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November 08, 2010
Does City Owe This Man Money?

A New York City man applied for welfare and was enrolled in the City’s work experience program, in which he was paid the federal minimum wage to work for the City. He was in that program from 1993 to early 2000, with his wages apparently being the only “public assistance” he received. Seven years after leaving the program, he won the lottery. That’s where this story begins.

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What happened. “King” won a $10,000 jackpot in August 2007. Under the state’s social services law, anyone who’s had public assistance within the previous 10 years and wins a lottery prize of $600 or more must reimburse the locality up to one-half the winnings as pay-back for public assistance. Accordingly, the state Office of Temporary and Disability Assistance (OTDA) intercepted King’s prize and gave $5,000 of it to New York City.

King sued, charging that forfeiting half his prize meant that he had actually worked for much less than the federal minimum wage—a violation of the Fair Labor Standards Act. In fact, he sued on behalf of anyone in the work experience program who’d ever had part of a lottery prize taken away from him or her—a class action suit. In federal district court, however, a judge ruled that King did not have “standing” to sue there. He had sued the City, while it was the OTDA that had confiscated half his prize, the judge reasoned. So he was, in essence, suing the wrong defendant. King appealed to the 2nd Circuit, which covers Connecticut, New York, and Vermont.

What the court said. Appellate judges did not agree with the district judge that King lacked standing to sue. He might not have had standing, they said, if OTDA’s step had been “the independent action of some third party not before the court,” but OTDA was anything but completely independent. OTDA’s role had a “determinative and coercive effect” on New York City, which accepted funds that OTDA had already confiscated.

Judges rejected the rest of King’s claims, including one charging that OTDA had not given him the name and contact information of a representative, which it was required to do. But they accepted his FLSA charge and sent it back to the district court for reconsideration. Carver et al. v. City of New York, U.S. Court of Appeals for the 2nd Circuit, No. 09-2053-cv (2010).

Point to remember: New York’s social services law apparently didn’t anticipate the work experience program, in which a participant receives minimum wage in exchange for working, as opposed to being given welfare grants. The social services law seems to make a sham of the work experience program—an option that appears to be a valuable one for both the City and its social services clients.

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