DEMARCO v. FARMACEUTICALRX, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

BRIAN DEMARCO, et al,

Plaintiffs, Civil Action No. 2:22-cv-1164

Vv. Hon. William S. Stickman [V

FARMACEUTICALRX, LLC, et al,

Defendants.

~ MEMORANDUM OPINION

WILLIAM S. STICKMAN IV, United States District Judge

Plaintiffs Brian DeMarco, Clint Goodenow, Mark Williams, Jason Hummel, and Alex

Fitzgerald filed an Amended Complaint and Demand for Jury Trial (“Amended Complaint”)

against Defendants! FarmaceuticalRX, LLC; FRX Management Holdings, LLC; FRX Growth

Partners, LLC; Rebecca L. Myers (“Myers”); Dietrich A. Stephan (“Stephan”); and Joy E. Bochner

(“Bochner”). (ECF No. 10). At Count I and Count III, Plaintiffs bring claims for violations of the

Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207. Ud). At Count II, Plaintiffs bring a claim

for violation of the Pennsylvania Minimum Wage Act (““PMWA”), 43 Pa. Stat. Ann. § 333.104.

(id.). Plaintiffs allege that Defendants failed to pay them adequate overtime compensation in

violation of the FLSA (Count I) and PMWA (Count IJ) and that Defendants “constructively

discharged” them in retaliation for their complaints about Defendants’ alleged FLSA and PMWA

violations (Count III). Presently before the Court is Defendants’ Motion to Dismiss Plaintiffs’

' Plaintiffs stipulated to the dismissal with prejudice of Defendants FRX Growth, LLC;

FarmaceuticalRX Real Estate Pennsylvania, LLC; and FarmaceuticalRX GP of Pennsylvania,

LLC (ECF No. 15), which the Court approved. (ECF No. 20).

Amended Complaint Pursuant to Federal Rule of Civil Procedure 12(b)(6).* (ECF No. 16). For

the reasons set forth below, Defendants’ Motion to Dismiss Plaintiffs’ Amended Complaint will

be denied.

I. FACTUAL BACKGROUND

FarmaceuticalR xX, LLC; FRX Management Holdings, LLC; and FRX Growth Partners,

LLC (collectively “Corporate Defendants”) are medical marijuana growing and processing

companies licensed by the Commonwealth of Pennsylvania and the State of Ohio. (ECF No. 10,

{ 29). Corporate Defendants each have the same principal place of business at 660 Martin Luther

King Jr. Boulevard, Farrell, Pennsylvania 16121. Ud. §{ 6-8). Myers, Stephan, and Bochner

(collectively “Individual Defendants”) each seemingly own a portion of Corporate Defendants and

serve on Corporate Defendants’ Board of Directors. (Ud. 13-15). Additionally, Myers is

Corporate Defendants’ Chief Executive Officer (“CEO”); Stephan is Corporate Defendants’ Chief

Science Officer; and Bochner is Corporate Defendants’ Director of Health and Wellness. Ud.).

Plaintiffs allege that Individual Defendants each “supervised, exercised control over, and [were]

responsible for the FLSA/PMWA violations and misclassification at issue in this case.” (d.).

Plaintiffs worked as delivery drivers and were responsible for transporting Corporate Defendants’

medical marijuana products from their facility in Farrell, Pennsylvania to licensed dispensaries in

Pennsylvania. (Ud. § 32).

* Defendants uploaded the incorrect PDF version of their motion to dismiss, which sought the

dismissal of the claims against FRX Growth Partners, LLC, Myers, Stephan, and Bochner. (ECF

No. 16). Defendants subsequently filed an errata that joined FarmaceuticalRX, LLC and FRX

Management Holdings, LLC to the motion to dismiss. (ECF No. 18). Plaintiffs argue that

Defendants intended to file the original motion to dismiss as written and the errata was filed for

the purpose of delaying the case. (See ECF No. 23, p. 3). Defendants will be afforded the benefit

of the doubt and the Court will address their motion to dismiss the claims against all remaining

defendants.

