Labor & Employment Law Daily Wrap Up, WAGE-HOUR—MINIMUM WAGE—E.D.N.Y.: Employer’s counterclaims may proceed in FLSA suit by building superintendent, (Aug 14, 2026)

By Steven Melendez

Counterclaims alleging double-billing scheme are tied to employee’s claims and sufficiently stated, the court found.

In an FLSA suit brought by a live-in building superintendent against his employer, counterclaims brought by the employer may proceed, ruled a federal district court in New York. The employee had argued the state law counterclaims are not sufficiently tied to the federal claim to convey jurisdiction, but the court found a “logical relationship” between the claims and counterclaims, and found the claims were sufficiently stated under Rule 12(b)(6) (Havolli v. 2909 Ocean Ave Owners Corp., No. 26-cv-1240 (BMC) (N.D.N.Y. Aug. 12, 2026)).

Building superintendent. The superintendent worked for a 54-unit co-op building in Brooklyn for about 25 years, where his duties included cleaning and maintenance, according to the court. He nominally worked a morning and an evening shift, but in practice was expected to be available 24 hours per day. He received about $1,200 per month and lived in the building without having to pay rent or utilities.

The building was purchased by the employer in the lawsuit about 15 years ago, and the superintendent’s compensation was reduced to $439 per month. He brought suit under the FLSA and New York Labor Law, alleging the owner failed to pay him minimum wage and overtime.

Counterclaims. The employer denied any wrongdoing, arguing the superintendent’s total “compensation package includes a monthly cash stipend, a rent-free apartment without utility costs, two parking spaces, three storage units, and workers’ compensation and disability insurance coverage,” collectively valued at more than $3,600 per month over the relevant time period.

A new co-op board of directors recently reviewed the building’s finances and found an alleged “long history of double-billing and personal profiteering at the co-op’s expense,” with co-op funds paid to the superintendent’s private handyman business for work that the employer says were within his duties as superintendent. The employer alleged that the superintendent filed the lawsuit in retaliation for cracking down on his double-billing, and filed counterclaims for unjust enrichment, fraud, and breach of the duty of loyalty.

Subject matter jurisdiction. The superintendent argued that the court lacked subject matter jurisdiction over the state law counterclaims. Courts have generally found that federal courts can hear counterclaims to FLSA lawsuits if the relevant conduct arose during the performance of an employee’s duties, observed the court.

Here, the claims arose in the course of the superintendent performing his duties, when he is alleged to have fraudulently billed for services for which he was already compensated. The counterclaim was therefore compulsory, the court found, and the court had jurisdiction over it despite it normally being a matter for a state court.

Duty of loyalty. The employer also brought a “faithless servant” counterclaim and a counterclaim alleging breach of the duty of loyalty. Either requires demonstrating the existence of a duty, its breach, and resulting damages, according to the court.

A duty exists because of an undisputed employer-employee relationship, and the employer adequately alleged its breach, based on ample precedent showing that stealing money or improperly using employer corporate assets constitutes such a breach. The compensation given to the employee, and the damages sought for the breach of loyalty based on the alleged double-billing, were also adequately alleged to meet Rule 12(b)(6) requirements, the court found.

Fraud. Fraud counterclaims are held to a higher pleading standard. The employer must specify fraudulent statements, identify their speaker, state where and when the statements were made, and explain why they were fraudulent. Here, the alleged fraudulent statements were made via invoice by the superintendent and were made by “mail or wire on the dates listed on the invoice,” according to the court.

Still, the superintendent argued the employer failed to adequately explain why the statements were fraudulent, arguing the employer cannot allege fraud based on an interpretation of memo lines in checks to the superintendent allegedly related to the double-billing scheme.

The court disagreed, finding that the employer’s interpretation of the memo lines adequately explained why they were deemed fraudulent, allowing the counterclaim to proceed.

The case is No. 26-cv-1240 (BMC).

Judge: Cogan, B.

Attorneys: Jesse Curtis Rose (The Rose Law Group) for Nazmi Havolli. Joey Tsai (Tsai PLLC) for 2909 Ocean Ave Owners Corp.

Companies: 2909 Ocean Ave Owners Corp.

Cases: WageHour MinimumWage Overtime Procedure Retaliation NewYorkNews