Introduction

In McMillian v. Out-Look Safety LLC, 2025 NY Slip Op 04963 (1st Dept Sept. 11, 2025), the Appellate Division, First Department, affirmed class certification in a putative class action brought by non-union construction-site “flaggers” seeking prevailing wages for work performed on New York City public works projects during April 16, 2018 through January 28, 2024. The decision, authored by Justice Manuel Mendez with all Justices concurring, squarely addresses several recurring issues in wage-and-hour class litigation under New York’s CPLR:

• What constitutes sufficient “commonality” and “predominance” when the claim centers on an alleged uniform misclassification scheme.
• Whether individualized damages and variations in workers’ tasks defeat class certification (they do not).
• Whether plaintiffs must first exhaust administrative remedies before bringing a common-law breach-of-contract/third-party beneficiary prevailing wage action (they need not).
• Whether a class definition referencing “flaggers” and “projects requiring payment of prevailing wages” creates an impermissible “fail-safe” class under federal practice (no; and in any event, New York courts can and did cure by redefinition).

The plaintiffs—led by Craig and Eian McMillian and Victor Ballast—alleged that Out-Look Safety LLC, a subcontractor, supplied flaggers to general contractors Restani Construction Corp., Triumph Construction Corp., Elecnor Hawkeye, LLC (Hawkeye), and Safeway Construction Enterprises, LLC, but that defendants paid the workers far less than the New York City Comptroller’s prevailing wage rates by misclassifying them as “crossing guards” or “traffic control.” The causes of action included breach of contract as third-party beneficiaries and unjust enrichment.

Summary of the Opinion

The First Department affirmed Supreme Court (Masley, J.) in certifying a class of non-union “flaggers” employed by Out-Look Safety LLC on the named general contractors’ projects during the class period. Applying CPLR 901(a) and 902, the court held:

• Numerosity was supported by testimony, payroll, and site records; plaintiffs met the minimal evidentiary burden at certification to show their claims were not a sham.
• Commonality/Predominance was satisfied because the central legal issue—whether defendants utilized workers in flagger roles entitling them to prevailing wages—predominates, notwithstanding individualized proof about tasks or damages.
• Typicality existed where representative plaintiffs’ claims arise from the same alleged course of conduct and legal theories as the class, even if not identical across all defendants; evidence supported that named plaintiffs worked at Hawkeye’s site.
• Superiority was established; class treatment is an appropriate vehicle for prevailing wage claims, and plaintiffs were not required to exhaust administrative remedies before pursuing common-law contract claims.
• “Fail-safe” Class Argument Rejected/Cured: Federal “fail-safe” doctrines do not control under CPLR, which is construed more broadly; in any event, Supreme Court appropriately amended the class definition to avoid fail-safe concerns by removing language tying class membership to the ultimate issue of liability.

The Appellate Division affirmed the order with costs, finding defendants’ remaining arguments unavailing.

Analysis

Precedents Cited and Their Influence

• City of New York v. Maul, 14 NY3d 499 (2010):

  Maul anchors the framework for CPLR 901(a), identifying the five prerequisites—numerosity, commonality (predominance of common issues), typicality, adequacy, and superiority—and instructs courts to construe New York’s class action rule liberally. McMillian relies on Maul both to emphasize liberal construction and to disentangle commonality from the need for factual uniformity, rejecting the notion that individualized differences preclude certification.

• Maddicks v. Big City Props., LLC, 34 NY3d 116 (2019):

  Maddicks clarifies that commonality focuses on whether common issues predominate and recognizes that a “common systematic plan” causing harm can unify claims despite varied manifestations. McMillian adopts Maddicks’ language almost verbatim, finding predominance satisfied because the core issue—systematic misclassification of flaggers—pervades the case.

• Pludeman v. Northern Leasing Sys., Inc., 74 AD3d 420 (1st Dept 2010):

  Cited for the proposition that CPLR 902’s manageability considerations apply only after the 901(a) prerequisites are met. The First Department notes that defendants did not challenge adequacy under CPLR 902.