Plaintiffs were hired by Defendants “on an ongoing basis for a period of years of indefinite

duration;” used Defendants’ vehicles and equipment for transporting Defendants’ products; and

were covered by Defendants’ insurance policies when providing transportation services for

Defendants. (/d. § 33). “Plaintiffs received paychecks and tax forms from FarmaceuticalRX, LLC

and FRX Management Holdings, LLC.” (Ud. § 26). According to Plaintiffs, Defendants had

complete control over all aspects of Plaintiffs’ work, including their work schedules. (/d. § 33).

Defendants classified Plaintiffs as independent contractors, and, as a result, did not pay Plaintiffs

overtime compensation when they worked over 40 hours in a week. (Ud. ¥ 34). Plaintiffs contend

that, under the FLSA and PMWA, they should have been classified as “employees” of Corporate

Defendants—each of which, according to Plaintiffs, “collectively constitute a Single and/or Joint

Employer.” Ud. 18, 33).

In the early stages of performing transportation services for Defendants, “Plaintiffs

regularly complained to Defendants about their misclassification as independent contractors and

the failure to pay them overtime compensation.” (/d. § 36). According to Plaintiffs, Defendants

made promises to correct Plaintiffs’ alleged misclassification, but never did so. (Ud 4 37).

Plaintiffs allege that “Defendants claimed that they could not correct the misclassification and

overtime issues mid-year because it would look suspicious and would trigger an audit of

Defendants’ books by the Internal Revenue Service.” (Ud. § 38). This issue was the subject of

“extensive meetings over an extended period among Defendants’ senior-level management,

owners, and officers.’ (Ud § 39). Plaintiffs continued to complain about their alleged

misclassification and resulting lack of overtime compensation. (Ud. §/ 40). In early May 2022,

“Defendants held a meeting in which Plaintiffs were informed that, if they wanted to continue

working for Defendants, they were required to ‘reapply’ for employment as W-2 employees” at

reduced wage rates. (Id. J 41). According to Plaintiffs, Defendants had already sought out

Plaintiffs’ replacements before the May 2022 meeting. (Ud. § 42).

II. LEGAL STANDARD

A motion to dismiss filed under Federal Rule of Civil Procedure (“Rule”) 12(b)(6) tests the

legal sufficiency of the complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). A plaintiff

must allege sufficient facts that, if accepted as true, state a claim for relief plausible on its face.

See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009). A court must accept all well-pleaded factual allegations as true and view them

in the light most favorable to a plaintiff. See Doe v. Princeton Univ., 30 F.4th 335, 340 (3d Cir.

2022); see also Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). Although a court

must accept the allegations in the complaint as true, it is “not compelled to accept unsupported

conclusions and unwarranted inferences, or a legal conclusion couched as a factual allegation.”

Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citations omitted).

The “plausibility” standard required for a complaint to survive a motion to dismiss is not

akin to a “probability” requirement but asks for more than sheer “possibility.” Jgbal, 556 U.S. at

678 (citing Twombly, 550 U.S. at 556). In other words, the complaint’s factual allegations must

be enough to raise a right to relief above the speculative level, on the assumption that all the

allegations are true even if doubtful in fact. Twombly, 550 U.S. at 555. Facial plausibility is

present when a plaintiff pleads factual content that allows the court to draw the reasonable

inference that a defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678. Even if the

complaint’s well-pleaded facts lead to a plausible inference, that inference alone will not entitle a

plaintiff to relief. Jd at 682. The complaint must support the inference with facts to plausibly

justify that inferential leap. Jd.

II. ANALYSIS

Counts I and II of Plaintiffs’ Amended Complaint allege that Defendants misclassified

Plaintiffs as independent contractors and violated the FLSA and PMWA’s? requirement that

employers must pay employees time and half their regular rate for all hours worked above forty

hours per week unless an exemption applies. See 29 U.S.C. § 207(a)(1); 43 Pa. Stat. Ann. §

333.104(c).4 Count III of Plaintiffs’ Amended Complaint alleges that Defendants violated the

FLSA’s prohibition against an employer discharging an employee for filing a complaint or

instituting a proceeding against the employer for alleged FLSA violations. See 29 U.S.C. § 215

(a)(3).

