2 of 39 PageID #: 5348
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`516-328-8899
`Fax: 516-328-0082
`Email: joe@mllaborlaw.com
`
`
`JACK B. WEINSTEIN, Senior United States District Judge:
`
`
`Table of Contents
`
`I.
`
`Introduction .................................................................................................................. 4
`
`II.
`
`Facts .......................................................................................................................... 4
`
`A. Defendants’ Product and Nature of Industry......................................................... 4
`
`B.
`
`Plaintiffs ................................................................................................................ 5
`
`C. Claims.................................................................................................................... 5
`
`D.
`
`Jury Verdict and Rule 50 Motions ........................................................................ 5
`
`1.
`
`2.
`
`Jury Verdict ....................................................................................................... 5
`
`Rule 50 Motions ................................................................................................ 6
`
`E.
`
`Testimony and Evidence ....................................................................................... 7
`
`1. Aqualife’s Independent Business Owner Contract ............................................ 7
`
`2. Marketing Plan .................................................................................................. 7
`
`3. Vladislav Pustov ................................................................................................ 8
`
`4. Michael Leibzon ................................................................................................ 8
`
`5. Katherine Tsigel ................................................................................................ 9
`
`6. Victoria Leevson .............................................................................................. 10
`
`7. Yakov Sionov and the Individual Defendants ................................................. 11
`
`III. Law ......................................................................................................................... 11
`
`A. Rule 50 ................................................................................................................ 11
`
`B. Contract Formation and Modification ................................................................. 12
`
`1.
`
`Intent to be Bound ........................................................................................... 12
`
`2. Assent .............................................................................................................. 13
`
`3.
`
`Statute of Frauds .............................................................................................. 14
`
`C.
`
`Fair Labor Standards Act and New York Labor Law ......................................... 14
`
`1.
`
`Employee v. Independent Contractor .............................................................. 14
`
`i. Tax Return Status and Estoppel ........................................................................ 15
`
`ii. Worker Misclassification ................................................................................. 16
`
`iii. Commissioned Salespersons .......................................................................... 19
`
`iv. Written Consent for Collective Actions.......................................................... 19
`
`2. Overtime Pay ................................................................................................... 20
`
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`2
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`i. “Work” from Home or “On-call” .................................................................... 20
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`ii. Mixed Question of Fact and Law .................................................................... 22
`
`iii. New Technology and a Shifting Paradigm ..................................................... 22
`
`3.
`
`Statute of Limitations ...................................................................................... 23
`
`4. Notice and Statement Requirements ................................................................ 23
`
`5. Willfulness and Liquidated Damages .............................................................. 25
`
`6. Attorney’s Fees and Costs ............................................................................... 25
`
`7.
`
`Pre-Judgment Interest ...................................................................................... 26
`
`8. New York CPLR Interest Calculations ........................................................... 26
`
`9.
`
`Post-Judgment Interest .................................................................................... 27
`
`IV. Application of Law to Facts .................................................................................... 27
`
`A.
`
`Plaintiffs Assented to the Terms of the Contract as Consistently Applied ......... 27
`
`B. Residual Commission is Barred by the Statute of Frauds ................................... 28
`
`C.
`
`D.
`
`Plaintiffs Leevson and Tsigel are Protected by the FLSA and NYLL ................ 28
`
`Inside Salespeople ............................................................................................... 30
`
`E. Written Consent................................................................................................... 30
`
`F. Overtime under the FLSA and NYLL................................................................. 30
`
`G. Compensation for On-Call or Wait Time ............................................................ 31
`
`V. Damages .................................................................................................................. 32
`
`A. Breach of Contract .............................................................................................. 32
`
`B.
`
`C.
`
`D.
`
`FLSA and NYLL ................................................................................................. 32
`
`Liquidated Damages ............................................................................................ 32
`
`Pre-Judgment Interest .......................................................................................... 33
`
`1. Leevson’s Interest ................................................................................................. 34
`
`2. Tsigel’s Interest ..................................................................................................... 34
`
`E.
`
`F.