• Weinstein v. Jenny Craig Operations, Inc., 138 AD3d 546 (1st Dept 2016):

  Establishes that plaintiffs at the certification stage bear only a “minimal evidentiary burden” to show claims are not a sham. McMillian applies this standard to accept testimony and payroll records as sufficient proof of numerosity and bona fides of the misclassification theory.

• Kudinov v. Kel-Tech Constr. Inc., 65 AD3d 481 (1st Dept 2009):

  Supports finding numerosity through a combination of testimony and records without precise headcounts; McMillian uses Kudinov to validate plaintiffs’ numerosity showing across multiple job sites.

• Brown v. Mahdessian, 206 AD3d 511 (1st Dept 2022); Stecko v. RLI Ins. Co., 121 AD3d 542 (1st Dept 2014); Orgill v. Ingersoll-Rand, 110 AD3d 573 (1st Dept 2013):

  These decisions confirm that individualized damages issues do not defeat certification; liability and damages can be bifurcated or damages severed for later proceedings. McMillian draws on these to reject defendants’ manageability objections.

• Kozak v. Kushner Vil. 329 East 9th St. LLC, 232 AD3d 542 (1st Dept 2024) and Pruitt v. Rockefeller Ctr. Props., 167 AD2d 14 (1st Dept 1991):

  Both articulate that typicality requires claims arising from the same course of conduct and legal theories, not identity. McMillian applies this to overrule Hawkeye’s assertion that typicality is defeated because named plaintiffs allegedly did not work at its site.

• La Cruz v. Caddell Dry Dock & Repair Co., Inc., 22 AD3d 404 (1st Dept 2005):

  A key precedent for prevailing wage litigation, holding that workers suing as third-party beneficiaries of public works contracts need not exhaust administrative remedies before bringing a common-law breach-of-contract claim. McMillian reaffirms La Cruz and finds that Brandy is not to the contrary.

• Brandy v. Canea Mare Contr., Inc., 34 AD3d 512 (2d Dept 2006):

  Often cited by defendants to argue for administrative primacy. McMillian clarifies that Brandy does not undermine La Cruz’s allowance of direct contract suits without exhaustion for prevailing wage beneficiaries.

• Federal “fail-safe” class authorities:
  • Spread Enterprises, Inc. v. First Data Merchant Services Corp., 298 F.R.D. 54 (E.D.N.Y. 2014) and Kamar v. RadioShack Corp., 375 F. App’x 734 (9th Cir. 2010): define and explain the impermissibility of “fail-safe” class definitions.
  • Hicks v. T.L. Cannon Corp., 35 F. Supp. 3d 329 (W.D.N.Y. 2014): recognizes courts’ discretion to redefine class definitions to avoid fail-safe issues.

  McMillian acknowledges these federal principles but emphasizes they are not controlling in New York state courts. The opinion underscores that CPLR 901(a) is to be construed more broadly than FRCP 23 and highlights Supreme Court’s proper exercise of discretion to amend the class definition to resolve any fail-safe concerns.

Legal Reasoning

The court’s reasoning tracks the CPLR 901(a) factors, integrating New York’s liberal approach to class certification.

• Numerosity:

  Plaintiffs met their minimal burden by proffering deposition testimony, payroll, and jobsite records, showing that a joinder of all affected workers would be impracticable. This is consistent with New York’s acceptance of reasonable inferences at the certification stage and the recognition that precise counts are not needed where the record suggests substantial numbers across multiple projects and time periods.

• Commonality/Predominance:

  The central, predominant question is whether defendants used class members in roles qualifying as non-union construction “flaggers” (as defined by the NYC Comptroller) on public works projects requiring prevailing wages, yet paid them at lower “crossing guard” or “traffic control” rates. The court rejects the notion that individualized proof of daily tasks defeats commonality. Under Maddicks and Maul, the law looks to whether a common policy or systematic plan is alleged; here, a uniform misclassification and payment practice was plausibly asserted. The court also notes that any individualized damages questions can be severed for later adjudication.