Much of the parties’ briefing is concerned with whether the six defendants can be

considered one employer under the “single employer theory” or the “joint employer theory.”

However, because the relevant statutory provisions apply only to “employees,” all of Plaintiffs’

claims depend on an initial showing that they were acting as “employees’”—as opposed to

independent contractors—under the FLSA and PMWA. See Thompson yv. Real Est. Mortg.

Network, 748 F.3d 142, 148 (3d Cir. 2014); Davis v. Abington Mem’ Hosp., 817 F. Supp. 2d 556,

3 Because the PMWA “substantially parallels” the FLSA, the two statutes are interpreted and

analyzed together. Levitt v. Tech. Educ. Servs., Inc., No. 10-CV-6823, 2012 WL 3205490, at *3

(E.D. Pa. Aug. 7, 2012); see also Baum v. Astrazeneca LP, 372 F. App’x 246, 248 (3d Cir. 2010); :

Com., Dep’t of Lab. & Indus., Bureau of Lab. L. Compliance v. Stuber, 822 A.2d 870, 873 (Pa.

Commw. Ct. 2003), aff'd sub nom. Com. v. Stuber, 859 A.2d 1253 (2004) (“[D]eference is

properly given to the federal interpretation.”). The Court’s analysis will largely focus on the FLSA

but applies with equal force to the PMWA.

* To state an overtime claim under the FLSA, “a plaintiff must allege that: (1) the defendant was

‘engaged in commerce’ as that phrase is defined by the FLSA; (2) the plaintiff was an ‘employee’

as defined by the FLSA; and (3) the plaintiff worked more than forty hours in a week but was not

paid overtime compensation for the hours worked in excess of forty.” Rummel v. Highmark, Inc.,

No. 3:13-CV-87, 2013 WL 6055082, at *3 (W.D. Pa. Nov. 15, 2013). See also 29 U.S.C. §

207(a)(1). Only the second element—-whether Plaintiffs were “employees” under the FLSA—is

at issue here.

564 (E.D. Pa. 2011) (“[T]he Court cannot assess whether a joint-employer relationship exists

without facts alleging the basic terms of the primary employment-employer relationship.”). If—

based on the standards set forth by the United States Court of Appeals for the Third Circuit—

Plaintiffs were properly classified as independent contractors, Defendants will not be liable (jointly

or otherwise) for the alleged statutory violations.

A. Plaintiffs Have Sufficiently Pled the Existence of an Employer-Employee

Relationship.

Under the FLSA, “employer” is defined expansively as “any person acting directly or

indirectly in the interest of an employer in relation to an employee[.]” 29 U.S.C. § 203(d). The

FLSA’s definitions concerning employment status are intentionally and necessarily broad in order

to effectuate the statute’s remedial purpose of abolishing substandard labor conditions. Martin v.

Selker Bros., 949 F.2d 1286, 1293 (3d Cir. 1991). How the worker is labeled or classified is not

dispositive, though it “may serve as evidence of what the actual practice or working relationship

is.” Williams v. Jani-King of Philadelphia Inc., 837 F.3d 314, 323 (3d Cir. 2016); see also

Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 (1947) (“Where the work done, in its

essence, follows the usual path of an employee, putting on an ‘independent contractor’ label does

not take the worker from the protection of the [FLSA].”).

“There is no single test to determine whether a person is an employee or an independent

contractor for purposes of the FLSA.” Martin, 949 F.2d at 1293. Instead, courts consider “the

total employment situation and the economic realities of the work relationship.” In re Enter. Rent-

A-Car Wage & Hour Emp. Pracs. Litig., 683 F.3d 462, 469 (3d Cir. 2012) (internal quotations

omitted). In doing so, courts consider the following six factors:

(1) the degree of the alleged employer’s right to control the manner in which the

work is to be performed; (2) the alleged employee’s opportunity for profit or loss

depending upon his managerial skill; (3) the alleged employee’s investment in

equipment or materials required for his task, or his employment of helpers; (4)

whether the service rendered requires a special skill; (5) the degree of permanence

of the working relationship; (6) whether the service rendered is an integral part of

the alleged employer’s business.