`
`Post-Judgment Interest ........................................................................................ 34
`
`Costs .................................................................................................................... 34
`
`G. Attorney’s Fees ................................................................................................... 35
`
`H. Damages Chart .................................................................................................... 35
`
`VI. Summation of Rulings on Jury Verdict Findings ................................................... 36
`
`VII.
`
`Conclusion ........................................................................................................... 38
`
`VIII. Appendixes A-D, Relevant Documents .............................................................. 40
`
` IX. Appendix E, Jury Charge and Verdict Sheet ....................................................... 44
`
`
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`3
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`I.
`
`Introduction
`
`After a four-week trial and complex jury verdict, this memorandum and order addresses
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`pre-and post-verdict Rule 50 motions.
`
`The case involves: (1) a simple contract question of whether critical terms of an
`
`agreement were in effect assented to by the consistent conduct of the parties; on this point the
`
`jury verdict, granting damages to the plaintiffs, is set aside; (2) whether employees working and
`
`classified as independent entities, but under individual contract and control of the employer were
`
`entitled to the protection of state and federal wage laws; on this point the jury verdict, finding the
`
`wage laws applicable, is affirmed; and (3) whether employees working or “on-call” for their
`
`employer after they physically leave the employer’s office, while they are at home and under
`
`conditions that impede them from going about their normal life, are entitled to overtime pay; on
`
`this point the jury’s verdict, finding that they were at work while at home, is affirmed.
`
`II.
`
`Facts
`
`A. Defendants’ Product and Nature of Industry
`
`Defendant Aqualife USA, Inc., (“Aqualife”) sells and services water filtration systems to
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`the Russian speaking community in New York City and its environs. Trial Tr. 1191:21. The
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`company was formed in 2004, along with its subsidiary Aqualife, Inc. Trial Tr. 1190:3-11. It is
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`owned and operated by defendants Yakov Sionov, Vladimir Gorbach, and Alexander Gitelman.
`
`Trial Tr. 1190:3-11.
`
`The company employs a number of salespeople, who are paid commissions, as well as
`
`office staff, who are paid hourly wages and perform clerical and “telemarketing” work under
`
`direction of management. Trial Tr. 1192:1-9. Some employees are required to create
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`independent corporate entities through which they are paid for the services they render. Trial Tr.
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`1192:15-24.
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`B. Plaintiffs
`
`All individual plaintiffs were under contract with Aqualife, but were paid through their
`
`personal corporations. Plaintiffs Victoria Leevson and her husband, Michael Leibzon, are
`
`owners and operators of Matana Enterprises, Inc. (“Matana”). Trial Tr. 1199:1-6. Plaintiff
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`Katherine Tsigel and her husband Vadim Tsigel (who is not a party to this suit) own and operate
`
`VadKat, Inc. (“VadKat”). Plaintiff Vladislav Pustov is the owner and operator of Imperial
`
`Enterprise Services, Inc. (“Imperial”). Trial Tr. 1197:6-1198:22.
`
`C. Claims
`
`Each individual plaintiff and their corporation sues Aqualife USA, Inc., Aqualife, Inc.,
`
`and owners Alex Gitelman, Yakov Sionov, and Vladimir Gorbach, individually, jointly and
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`severally.
`
`They assert claims that they were not paid commissions and wages, in breach of their
`
`individual contracts.
`
`Plaintiffs Victoria Leevson and Katherine Tsigel also individually claim under state and
`
`federal labor laws that they were not paid wages earned and overtime, and not provided with
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`proper wage statements and notices.
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`D. Jury Verdict and Rule 50 Motions
`
`After four weeks of trial and thousands of pages of exhibits, the jury returned a verdict in
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`favor of the plaintiffs on their claims for commissions and wages, overtime pay, and lack of
`
`wage statements and notices. See App. E, Jury Instructions and Verdict Sheet.
`
`1.