• Typicality:

  Plaintiffs’ claims arise from the same alleged course of conduct (misclassification leading to underpayment of prevailing wages) and invoke the same legal theories (third-party beneficiary breach of contract, unjust enrichment) as those of the absent class members. The court emphasizes that typicality does not require identity across defendants or projects. Further, plaintiffs adduced evidence (including deposition testimony) that they performed work at Hawkeye’s site, undercutting that defendant’s specific challenge.

• Superiority and Administrative Exhaustion:

  The court finds class adjudication superior to individual suits for prevailing wage disputes—workers may lack resources or incentive to bring individual actions, and a unified determination of the misclassification issue is efficient. Crucially, the court reaffirms that plaintiffs were not required to exhaust administrative remedies before filing common-law breach-of-contract claims as third-party beneficiaries, citing La Cruz. The court distinguishes or declines to follow contrary readings of Brandy.

• “Fail-safe” Class Argument:

  Defendants argued that class membership was inextricably tied to the merits—i.e., whether a worker was in fact acting as a “flagger,” such that an adverse judgment could not attach to non-members. The First Department holds that New York courts are not bound by federal Rule 23(b) doctrine and that CPLR 901(a) is construed more broadly. In any event, the Supreme Court eliminated the fail-safe problem by amending the class definition to remove language that framed membership by the ultimate liability question. The revised definition—“All persons employed by Out-Look Safety LLC at any time since April 16, 2018 through January 28, 2024, who worked as non-union construction flaggers on Restani, Safeway, Triumph, and/or Hawkeye projects requiring the payment of prevailing wages in New York City”—anchors membership to objective facts (employment by Out-Look, work performed as flagging, and presence on projects that, by contract and law, require prevailing wages) rather than a merits determination of entitlement. The court also notes that parties themselves used “flagger,” “crossing guard,” and “traffic controller” interchangeably; whether a worker actually performed flagging tasks is a factual issue for class membership and liability, not a barrier to certification.

Impact and Significance

• Prevailing wage enforcement via class actions:

  McMillian strengthens the pathway for workers to pursue prevailing wage misclassification claims through class actions in New York state courts. By reaffirming liberal construction of CPLR 901(a) and the ability to manage individualized damages separately, it reduces defendants’ ability to defeat certification based on task variability or damage calculations.

• Reduced potency of “fail-safe” objections:

  The decision makes clear that federal “fail-safe” objections will rarely defeat certification in New York practice. Trial courts have discretion to reframe class definitions to avoid conflating membership with liability, and the First Department endorsed that approach here.

• No exhaustion prerequisite for third-party beneficiary claims:

  By reaffirming La Cruz, the court underscores that workers alleging breach of prevailing wage provisions as intended third-party beneficiaries of public works contracts are not required to first seek administrative relief. Expect increased use of direct contract claims alongside or instead of administrative complaints to the NYC Comptroller or state labor authorities.

• Contractor compliance implications:

  General contractors and their subcontractors on NYC public works projects face elevated risk if they misclassify traffic control personnel. The opinion incentivizes compliance audits, accurate task-based classification, and documentation. It also encourages clearer subcontract terms, training of site supervisors on prevailing wage classifications, and alignment of payroll practices with the Comptroller’s schedules.

• Litigation management:

  For multi-defendant cases, McMillian suggests typicality can be established even if named plaintiffs’ time at a particular defendant’s site is limited, provided the claims arise from the same alleged misclassification scheme and common legal theories. Courts can later deploy subclasses or tailored damages proceedings to address defendant-specific issues.

Complex Concepts Simplified

• Prevailing wage (NYC public works):

  On New York City public works projects, contractors must pay workers wages and benefits set by the NYC Comptroller for each trade or occupation. These rates are meant to reflect the prevailing union wage. “Flaggers” are a recognized classification with specific rates; paying the lower “crossing guard” or “traffic control” rates to workers performing flagging tasks can violate prevailing wage requirements.

