SSI Interim Assistance Reimbursement for Work-Conditioned Safety Net Benefits Does Not Create an FLSA “Kick-Back”

1. Introduction

Matter of Andersen v Hein sits at the intersection of (a) the federal Supplemental Security Income (SSI) program’s need-based design, (b) New York’s Safety Net Assistance (SNA) “interim assistance” provided while SSI eligibility is pending, and (c) the FLSA’s minimum-wage requirement and its “free and clear” anti-kickback regulation.

Parties and posture. Petitioners were SSI recipients who, while their SSI applications were pending, received SNA conditioned on participation in New York work experience programs (WEPs). When SSI was later approved, the Social Security Administration issued retroactive lump-sum SSI payments to the county social services districts, which reimbursed the State for the SNA previously provided and forwarded petitioners the excess. Petitioners challenged that reimbursement practice via a hybrid CPLR article 78 proceeding and putative class action, arguing that the State’s recoupment functioned as an FLSA “kick-back” by depriving them of the value of their labor.

Key issue. Does reimbursement of work-conditioned interim assistance from retroactive SSI under 42 USC § 1383(g) violate the FLSA, particularly 29 CFR 531.35, by effectively requiring WEP participants to return minimum wages?

2. Summary of the Opinion

The Court of Appeals affirmed the Appellate Division (230 AD3d 880 [3d Dept 2024]) and held there was no FLSA violation. The Court reasoned that the disputed funds were part of the retroactive SSI award that Congress structured to (i) meet basic needs during the SSI adjudication delay and (ii) reimburse states that bridged that gap. Because petitioners (a) received interim assistance that corresponded to at least the minimum wage for their WEP hours and (b) received the remainder of their retroactive SSI award representing unmet needs above the interim assistance level, the State’s reimbursement did not cause a “cognizable loss” or deprive them of minimum wage “free and clear.”

A central doctrinal move is the Court’s narrowing reading of its earlier decision in Matter of Carver v State of New York (26 NY3d 272 [2015]): Carver decided that WEP participants may be “employees” under the FLSA, but did not decide the permissibility of recoupment from a later, independently-owed payment stream (like lottery winnings). Retroactive SSI awards, the Court emphasized, are categorically different from such payments because SSI is purely need-based and expressly designed to avoid duplicative benefits (“windfalls”) while reimbursing interim assistance.

3. Analysis

3.1 Precedents Cited

A. SSI’s purpose as a need-based minimum-income program

• Schweiker v Hogan, 457 US 569 (1982): Cited for the characterization of SSI as a federally guaranteed minimum income to meet “basic needs.” This framing supports the Court’s view that retroactive SSI is not a discretionary “bonus,” but a need-calibrated payment.
• Splude v Apfel, 165 F3d 85 (1st Cir 1999); Noland v Shalala, 12 F3d 258 (DC Cir 1994); White v Bowen, 835 F2d 974 (2d Cir 1987); Jackson v Schweiker, 683 F2d 1076 (7th Cir 1982): Used collectively to establish SSI as an economic-need program designed to bring purchasing power to a minimum subsistence level (the Court quotes Jackson’s “minimum poverty level” framing). This undergirds the “no net loss” logic: SSI is not meant to stack atop state interim assistance covering the same needs.
• Pappas v Bowen, 863 F2d 227 (2d Cir 1988): Supports the “income below subsistence level” premise and the Court’s “windfall” analysis, reinforcing that delayed SSI plus state aid can yield duplicative coverage absent reimbursement.
• Biggs v Lyng, 823 F2d 15 (2d Cir 1987): Supports that SSI approvals commonly entail retroactive lump-sum benefits covering the pendency period.

B. Interim assistance reimbursement and windfall avoidance

• Matter of Rodriguez v Perales, 86 NY2d 361 (1995); Rivers v Schweiker, 692 F2d 871 (2d Cir 1982): Cited for the 1974 federal mechanism incentivizing states to provide interim assistance while SSI is pending, and for the legitimacy of reimbursement structures tied to that policy.
• McKenzie v Bowen, 787 F2d 1216 (8th Cir 1986): Cited for Congress’s dual objective: reimbursing welfare agencies and preventing claimant “windfalls.” The Court relies heavily on this rationale to characterize petitioners’ requested relief as a demand for duplicative benefits.
• White v Bowen, 835 F2d 974 (2d Cir 1987) (again): Used not only for SSI’s need-based nature but also for the “shared federal and state responsibility” concept and the warning against interpretations that create “windfalls” in the combined benefit package.