`
`Jury Verdict
`
`For breach of contract, the jury awarded: $5,982 for commissions to Matana; $4,056 for
`
`commissions to VadKat; $77,500 for commissions to Imperial; $25,680.54 for hourly
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`compensation and $87,989 for commissions to Victoria Leevson; $5,982.60 for commissions to
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`5
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`Michael Leibzon; $48,320.45 for hourly compensation and $159,691.89 for commissions to
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`Katherine Tsigel; and $77,500 for commissions to Vladislav Pustov. Mr. Pustov and his
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`company Imperial were awarded “residual commissions” through 2026. See App. E.
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`Under the FLSA and the NYLL, the jury awarded: $2,500 for wage notice violations,
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`$2,500 for wage statement violations, and $25,680.54 for overtime pay to Victoria Leevson; and
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`$2,500 for wage notice violations, $2,500 for wage statement violations, and $48,320.45 for
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`overtime pay to Katherine Tsigel. Id.
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`2.
`
`Rule 50 Motions
`
`The defendants orally and in writing made the following motions pursuant to Federal
`
`Rule of Civil Procedure 50(a)-(b):
`
`(1) Motion for judgment as a matter of law on plaintiffs’ FLSA and NYLL claims, ECF
`No. 164, Aug. 17, 2017.
`
`(2) Motion for judgement as a matter of law on plaintiffs’ breach of contract claims on
`the ground that plaintiffs assented to the contract terms offered by defendants, ECF No.
`165, Aug. 17, 2017.
`
`(3) Motion for judgement as a matter of law on plaintiffs’ breach of contract claims for
`residual commissions as barred by the statute of frauds, ECF No. 166, Aug. 17, 2017.
`
`(4) Letter in support of motion for judgment as a matter of law on plaintiffs’ breach of
`contract claims, ECF No. 167, Aug. 17, 2017.
`
`(5) Reply to plaintiffs’ memorandum in opposition to defendants third motion for
`judgment as a matter of law, ECF No. 181, Aug. 23, 2017.
`
`(6) Fourth motion for judgment as a matter of law on plaintiffs’ breach of contract claims
`against the individual defendants, ECF No. 183, Aug. 27, 2017.
`
`(7) Fifth motion for judgment as a matter of law on plaintiffs’ FLSA and NYLL claims
`against defendants, ECF No. 184, Aug. 27, 2017.
`
`(8) Sixth motion for judgment as a matter of law on the grounds that plaintiffs Leevson
`and Tsigel are exempt from overtime requirements as commissioned salespersons, ECF
`No. 187, Aug. 28, 2017.
`
`(9) Motion for judgment as a matter of law, motion for new trial, ECF No. 200, Sept. 29,
`2017.
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`(10) Reply in support re motion for judgment as a matter of law, ECF No. 211, Oct. 22,
`2017.
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`6
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`Plaintiffs filed responses to defendants’ motions as follows:
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`(1) Memorandum in opposition to defendants’ first motion for judgment as a matter of
`law, ECF No. 170, Aug. 21, 2017.
`
`(2) Memorandum in opposition to defendants’ third motion for judgment as a matter of
`law, ECF No. 178, Aug. 23, 2017.
`
`(3) Response to defendants’ fifth motion for judgment as a matter of law, ECF No. 185,
`Aug. 28, 2017.
`
`(4) Motion for judgment as a matter of law post-verdict, ECF No. 202, Sept. 29, 2017.
`
`(5) Memorandum in opposition re motion for judgment as a matter of law, ECF No. 210,
`Oct. 17, 2017.
`
`(6) Memorandum in support of plaintiffs’ motion for judgment as a matter of law, ECF
`No. 212, Oct. 23, 2017.
`
`The court reserved judgment on all Rule 50 motions. After the verdict the court
`
`adjourned the case so the parties could fully brief and argue all the issues raised in their motions;
`
`it requested submission of a form and amount of judgment, including costs, disbursements,
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`interest, penalties, and legal fees. ECF No. 194, Sept. 1, 2017; see also ECF No. 199, Sept. 26,
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`2017 (Court order directing the contents of parties briefing).
`
`E. Testimony and Evidence
`
`1.