Martin, 949 F.2d at 1293. No single factor is dispositive and “a court should consider them

together in the ‘circumstances of the whole activity’ to determine whether the worker is ‘dependent

upon the business to which [she] render[s] service’ or is, ‘as a matter of economic reality,’

operating an independent business for herself.” Verma v. 3001 Castor, Inc., 937 F.3d 221, 230

(3d Cir. 2019) (quoting Martin, 949 F.2d at 1293).

The first factor of the economic realities test—the degree of Plaintiffs’ right to control the

manner in which the work is to be performed—weighs in favor of employee status. When

analyzing the control factor, courts assess “the degree of supervision over the worker, control over

the worker’s schedule, and instruction as to how the worker is to perform his or her duties.”

Bamgbose v. Delta-T Grp., Inc., 684 F. Supp. 2d 660, 669 (E.D. Pa. 2010). Plaintiffs claim that

Defendants managed the day-to-day supervision and disciplining of Plaintiffs; controlled

Plaintiffs’ work schedule, compensation, and benefits; subjected Plaintiffs to numerous policies;

and promulgated work rules and assignments. (ECF No. 10 4 22-24).

The second factor—Plaintiffs’ opportunity for profit or loss depending on their managerial

skill—also weighs in favor of employee status. “The profit and loss factor ‘centers on whether

[the plaintiff] had meaningful opportunities for profit or any significant risk of financial loss,

depending upon his managerial skill.’” Pendleton v. JEVS Hum. Servs., Inc., 463 F. Supp. 3d 548,

566 (E.D. Pa. 2020) (quoting Cherichetti v. PJ Endicott Co., 906 F. Supp. 2d 312, 317 (D.Del.

2012)). Generally, this factor weighs in favor of a worker being classified as an independent

contractor if “the worker’s earnings are tied to his performance or when the putative employee

makes a capital investment that may be lost if the business does not succeed.” Id. (citing Martin,

949 F.2d at 1294). Plaintiffs were paid a wage for transporting Defendants’ products and there is

no indication that Plaintiffs’ earnings were tied to their performance or to the performance of

Defendants’ business.

The third factor—Plaintiffs’ investment in equipment, materials, and employment of

helpers—“is interrelated to the profit and loss consideration.” Sec’y of Labor v. Lauritzen, 835

F.2d 1529, 1537 (1987). As with the profit and loss factor, the third factor weighs in favor of

employee status. Plaintiffs claim that they “utilized Defendants’ vehicles and equipment for

transporting Defendants’ medical marijuana products” and nothing in the pleadings suggests that

Plaintiffs hired any helpers. (ECF No. 10, 7 33).

The fourth factor of the economic realities test—whether the services provided by Plaintiffs

required special skill—also weighs in favor of employee status. In evaluating this factor, a court

looks at whether the alleged employees have “the skills necessary to locate and manage discrete

work projects characteristic of independent contractors, or whether the skills are of the task-

specific, specialized kind that form a piece of a larger enterprise, suggesting employee status.” Li

v. Renewable Energy Solutions, Inc., 2012 WL 589567, *9 (D.N.J. Feb. 22, 2012). Plaintiffs

worked for Defendants “out of their facility in Farrell, Pennsylvania as [d]rivers and were

responsible for transporting medical marijuana products to licensed dispensaries located in

Pennsylvania.” (ECF No. 10, 432). Nothing in the Amended Complaint indicates that Plaintiffs

were required to have any specialized training or licensing to perform their work for Defendants.

The fifth factor—the permanence of Plaintiffs’ working relationship with Defendants—

weighs in favor of employee status. This factor “turns on two considerations: (1) whether the

employee had a set term with the employer, and (2) whether the employee also took outside work.”

Jimenez v. Best Behavioral Healthcare, Inc., 391 F. Supp. 3d 380, 391 (E.D. Pa. 2019) (citing

Donovan y. DialAmerica Mktg., Inc., 757 F.2d 1376, 1387 Gd Cir. 1985)). According to Plaintiffs,

they did not have a set term of employment with Defendants, but “they were employed on an

ongoing basis for a period of years of indefinite duration[.|” (ECF No. 10, 33). Plaintiffs also

claim that they regularly worked over 40 hours per week for Defendants and that they worked as

drivers exclusively for Defendants’ business. (Cd. f§ 33, 62). Because “the duration of the

relationship is less significant than the hours worked and the exclusivity of the working

arrangement|,|” this factor weighs in favor of Plaintiffs being classified as employees. Smith v.