C. FLSA minimum wage, “kick-back,” and the scope of Carver

• Barrentine v Arkansas-Best Freight System, Inc., 450 US 728 (1981); D. A. Schulte, Inc. v Gangi, 328 US 108 (1946): These anchor the Court’s description of the FLSA as establishing subsistence wages and preventing oppressive labor conditions, allowing the Court to contrast the FLSA’s goals with (and ultimately harmonize them to) SSI and SNA’s subsistence aims.
• Matter of Carver v State of New York, 26 NY3d 272 (2015): The contested precedent. The majority treats Carver as resolving the threshold question—WEP participants may be “employees” under the FLSA—while disclaiming any holding on whether later recoupment constitutes a prohibited kick-back under 29 CFR 531.35.
• Brukhman v Giuliani, 94 NY2d 387 (2000): Referenced as the earlier decision Supreme Court relied upon (in Carver’s trial-level history) to reject employee status. Carver later moved away from that approach by applying the “economic reality” test.
• Matter of Empire Ctr. for N.Y. State Policy v New York State Teachers' Retirement Sys., 23 NY3d 438 (2014): Cited for the interpretive caution that decisions should not be read as deciding questions not presented—used to cabin Carver.
• Stein v HHGREGG, Inc., 873 F3d 523 (6th Cir 2017): Cited to illustrate the contested contours of “kick-back” doctrine—distinguishing between returning delivered wages and deductions from wages not yet delivered, so long as minimum wage is preserved for the new period. The Court uses Stein to show that even if Carver had presented a kick-back question, the answer would not be automatic.

D. “Interim assistance” includes work-conditioned benefits

• Johns v Stewart, 57 F3d 1544 (10th Cir 1995): Cited for the proposition that a work requirement does not change the nature of assistance provided “to meet basic needs,” supporting the conclusion that SNA paid to WEP participants remains “interim assistance” under 42 USC § 1383(g).
• Whitaker v California Dept. of Social Servs., 2010 WL 4403317, 2010 Cal App Unpub LEXIS 8861 (Nov. 8, 2010, No. A126704): Cited similarly for treating work-conditioned aid as interim assistance.
• United States v City of New York, 359 F3d 83 (2d Cir 2004): Mentioned in a footnote to show that other courts, like the Second Circuit, have disagreed with Johns on whether workfare participants are employees; the Court reaffirms that Carver rejected Johns on that employee-status point while still accepting Johns’s reading of “interim assistance.”

E. Handling potential federal statutory conflict

• Edmond v United States, 520 US 651 (1997): Cited for the principle that where two federal laws conflict, the more specific governs. The Court uses this to suggest 42 USC § 1383(g) would control reimbursement questions even if tension with the FLSA were assumed.

F. Kick-back examples (discussed but not applied)

• Mayhue's Super Liq. Stores, Inc. v Hodgson, 464 F2d 1196 (5th Cir 1972), cert denied 409 US 1108 (1973); Cao v Wu Liang Ye Lexington Rest., Inc., 2010 US Dist LEXIS 109373, 2010 WL 4159391 (SD NY Sept. 30, 2010, No. 08 Civ 3725): Cited in a footnote as examples of unlawful arrangements where employees’ payments back to the employer reduce compensation below minimum wage. Their role here is illustrative—showing the sort of factual setting absent from SSI reimbursement.

3.2 Legal Reasoning

A. The Court’s three-program synthesis (SSI + SNA + FLSA)

The majority constructs the case as an alignment of subsistence-focused regimes: SSI guarantees a minimum need-based income; SNA fills the gap while SSI is pending; and the FLSA ensures wages do not fall below a subsistence floor. On that view, New York’s practice does not “take back” wages; it reconciles funding responsibility between sovereigns for the same subsistence period.

B. Why reimbursement is not treated as an FLSA “kick-back”

The Court’s functional test is not whether money is withheld from a retroactive SSI check, but whether petitioners experienced a net deprivation of the minimum wage “free and clear” under 29 CFR 531.35. The Court answers “no” for two linked reasons:

• WEP wage equivalence already delivered. Petitioners’ WEP hours were capped by dividing their SNA benefit by the minimum wage (per Social Services Law § 336-c [2] [b]), ensuring the SNA corresponded to at least minimum wage for the labor demanded.
• Retroactive SSI was never a second payment for the same covered need. Retroactive SSI is designed to meet unmet needs during the pending period, but 42 USC § 1383(g) earmarks part of that award to reimburse the state for interim assistance that already met those needs. Petitioners still receive the “excess” (as illustrated by the opinion’s examples of Ohlsson and Ash), representing the gap between SNA and the federal minimum.

C. The “windfall” frame is decisive

A major premise is that petitioners’ theory implicitly demands both (1) state aid calibrated to the minimum wage and (2) a retroactive SSI award calculated as though the state had not covered basic needs. The Court treats that as a request for duplicative benefits—precisely what Congress sought to avoid (White v Bowen; McKenzie v Bowen; Pappas v Bowen). In short: reimbursement is the statutory mechanism that prevents “double dipping.”