`
`Aqualife’s Independent Business Owner Contract
`
`Aqualife required every salesperson and most workers to sign an Independent Business
`
`Owner (“IBO”) contract. The relevant terms of the contract state:
`
`1. IBO is not [Aqualife’s] employee or representative. He is an independent legal
`person, who is familiar with the rules and regulations of the company.
`
`5. IBO is entitled to receive commission fees and profit as per marketing plan of
`the company.
`
`7. The company reserves the right to change the conditions, prices, marketing
`plan at any time.
`
`
`App. A, IBO Contract, Vladislav Pustov.
`
`2.
`
`Marketing Plan
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`The parties produced different versions of the marketing plan. See App. B, Defendants’
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`Plan; App. C, Plaintiffs’ Plan. The provenance of both are dubious. Both, however, are
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`irrelevant because the invariable practice of the parties defined the critical terms of the
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`agreement.
`
`3.
`
`Vladislav Pustov
`
`Plaintiff Vladislav Pustov met defendant Yakov Sionov in 2005; soon after, he signed an
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`IBO agreement to sell water filtration systems for Aqualife. Trial Tr. 55:17-18; App. A. Mr.
`
`Pustov testified that based on a verbal agreement with Mr. Sionov, he was to receive a thirty-five
`
`percent commission—without deductions—of all sales he made. Trial Tr. 71:8-13. He also
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`would receive a “residual commission” of five percent a year, in perpetuity, from each client that
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`requires yearly maintenance of their filtration system. Trial Tr. 79:1-83:17. Nevertheless,
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`deductions were consistently taken out of his commission for fees, presents and expenses. Trial
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`Tr. 91:1-96:5.
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`On cross-examination, Mr. Pustov was shown a marketing plan produced by defendants.
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`He testified that he received this plan in 2006, but that it did not contain the language in the
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`bottom right corner, describing deductions to be taken from the salesperson’s commissions.
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`Trial Tr. 161:7-20.
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`After the close of the defendants’ case, Mr. Pustov was called as a rebuttal witness and
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`produced for the first time what he claimed was the original version of the marketing plan that he
`
`was given when he was first hired, and that contained no language about deductions. Trial Tr.
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`1613:6-1614:7; App. C.
`
`4.
`
`Michael Leibzon
`
`Michael Leibzon signed an IBO agreement with Aqualife to begin selling water filtration
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`systems in 2009. Trial Tr. 223:6-9. He testified that he was told by Vladimir Gorbach that he
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`8
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`would be paid “35 percent straight” commission on each system he sold; he also would receive
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`an extra five percent commission on sales he booked himself, and a yearly five percent residual
`
`commission, in perpetuity, from payments for maintenance of the systems. Trial Tr. 227:7-10;
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`242:15-243:12. He never received a marketing plan. Trial Tr. 231:8-12.
`
`Mr. Leibzon testified that “from the very first check [he] received” deductions were taken
`
`out of his commissions. Trial Tr. 330:10-16; 379:14. He routinely objected to the defendants
`
`about his payment, and, in 2012, Mr. Leibzon quit working for Aqualife because he believed he
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`was being improperly compensated. Trial Tr. 255:8-12; 267:10-269:16.
`
`5.
`
`Katherine Tsigel
`
`Katherine Tsigel was hired in 2006 to work in Aqualife’s telemarketing department
`
`where she would schedule appointments for technicians, resolve complaints, and perform other
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`clerical work. Trial Tr. 448:16-22; 452:22-453-4. She testified that Aqualife’s owners agreed to
`
`pay her ten dollars hourly, plus ten percent commission for each sale she assisted with and a
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`separate commission for any repairs made to filtration systems. Id. In 2011, her pay was raised
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`to eleven dollars an hour. Trial Tr. 578:9-17. Management controlled her work schedule and
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`she “punched” in and out on the office “time clock” each day. Trial Tr. 793:16-21.
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`Ms. Tisgel never signed an IBO agreement, and never made outside sales for Aqualife.
`
`Trial Tr. 451:1-13. Through their company VadKat, Ms. Tsigel and her husband, who was a
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`salesperson for Aqualife, claimed large deductions on their income tax returns for work as
`
`independent contractors. Trial Tr. 611:6-618:18.