Effluent Retrieval Servs. Inc., No. 16-654, 2016 WL 6135573, at *5 (E.D. Pa. Oct. 21, 2016)

(internal quotations omitted).

The sixth and final factor—whether the services provided by Plaintiffs were an integral

part of Defendants’ business—also weighs in favor of employee status. “[W]orkers are more likely

to be ‘employees’ under the FLSA if they perform the primary work of the alleged employer.”

Donovan, 757 F.2d at 1385. While transportation of Defendants’ product is not the “primary

work” of Defendants’ business, delivery of Defendants’ medical marijuana to its clients is certainly

a necessary—or integral—part of the business.

With each of the economic reality test’s six factors weighing in favor of Plaintiffs being

classified as employees rather than independent contractors, the Court holds that Plaintiffs have

pled facts sufficient to support a reasonable inference that an employer-employee relationship

existed. As the Defendants point out, the Amended Complaint does not contain particularized

allegations about Plaintiffs’ alleged employment relationship with each Defendant. (See ECF No.

19, p. 10) (‘By grouping Defendants together and referring to them collectively throughout the

Amended Complaint, Plaintiffs underscore the insufficiency of their pleading.”). The Court

recognizes, however, “that ‘the precise contours of an employment relationship can only be

established by a careful factual inquiry’ and, thus, discovery is often necessary before a plaintiff

can reliably define the contours of the employment relationship.” Anderson v. Finley Catering

Co., 218 F. Supp. 3d 417, 422-23 (E.D. Pa. 2016) (quoting Graves vy. Lowery, 117 F.3d 723, 729

(3d Cir. 1997)). Where, as here, “the employment relationship is ambiguous or uncertain, such a

fact-intensive analysis is essential, and the plaintiff's claims should not be dismissed at the

pleading stage.” Hayes v. Waddell & Reed, Inc., No. CA 12-293, 2013 WL 5434139, at *9 (W.D.

Pa. Sept. 26, 2013) (citing Graves, 117 F.3d at 729); see also Hamilton v. Steadfast Constr., LLC,

No. 2:20-CV-150, 2020 WL 12517273, at *2 (W.D. Pa. Oct. 20, 2020) (“The Court recognizes

that [defendant] factually disputes the contention that [plaintiff] was its employee. It will have the

opportunity to do so. [The motion to dismiss stage], however, is not the time.”); Braden v. Cnty.

of Washington, No. CIV. A. 08-574, 2008 WL 5129919, at *3 (W.D. Pa. Dec. 5, 2008) (“Such

facts as who [Plaintiffs’] employer was and the structure of [their] employment are the types of

facts that must be uncovered through discovery.”).

B. Single Employer Theory and Joint Employer Theory

Having held that Plaintiffs have sufficiently pled the existence of an employer-employee

relationship, the Court turns to Plaintiffs’ claim that “Defendants collectively constitute a Single

Employer and/or Joint Employer of Plaintiffs.” (ECF No. 10 { 18). Under two different theories—

the “single employer theory” and the “joint employer theory”—1multiple legally separate entities

can be considered a single employer for employment claims. See Nesbitt v. Gears Unlimited, Inc.,

347 F.3d 72, 87 (3d Cir. 2003); Xiao v. Sichuan Gourmet LLC, No. 2:21-CV-00482, 2022 WL

819096, at *4 (W.D. Pa. Mar. 18, 2022). “Both the joint employer and the single employer

doctrines involve fact-intensive analyses which are generally inappropriate at the motion to

dismiss stage.” Hayes, 2013 WL 5434139 at *9; see also Hartman v. Chestnut Hill Coll., No.