• Third-party beneficiary breach of contract:

  Although workers are not signatories to public works contracts, prevailing wage clauses are intended for their benefit. As “intended third-party beneficiaries,” they can sue to enforce those clauses where they were underpaid, without first exhausting administrative remedies.

• Class certification under CPLR 901(a):

  To certify a class, plaintiffs must show: (1) numerosity (joinder impracticable), (2) common questions predominate, (3) typicality (representatives’ claims are typical), (4) adequacy of representation, and (5) superiority (class action is the best method to adjudicate). New York courts construe these requirements liberally, focusing on whether common issues will drive resolution.

• “Commonality” vs. “Predominance”:

  In New York, “commonality” in CPLR 901(a)(2) encompasses predominance—whether common questions outweigh individualized ones. A uniform policy (e.g., misclassification) typically satisfies this, even if the specifics of each worker’s tasks vary.

• “Fail-safe” class:

  A class definition is “fail-safe” if a person is only a class member if the defendant is liable to them—making an adverse judgment impossible against members. While disfavored in federal courts, New York courts are not bound by that doctrine and can cure issues by redefining the class to use objective, merits-neutral criteria.

• Severing damages:

  Courts can decide liability issues common to the class first and then handle individual damages later, through separate hearings, subclasses, or claims processes. This approach allows certification even when damages differ widely among class members.

• Administrative exhaustion:

  Some statutory schemes require a plaintiff to seek administrative relief before suing. For prevailing wage claims pursued as breach-of-contract suits by third-party beneficiaries, New York’s First Department holds no such exhaustion is required.

Practical Guidance

• For contractors and subcontractors:
  • Audit classification of site personnel performing traffic control; confirm whether duties match the Comptroller’s “flagger” classification.
  • Align payroll systems to pay prevailing wage rates where required; maintain detailed task logs and site assignments.
  • Ensure subcontracts incorporate prevailing wage compliance obligations and reporting mechanisms; conduct periodic compliance training.
• For plaintiffs’ counsel:
  • Build the certification record with deposition testimony, payroll, dispatch sheets, and site rosters showing uniform practices across projects.
  • Frame class definitions with objective criteria (employer, time period, job function, and project type) to avoid fail-safe disputes; propose curative language proactively.
  • Leverage La Cruz to forestall exhaustion defenses; emphasize manageability through damages severance and subclasses if needed.
• For defense counsel:
  • Recognize that individualized task variations are unlikely to defeat commonality; focus on factual disprovals of a uniform policy, or on adequacy/typicality showing conflicts within the class, if any.
  • If raising “fail-safe” concerns, offer a concrete alternative class definition rather than seeking wholesale denial of certification.
  • Preserve individualized defenses for the damages phase (e.g., proof of tasks performed, hours, or site-specific exemptions).

Conclusion

McMillian v. Out-Look Safety LLC cements several important points in New York class action practice and prevailing wage litigation:

• Predominant common issues exist where plaintiffs allege a systematic misclassification policy denying prevailing wages to a defined group of workers across projects.
• Variation in tasks and individualized damages do not defeat certification; courts can sever damages for subsequent proceedings.
• Workers suing as intended third-party beneficiaries of public works contracts need not exhaust administrative remedies before bringing common-law breach claims.
• Federal “fail-safe” objections do not bar certification under CPLR 901(a); trial courts may redefine class descriptions to ensure membership turns on objective criteria rather than merits determinations.

The decision thus provides a clear roadmap for certifying prevailing wage misclassification classes in New York, while signaling to public works contractors and their subs that compliance with the NYC Comptroller’s classifications and rates is both a contractual and litigation imperative.

Order affirmed, with costs; opinion by Mendez, J.; Webber, J.P., Scarpulla, Mendez, Rodriguez, Pitt-Burke, JJ., concurring.