`
`She testified that she was paid every week for many years, but was never paid the proper
`
`wages or commissions, and was always paid through VadKat. Trial Tr. 738:11-19. She claims
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`roughly $1,000 per week in unpaid wages over a period of six years. Trial Tr. 577:15-578:25.
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`9
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`Ms. Tsigel was required by her employer to be available to receive calls at home before
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`and after her regular work hours to assist technicians and salespersons with completing and
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`financing their sales. Trial Tr. 504:9-505:2; 720:7-22. After she received these calls she would
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`often continue to do work on her laptop to assist in the sale and then call the technician back to
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`help complete the transaction. Trial Tr. 807:21-808:19.
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`6.
`
`Victoria Leevson
`
`Victoria Leevson began working for Aqualife as a salesperson in 2009. Trial Tr. 820:14-
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`15. She testified that Vladimir Gorbach agreed to pay her a thirty-five percent commission
`
`without deductions, plus five percent for self-booking, and a five percent yearly residual
`
`commission from maintenance to the filtration systems. Trial Tr. 828:4-11. Ms. Leevson says
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`she was regularly paid less than thirty-five percent commission from each sale because of
`
`deductions taken for gifts, installation fees and other costs. Trial Tr. 833:10-11; 837.
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`After resigning in June 2010, Ms. Leevson was re-hired as an office employee in August
`
`of 2011. Trial Tr. 847:23-848:4. In her new role, Ms. Leevson answered phone calls, assisted
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`technicians with sales, and dealt with customer cancellations and complaints. Trial Tr. 875:2-7.
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`She worked daily in the office from nine to seven, and was to be paid ten dollars hourly and ten
`
`percent commissions on any sales she assisted with. Trial Tr. 879:2-5; 848:9-25. She “punched”
`
`in and out each day. Trial Tr. 1000:21-23.
`
`Ms. Leevson testified that in her second period of employment she received payments for
`
`commissions and wages, but it was always less than the correct amount. Trial Tr. 872:2-13;
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`879:16-18. She claims that her wages were underpaid by $1,240 per week over a period of one
`
`year. Trial Tr. 869:16-13.
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`10
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`After leaving the office each day, Ms. Leevson was required to continue to assist the
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`technicians and salespeople while at home and answer her phone late into the night. Trial Tr.
`
`887:8-17.
`
`7.
`
`Yakov Sionov and the Individual Defendants
`
`Yakov Sionov, along with Vladimir Gorbach and Alexander Gitelman, founded Aqualife
`
`in 2004. Trial Tr. 1190:1-11.
`
`Mr. Sionov testified that the defendants’ marketing plan, which included deductions for
`
`expenses, gifts and fees, was in effect from 2006 through 2012, and that commissions were
`
`always paid on the “net amount” of the sale. Trial Tr. 1208:5-14; 1210:1-12.
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`Mr. Sionov and the individual defendants claimed they paid Victoria Leevson and
`
`Katherine Tsigel their full hourly wages by check every Monday. Trial Tr. 1512:21-1513:3;
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`1481:9-18; 1482:8-11; 1088:9-11;
`
`Plaintiffs Leevson and Tsigel, according to Mr. Sionov, were compensated for after-hours
`
`calls and other work by receiving a commission from any sales they assisted with. Trial Tr.
`
`1340:3-18. They were never paid overtime wages for the time spent making calls at home or the
`
`time spent at home “on-call” waiting to assist with an assignment.
`
`III. Law
`
`A. Rule 50
`
`
`
`At a jury trial, the court may grant a motion for judgment as a matter of law against a
`
`party on an issue which a reasonable jury would “have [no] legally sufficient evidentiary basis to
`
`find for [that] party.” Fed. R. Civ. P. 50(a). A court may reserve decision on a Rule 50 motion
`
`and decide after the jury has rendered a verdict. Unitherm Food Systems, Inc. v. Swift-Eckrich,
`
`546 U.S. 394, 406 (2006) (finding it within the “District Court’s discretion” to permit “the jury
`
`to make an initial judgment about the sufficiency of the evidence” before deciding a Rule 50(a)
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`11
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`Case 1:14-cv-06905-JBW-VMS Document 216 Filed 11/01/17 Page 12 of 39 PageID #: 5358
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`motion). Judgment as a matter of law may be granted on any issue raised before the case was
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`submitted to the jury. Fed. R. Civ. P. 50(a)(2); Holmes v. U.S., 85 F.3d 956, 962 (2d Cir. 1996).