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CIV. A. 00-1400, 2000 WL 1016655, at *2 (E.D. Pa. July 7, 2000) (“Although these allegations

do not specifically bring defendant . . . into a ‘single employer’ or ‘joint employer’ role with the

other defendants, it would be premature to dismiss the complaint, because these allegations, when

taken in a light most favorable to plaintiff, could lead a reasonable mind to believe that defendant

... was in fact a “single employer” or a ‘joint employer.’”). Nevertheless, Plaintiffs still must

plead sufficient facts to support a reasonable inference that Defendants were operating as

Plaintiffs’ “single employer” or “joint employer” under the FLSA.

1. Single Employer Theory

Multiple entities may constitute a single employer where the entities are nominally

independent but in practice operate as one integrated enterprise. Xiao, 2022 WL 819096 at *4

(citing NLRB. v. Browning-Ferris Indus. of Pa., Inc., 691 F.2d 1117, 1122 Gd Cir. 1982)). In

evaluating whether multiple companies constitute a “single employer,” the Third Circuit

“considers the level of interrelation of operations, whether there is shared common management,

whether labor relations are under centralized control, and whether there is common ownership or

financial control.” Jd. at *8 (citing Nesbit, 347 F.3d at 84).

According to the Amended Complaint, Corporate Defendants share the same principal

place of business located at 660 Martin Luther King Jr. Boulevard, Farrell, Pennsylvania 16121.

(ECF No. 10, ff 6-8). Additionally, Corporate Defendants all operate in the medical marijuana

business; have common ownership; and share a board of directors, a CEO, a chief science officer,

and a director of health and wellness. (See id. □□ 13-15). Although a final evaluation of the single

employer issue will require details about Corporate Defendants’ organizational structure and

operations, these allegations are sufficient to support a reasonable inference that Corporate

Defendants were acting together as a “single employer.”

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2. Joint Employer Theory

Plaintiffs also argue that all six defendants —Corporate Defendants and Individual

Defendants—should be treated as one employer under the “joint employer theory.” “[J]oint

employment status [can exist] when two [or more] entities exercise significant control over the

same employees.” Graves, 117 F.3d at 727. Individual owners, officers, or supervisors may also

be considered “joint employers” when acting “in the interest of an employer in relation to an

employee[.]” 29 U.S.C. § 203(d); see also Real Est. Mortg. Network, 748 F.3d at 153 (“Aside

from the corporate entity itself, a company’s owners, officers, or supervisory personnel may also

constitute ‘joint employers’ for purposes of liability under the FLSA.”). In determining whether

a joint employment relationship exists under the FLSA, four factors are particularly relevant:

(1) the alleged employer’s authority to hire and fire the relevant employees; (2) the

alleged employer’s authority to promulgate work rules and assignments and to set

the employees’ conditions of employment: compensation, benefits, and work

schedules, including the rate and method of payment; (3) the alleged employer’s

involvement in day-to-day employee supervision, including employee discipline,

and (4) the alleged employer’s actual control of employee records, such as payroll,

insurance, or taxes.

Inre Enter. Rent-A-Car, 683 F.3d at 469. “[T]hese factors do not constitute an exhaustive list of

all potentially relevant facts, and should not be ‘blindly applied.’” Jd. Additionally, “[n]o single

factor is dispositive and a weak showing on one factor may be offset by a strong showing on the

other two.” Myers v. Garfield & Johnson Enters., Inc., 679 F.Supp.2d 598, 608 (E.D. Pa. 2010).

Plaintiffs’ Amended Complaint includes several facts suggesting a joint employment

relationship among Corporate Defendants. According to Plaintiffs, after issuing regular

complaints about being classified as independent contractors, “Defendants held a meeting in which

Plaintiffs were informed that, if they wanted to continue working for Defendants, they were

required to ‘reapply’ for employment as W-2 employees and would receive severely reduced wage

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rates for the same work.” (ECF No. 10, 941). Accepted as true, these allegations clearly establish

that Defendants had the authority to fire Plaintiffs and had some control over Plaintiffs’ wages.