D. Statutory interpretation: “interim assistance” includes work-conditioned aid

Petitioners effectively sought an implied exception: that “interim assistance” reimbursable under 42 USC § 1383(g) excludes assistance conditioned on work. The Court rejects that as inconsistent with the statute’s plain language and federal regulations, and as contrary to the programmatic purpose of encouraging states to cover basic needs during SSI delays. It also flags a structural concern: excluding WEP-conditioned SNA from interim assistance could pressure the Social Security Administration to treat the minimum-wage-equivalent assistance as “income” for SSI eligibility/benefit calculations, potentially eliminating the very funds petitioners seek.

E. Carver is narrowed, not extended

The Court’s most consequential doctrinal clarification is what Carver did not decide: it held WEP participants can be employees under the FLSA (using the “economic reality” test), but did not adjudicate whether recoupment from a later payment stream violates 29 CFR 531.35. The Court reinforces this with Matter of Empire Ctr. for N.Y. State Policy v New York State Teachers' Retirement Sys., insisting that dicta (including Carver’s “gist” description) cannot be converted into a holding on an unbriefed regulatory issue.

F. The dissent’s fairness comparison—and the majority’s response

The dissent (Troutman, J.) argues that if a WEP participant and a non-working interim-assistance recipient end with the same total benefits after SSI reimbursement, the WEP participant effectively labored “for free,” which should be forbidden under Carver and the FLSA. The majority responds that equal end totals reflect SSI’s design to guarantee a fixed minimum income, not an unlawful taking from workers; the parity is produced by extending equivalent assistance to those exempt from work requirements, not by stripping WEP participants of wages. The majority also notes that any “windfall” from Congress’s indifference to work requirements is a federal-state allocation issue for Congress, not an FLSA remedy for claimants.

3.3 Impact

• Operational certainty for New York’s interim assistance model. The decision secures New York’s ability to use 42 USC § 1383(g) reimbursement even where SNA required WEP participation, avoiding administrative pressure to carve out work-conditioned cases or change reimbursement accounting.
• Constrains FLSA “kick-back” theories in benefits coordination settings. Claimants will face difficulty reframing statutorily earmarked federal reimbursement mechanisms as wage kick-backs where (i) minimum wage equivalence was provided and (ii) the challenged recoupment prevents duplicative need-based payments.
• Carver’s reach is cabined. Carver remains strong authority that WEP participants may be FLSA “employees,” but Andersen makes clear that Carver is not a blanket prohibition on all government recoupment efforts affecting former WEP participants. Future litigation about recoupment from “independently-owed” funds (lottery winnings, inheritances, tort recoveries) remains doctrinally open in New York’s highest court.
• Signals a harmonization approach to overlapping federal statutes. The Court declines to find an unavoidable conflict between the FLSA and SSI reimbursement, and suggests that even if one existed, 42 USC § 1383(g) would likely be treated as more “specific” under Edmond v United States.

4. Complex Concepts Simplified

• SSI (Supplemental Security Income). A federal program that pays people who are aged, blind, or disabled and have very low income/resources. The benefit is calculated to bring the person up to a minimum subsistence amount; it is not designed to add extra money beyond basic needs.
• Retroactive SSI lump sum. When SSI eligibility is approved after a delay, SSA often pays a lump sum for the months the person should have been paid.
• Interim assistance and reimbursement (42 USC § 1383[g]). Congress lets states provide basic-needs aid while SSI is pending and then get reimbursed from the claimant’s retroactive SSI payment—so claimants are supported during delays and states are not penalized for helping.
• WEP (Work Experience Program). A “workfare” assignment required as a condition of certain public assistance, intended to build employability. New York limits hours by dividing the benefit amount by the minimum wage, so the “benefit-per-hour” matches minimum wage.
• FLSA “kick-back” (29 CFR 531.35). The minimum wage must be paid “free and clear.” If the worker must return part of wages to the employer (directly or indirectly), the law may treat the worker as not truly receiving minimum wage.
• “Windfall.” In this context, it means double payment for the same basic needs over the same period—state aid plus full SSI for those months—contrary to SSI’s need-based design.
• “Specific governs the general” (Edmond v United States). If two federal laws clash, courts often apply the more specifically targeted statute to the situation at hand over a broader one.

5. Conclusion

Matter of Andersen v Hein establishes a clear coordination principle: when New York provides SNA as reimbursable “interim assistance” and caps WEP hours so the assistance corresponds to minimum wage, reimbursement from a claimant’s retroactive SSI under 42 USC § 1383(g) does not constitute an FLSA “kick-back.”

The decision is significant less for changing SSI reimbursement law (which already authorized repayment) and more for clarifying the boundary between wage-protection doctrine and need-based benefits coordination. It narrows attempts to extend Matter of Carver v State of New York into a general anti-recoupment rule, and it signals that, at least in the SSI interim-assistance setting, courts will look for an actual net wage loss—rather than the mere fact of reimbursement from a later federal payment stream—before finding an FLSA violation.