`
`A Rule 50(b) motion, renewing a motion for judgment as a matter of law, may be made
`
`no later than “28 days after the entry of judgment.” Fed. R. Civ. P. 50(b); Presutti v. FDIC, 24
`
`Fed. Appx. 92, 94 (2d Cir. 2001) (“Rule 50(b) does not require that a motion be made after the
`
`entry of judgment; instead it provides that the non-prevailing party may file its ‘motion no later
`
`than 10 days [now amended to 28 days] after entry of judgment.’ As the Advisory Committee
`
`Notes for the 1995 amendments to Rule 50 state: ‘The phrase no later than is used—rather than
`
`within—to include post-judgment motions that sometimes are filed before actual entry of the
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`judgment by the clerk.’”). Under Rule 50(b), relief may only be granted on an issued raised
`
`under Rule 50(a) “before the case was submitted to the jury.” Exxon Shipping Co. v. Baker, 554
`
`U.S. 471, 486 (2008).
`
`
`
`When deciding a Rule 50 motion, the court views the evidence in the light most favorable
`
`to the non-moving party. Weldy v. Piedmont Airlines, Inc., 985 F.2d 57, 59–60 (2d Cir. 1993).
`
`B. Contract Formation and Modification
`
`All parties are residents of New York; the place of contracting and most relevant
`
`activities ocurred in New York. New York contract law is controlling. Terwilliger v.
`
`Terwilliger, 206 F.3d 240, 245 (2d Cir. 2000).
`
`1.
`
`Intent to be Bound
`
`When determining the existence of a contract and its specific terms, “it is necessary to
`
`look to the objective manifestations of the intent of the parties as gathered by their expressed
`
`words and deeds.” 1 Williston on Contracts § 3:4 (4th ed.) (quoting Gallagher v. Long Island
`
`Plastic Surgical Group, P.C., 113 A.D.3d 652, 653 (2d Dept. 2014)); see Brown Bros. Elec.
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`Contractors, Inc., v. Beam Constr. Corp., 41 N.Y.2d 397, 399 (1977); see Apex Oil Co. v.
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`Vanguard Oil & Serv. Co. Inc., 760 F.2d 417, 422 (2d Cir. 1985) (“The existence of a contract
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`may be established through conduct of the parties recognizing the contract.”) (citing P.J. Carlin
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`Constr. Co. v. Whiffen Elec. Co., 66 A.D.2d 684 (1978)).
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`2.
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`Assent
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`Parties may acquiesce to modification of a contract by continued conduct or performance
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`under the original or new terms. Giannone v. Deutsche Bank Securities, Inc., 392 F. Supp. 2d
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`576 (S.D.N.Y. 2005) (finding that an employee who continues to work under new terms created
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`by an employer is “deemed to have ratified the new relationship”) (quoting Kempf v. Mitsui
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`Plastics, Inc., 1996 WL 673812, at *6 (S.D.N.Y. Nov. 20, 1996)). When an employer modifies
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`the terms of an at-will employee’s payment, and the employee chooses to remain “after being
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`advised of that change, that employee is deemed to have acquiesced to the new terms of the
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`employment and cannot later claim compensation based on the terms of the original contract.”
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`In re Footstar, Inc., 2007 WL 1989290, at *5 (Bankr. S.D.N.Y. July 6, 2007).
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`An at-will contract may be “modified and different compensation rates fixed without
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`approval of the other party since the dissatisfied party has a right to leave his employment.”
