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Monday 3rd of September 2012

General Contractor (G) Found Not Liable to Employees of Subcontractor (S) for Wages Unpaid by S

G might have had that liability if it qualified as a “joint” employer with S, but examining the factors that go into such a “joint” status the Court of Appeals, reversing the lower courts and the labor department, finds no “joint” status established on the record in Ovadia v. Office of the Industrial Board of Appeals, 19 N.Y.3d 138, 946 N.Y.S.2d 86 (May 1, 2012).

S had subcontracted with G to do the masonry work on a building G was under contract to build. Three months into the project, S – in essence one Bruten, its principal – walked off the job leaving S’s laborers unpaid or underpaid. Some of the workers, who spoke little English, went to G demanding to be paid. G talked to one of them, W. W testified that G told W “not to worry about it”, on which basis W then told his fellow workers to keep working and that G would pay them. Apparently on that representation, they went back to work for six days. A new masonry contractor and crew then took over.
The crux of the case is the period the workers labored before W’s visit to G, and for that period the Court has bad news for the workers. The indicia of “joint” employment such as would enable them to have G make good for what S owed them are found absent. The workers pointed, for example, to the facts that G provided the “work site” and furnished the materials used in their tasks, but the Court says these are “a common occurrence at construction sites” and “should not determine the nature of employment relationships”.
Citing several of its earlier decisions in an opinion by Judge Graffeo, the Court sees here
the typical contractor/subcontractor context [in which] a general contractor is not an employer of its subcontractors’ employees.
There was an unresolved issue, however, about whether G agreed to pay for the six days of labor the workers performed after the conversation took place between W and G. The case is remitted for findings on that, but G is off the hook for the prior work for which S failed to pay the laborers.
A hint that the Court was bothered by the workers being unpaid appears in a footnote in the case, in which the Court cites another route by which G could become obligated to pay workers at a construction site, citing Lien Law provisions. There is no indication the workers pursued that route, however. The Court recites as much but just leaves it there, and with a warning about a one-year time limit on pursuing such relief.
New York State Bar Association Publication, Law Digest No. 632 August 2012.  Editor:  DAVID D. SIEGEL