Plaintiffs also claim that, at the time of that meeting, Defendants had already “sought to pre-

emptively hire replacements for Plaintiffs[,]” clearly supporting a reasonable inference that

Defendants had the ability to hire new workers. (/d. § 42). Additionally, according to the

Amended Complaint, Plaintiffs “received paychecks and tax forms from FarmaceuticalRX, LLC

and FRX Management Holdings, LLC[]”, and were covered by Defendants’ insurance policies

when transporting Defendants’ medical marijuana products[.]” (Ud. {| 26, 33). These allegations

indicate that Defendants controlled Plaintiffs’ employee records.

As with the single employer issue, Plaintiffs will ultimately need more details about

Corporate Defendants’ structure and operations to prove that Corporate Defendants were acting as

“Joint employers.” At this stage, however, these factual allegations, when taken as true and viewed

in the light most favorable to Plaintiffs, are sufficient to support a reasonable inference that

Corporate Defendants were acting as a “joint employer.” See Hayes, 2013 WL 5434139 at *9 (“At

the motion to dismiss stage, it need not be ‘entirely clear’ that the factual allegations in the

plaintiff's complaint will ultimately prove ‘joint employer’ status.”).

Outside of pleading each Individual Defendants’ ownership status, title, and conclusory

allegations that each Individual Defendant “supervised, exercised control over, and was

responsible for the FLSA/PMWA violations and misclassification at issue in this case[,]” the

Amended Complaint contains no allegations specific to any Individual Defendant. (ECF No. 10,

q 13-15). Nevertheless, the allegations in the Amended Complaint are sufficient to support a

reasonable inference that Individual Defendants could be a “joint employer” within the meaning

of the FLSA.

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Plaintiffs claim that, after they issued regular complaints about being classified as

independent contractors, Defendants promised to correct the misclassification. (/d. §] 37).

According to the Amended Complaint, “Defendants provided Plaintiffs with repeated excuses for

the misclassification and failure to pay overtime. On one occasion, Defendants claimed that they

could not correct the misclassification and overtime issues mid-year because it would look

suspicious and would trigger an audit of Defendants books by the Internal Revenue Service[.]”

(Id. 38). These communications ultimately were “the subject of extensive meetings over an

extended period among Defendants’ senior-level management, owners, and officers.” (Ud. § 39).

It is reasonable to infer that high-ranking officials—especially the CEO—would exercise

significant control over employment decisions, particularly when those decisions are prompted by

persistent worker complaints, involve multiple meetings with management, and result in workers

being asked to reapply under a different classification. See Perez v. Davis Design & Dev., Inc.,

No. CIV.A. 13-1118, 2013 WL 6835095, at *5 (W.D. Pa. Dec. 23, 2013) (“Given that Mr. Davison

is in fact the CEO of the company, it is hard to believe that Mr. Davison did not exercise substantial

authority over the hiring and firing decisions of Davison’s employees[.]”). Whether Stephan—as

the chief science officer—or Bochner—as the director of health and wellness—were involved in

handling these issues will require more factual development regarding the companies’

management structure and the scope of each Individual Defendants’ authority and specific

involvement. Because Plaintiffs may not have access to these facts prior to discovery, the issues

are best decided at a later stage of litigation. See id. (“To the extent that [defendant] argues that

he did not control employee work schedules or the conditions of employment, such factual issues

about the internal structure of [defendant’s] management are properly determined at summary

judgment or trial rather than via judgment on the pleadings.”); Thompson y. U.S. Airways, Inc.,

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717 F. Supp. 2d 468, 479 (E.D. Pa. 2010) (holding that, despite a thin factual record, “[p]laintiffs

[had] satisfied the notice pleading standard, and [that] it would be inappropriate for the Court to

dispose of all of [p|laintiffs’ claims against [defendant] before any discovery has been

conducted.”). At the present stage, Plaintiffs have sufficiently pled facts to support a reasonable

inference that Individual Defendants—as owners, members of the board of directors, and company

executives—are liable under the FLSA and PMWA as “joint employers.”

IV. CONCLUSION

For the reasons set forth above, Defendants’ Motion to Dismiss Plaintiffs’ Amended

Complaint (ECF No. 16) will be denied. An Order of Court will follow.

BY THE COURT:

WILLIAM S. STICKMAN IV

UNITED STATES DISTRICT JUDGE

aialas

Dated

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