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`Kronick v. L.P. Thebault Co., Inc., 70 A.D.3d 648, 649 (2d Dept. 2010). An employee that
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`remains after a contract has been modified is “deemed to have assented to the modification and,
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`in effect, commenced employment under a new contract.” See DuBois v. Macy’s East Inc., 338
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`Fed. Appx. 32, 33 (2d Cir. 2009) (quoting Bottini v. Lewis & Judge Co., 211 A.D.2d 1006 (3d
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`Dept. 1995)) (dismissing breach of contract claim where employer unilaterally reduced
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`plaintiff’s sales territory and plaintiff continued to work; because employee remained in
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`defendant’s employment, the plaintiff was deemed to have assented to the modification and, in
`
`effect, commenced employment under a new contract).
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`
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`A contract between an independent contractor and an employer may be modified by the
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`conduct of the parties. Romaine v. Beacon Lithographic Co., 13 Misc. 122, 123 (N.Y.C.P. 1895)
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`(finding that an independent contractor whose weekly commissions were reduced by his
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`employer because of dissatisfaction of services could continue to carry out the agreement under
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`the new terms, but could not later sue for commission owed under the original contract).
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`3.
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`Statute of Frauds
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`An oral agreement which by “its terms is not to be performed within one year from the
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`making thereof” is unenforceable. N.Y. General Obligations Law § 5-701(a)(1); Freedman v.
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`Chemical Const. Corp., 43 N.Y.2d 260, 265 (1977) (“The critical test [] is whether by its terms
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`the agreement is not to be performed within a year.”). A contract which calls for performance
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`over an indefinite time period is unenforceable under the Statute of Frauds. Computech Intern.,
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`Inc. v. Compaq Computer Corp., 2002 WL 31398933 (S.D.N.Y. Oct. 24, 2002) (“Under New
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`York law, contracts of indefinite duration are deemed to be incapable of being performed within
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`a year, and thus fall within the ambit of the Statute of Frauds.”).
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`To satisfy the Statute of Frauds, a writing must contain all of the material terms of a
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`contract. See Wacks v. King, 260 A.D.2d 985, 986 (3d Dept. 1999) (“[T]he underlying
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`instrument ‘must designate all parties, identify and describe the subject matter and state all of the
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`essential terms of a complete agreement.’”) (quoting Conway v. Maher, 185 A.D.2d 570, 572
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`(1992)).
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`C. Fair Labor Standards Act and New York Labor Law
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`
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`Under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”)
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`non-exempt workers are entitled to a minimum wage, overtime pay, and formal wage statements
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`and notices. 29 U.S.C. § 201; N.Y. Lab. Law § 652.
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`1.
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`Employee v. Independent Contractor
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`Independent contractors are exempt workers, not protected by the state and federal labor
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`laws. See Brock v. Superior Care, Inc., 840 F.2d 1054 (2d Cir. 1988). The determinative
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`inquiry into whether a worker is an employee or an independent contractor pursuant to the FLSA
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`is laid out in a five factor “economic reality” test. The test involves:
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`(1) the degree of control exercised by the employer over the workers, (2)
`the workers' opportunity for profit or loss and their investment in the
`business, (3) the degree of skill and independent initiative required to
`perform the work, (4) the permanence or duration of the working
`relationship, and (5) the extent to which the work is an integral part of the
`employer's business.
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`Brock, 840 F.2d at 1058-59 (citing United States v. Silk, 331 U.S. 704, 716 (1947)).
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`
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`No single factor is dispositive; the primary concern is whether or not the workers are in
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`business for themselves. Brock, 840 F.2d at 1059 (“[W]hether, as a matter of economic reality,
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`the workers depend on someone else’s business for the opportunity to render services.”); Bartels
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`v. Birmingham, 332 U.S. 126, 130 (1947).
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`The test under the NYLL is similar, with a focus on the “degree of control exercised” by
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`the employer. Bynog v. Cipriani Group, Inc., 1 N.Y.3d 193, 195 (2003) (“Factors relevant to
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`assessing control include whether the worker (1) worked at his own convenience, (2) was free to
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`engage in other employment, (3) rece