Fore! Claiming Employee Status, New York Golf Club Caddies File Class/Collective Actions

2024 has seen increased class and collective actions brought by New York golf club caddies under the federal Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL). The caddies claim they are misclassified employees of the golf clubs they work at and, as such, have not been properly paid wages under federal and New York state law.

Caddies are typically paid directly by club members and do not receive wages from golf clubs. Thus, in general, clubs treat caddies as independent contractors rather than as employees who are afforded different protections under the FLSA and the NYLL.

These recent cases may turn on a legal determination concerning whether caddies are properly classified as independent contractors or should be treated as employees. A misclassification might be costly for a golf club, depending on factors such as the number of caddies the club utilized during the six years prior to the filing, which is the NYLL statute of limitations. If a court finds that a caddie has been misclassified and should have been treated as a golf club employee, the caddie’s damages may include, but are not limited to, back pay to compensate the caddie for at least the minimum wage they should have received during the entire time the caddie worked at the golf club (subject to the relevant statute of limitations) and time and a half for overtime wages if the caddie worked more than 40 hours in a week during the same timeframe. Clubs should be aware that these cases are especially attractive to plaintiffs’ law firms because the law incentivizes them to take these cases. Attorneys’ fees and costs for pursuing the cases are awardable as a form of damages if the caddies prevail.

Recent suits filed in Westchester County against Pelham Country Club, Siwanoy Country Club, and Hudson National Golf Club illustrate that dismissal of these cases may be difficult to achieve at the outset of litigation, making them potentially expensive to defend through at least the discovery phase. For example, on Sept. 24, 2024, Southern District of New York Judge Kenneth M. Karas gave golf caddie plaintiffs a mulligan in their case against Pelham Country Club by allowing them to file an amended complaint in response to the club’s motion to dismiss at the case’s outset. Although the NYLL has a six-year statute of limitations, the FLSA has a two-year statute of limitations that may extend to three years if employees can show their employer’s violations were willful. The court held that some of the named plaintiffs’ allegations fell outside the two-year statute of limitations and that plaintiffs failed to sufficiently plead that the golf club willfully violated the statute. Judge Karas has not yet ruled on the merits or decided whether plaintiffs are properly classified as independent contractors. In response, plaintiffs teed up an amended complaint alleging that Pelham Country Club paid its non-caddie employees the minimum wage and overtime wages and was therefore aware of FLSA and NYLL requirements. Plaintiffs further alleged that Pelham Country Club took no steps to determine whether it was properly complying with either statute by not paying its caddies’ wages and leaving that solely to the golfers. It remains to be seen whether the club will challenge the amended complaint and, if so, whether Judge Karas will find that plaintiffs have sufficiently plead willfulness under the FLSA.

Golf caddie plaintiffs represented by the same law firm as plaintiffs in the Pelham Country Club case filed a similar case against Siwanoy Country Club. On Oct. 21, 2024, Southern District of New York Judge Nelson S. Román followed Judge Karas’ lead and similarly held that plaintiffs failed to sufficiently plead that the golf club’s actions were willful under the FLSA. Like Judge Karas, Judge Román provided these plaintiffs an opportunity to file an amended complaint. Plaintiffs alleged similar additional facts as those in the Pelham Country Club case, and we again wait to see whether the amended complaint will be challenged and, if so, whether the court will hold that it sufficiently pleads willfulness in order to survive a Rule 12 motion to dismiss.

In a third example, Judge Karas recently denied a motion to dismiss a case filed by caddies who worked at Hudson National Golf Club. There, the club took a different approach. It did not dispute—solely for purposes of the motion to dismiss—that the caddies were Hudson National employees. Instead, it argued that because the caddies received bag fees, they were properly paid wages. Judge Karas’ analysis mirrored a recent decision by Southern District of New York Judge Cathy Seibel in an oral ruling, which denied a motion to dismiss in a case brought by caddies against Wykagyl Country Club.¹ In both cases, caddies received bag fees from the golfers they caddied for. The court held that although the bag fees fit the Department of Labor’s definition of a “service charge,”² the regulation should not drive the decision because it describes what counts as a tip for purposes of the tip credit. Judges Karas and Seibel both held that plaintiffs plausibly alleged that bag fees were tips and not service charges. As a result, the Hudson National case proceeds to discovery. According to the court docket, the Wykagyl case was resolved and dismissed by the court.

Takeaways

These recent cases demonstrate that plaintiff-side law firms are paying increased attention to golf club caddies and that golf clubs may face challenges to obtaining early dismissals of these actions. If these cases proceed, they may need to go through class certification, written discovery, and depositions, which can be time consuming. At the close of discovery, if there are no genuine issues of material fact that would lead the courts to dismiss the cases based on the law, these clubs may assess whether to file summary judgment motions to dismiss.

Golf clubs should consider strengthening their classification of caddies as independent contractors. In general, under both federal and state law, properly classified independent contractors are free from supervision, direction, and control in the performance of their duties. Typical traits of an independent contractor relationship also include that independent contractors set their own schedule, negotiate their own pay rates, are free to refuse work offers, and can work for competitors.

As precedent, golf clubs may look to several governmental agencies that have classified caddies as independent contractors. For example, the Internal Revenue Service has found that golf caddies paid directly by club members were not employees.³ Similarly, the Wage and Hour Division of the Department of Labor has stated that it “is not prepared to assert that caddies are employees of the golf course operator” because of the nature of services that caddies provide, since they are for the benefit of the “players themselves” and the players are expected to pay for the caddies’ services.⁴ Further, golf clubs should consider whether they qualify for an FLSA exemption, which is reserved for “an amusement or recreational establishment.”⁵ However, since this exemption is not applicable to clubs that operate for more than seven months per year, it will not pertain to golf clubs that operate year round.