Zhao v. Ke Zhang Inc.
1:18-cv-06452
| E.D.N.Y | Mar 31, 2021Background
- Plaintiffs Piyou Zhao and Zhiqiang Wang worked as delivery drivers primarily for Ke Zhang and occasionally (morning deliveries in exchange for breakfast) for nearby T&T.
- Ke Zhang (operated by Tengyu Zhu; co-owned by Li Hui Zhu) reported approximately $700,000–$800,000 in annual sales; T&T (owned by Wen Chai "Chai" Zou and Xiang Keng Zhu) is a small takeout restaurant with no evidence of $500,000+ sales.
- Plaintiffs allege violations of the FLSA and NYLL: unpaid minimum and overtime wages, spread-of-hours pay, and failures to provide wage notices/paystubs.
- Tengyu managed hiring, firing, schedules, and pay at Ke Zhang; Li Hui performed limited, episodic tasks; Chai coordinated T&T deliveries and provided breakfast compensation; Xiang worked as a cook and had no contact with plaintiffs.
- Defendants moved for summary judgment arguing lack of FLSA coverage, that only Ke Zhang and Tengyu were employers, absence of willfulness (two-year SOL), and entitlement to a good-faith defense against liquidated damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FLSA enterprise coverage (Ke Zhang & T&T) | Both restaurants are covered enterprises; Ke Zhang exceeds $500k and employees handle goods from out-of-state | No FLSA coverage; T&T lacks $500k; Ke Zhang not sufficiently engaged in interstate commerce | Ke Zhang: triable issue on enterprise coverage (summary judgment denied). T&T: no evidence of $500k — FLSA claims against T&T dismissed. |
| Employer status — Li Hui Zhu | Li Hui is co-owner and involved in operations | Li Hui lacked control over hiring, firing, pay, schedules | Li Hui is not an employer under FLSA/NYLL; dismissed. |
| Employer status — T&T, Chai, Xiang | T&T and Chai exercised functional control (dispatched deliveries; provided meals); Xiang has liquor license | T&T did not hire or pay plaintiffs; Xiang had no interaction; Chai's role limited | Triable issue: T&T and Chai may be joint employers (summary judgment denied as to them). Xiang lacks evidence of operational control — dismissed. |
| Willfulness / statute of limitations | Violations were willful → 3-year SOL | No willfulness → 2-year SOL applies | No evidence of willfulness; two-year statute of limitations applies. |
| Liquidated damages (good-faith defense) | Plaintiffs seek liquidated damages under FLSA/NYLL | Defendants claim good-faith reliance/ignorance of law | Defendants failed to show they took active steps to ascertain and comply with law; good-faith defense denied. |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard)
- Jacobs v. New York Foundling Hosp., 577 F.3d 93 (enterprise and individual coverage under FLSA)
- McLeod v. Threlkeld, 319 U.S. 491 (individual coverage requires more than indirect effect on interstate commerce)
- Brock v. Superior Care, 840 F.2d 1054 (broad definition of "employ" under FLSA)
- Barfield v. New York City Health & Hospitals Corp., 537 F.3d 132 (tests for employer status and economic-reality analysis)
- Carter v. Dutchess Cmty. Coll., 735 F.2d 8 (formal-control factors for employer status)
- Zheng v. Liberty Apparel Co., 355 F.3d 61 (functional-control/joint-employer factors)
- Irizarry v. Catsimatidis, 722 F.3d 99 (ownership alone insufficient to establish employer status)
- McLaughlin v. Richland Shoe Co., 486 U.S. 128 (willfulness standard under FLSA)
- Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132 (defendant bears burden to prove good-faith defense)
- Reich v. Southern New England Telecommunications Corp., 121 F.3d 58 (good faith requires more than ignorance of law)
- Parada v. Banco Industrial de Venezuela, 753 F.3d 62 (FLSA statute-of-limitations framework)