Massachusetts’ Supreme Judicial Court held that to determine whether an entity jointly employs an individual for purposes of the state’s minimum wage and overtime laws, courts should apply the Fair Labor Standards Act’s test, which considers the totality of the circumstances of the parties’ working relationship. The court rejected an argument that the Massachusetts’ Wage Act’s restrictive “ABC test” extends to joint employment determinations.
In a decision issued December 13 in Jinks v. Credico (USA) LLC, the Massachusetts Supreme Judicial Court (SJC) adopted the Fair Labor Standards Act’s (FLSA’s) test to determine joint employer status for purposes of Massachusetts’ minimum wage and overtime laws.[1] As a threshold matter—although the Massachusetts wage laws do not explicitly define “employer” or provide for “joint employment”—the SJC confirmed that the wage laws include the concept of joint employment given its longstanding support in common law.
The certified question before the SJC was whether M.G.L. c. 149, § 148B—which uses the “ABC test” to determine whether an individual is an employee or an independent contractor for purposes of the minimum wage and overtime statutes—also applies to determine whether an entity is a joint employer for purposes of those laws.
The plaintiffs argued that the ABC test applied and, therefore, that an entity is presumed to be an individual’s employer (including joint employer) so long as the individual is “performing any service” from which the entity derives an economic benefit.
The SJC rejected that argument, holding that its prior precedent established that, subject to some limited exceptions, only the entity to whom the individual directly provides services is the individual’s employer.
The SJC further found that the ABC test “asks a question that differs from the question relevant to determining whether an entity is a joint employer.” While “[t]he [ABC] test classifies a worker as either an employee or an independent contractor for purposes of the wage laws based on the answer to the question ‘who, if anyone, controls the work other than the worker herself,’. . . the question of joint employment focuses on whether an individual, whose work is controlled by one entity, is also subject to the control of another entity.”
The SJC thus noted that, “using the independent-contractor test exclusively to answer the joint-employer question would be rather like using a hammer to drive in a screw: it only roughly assists the task because the hammer is designed for a different purpose.”
The SJC ruled that whether an entity is a joint employer under the wage laws should be determined, instead, by applying the test set forth in the FLSA, from which Massachusetts’ wage laws derive.
The FLSA test considers the totality of the circumstances of the parties’ working relationship, focusing on four factors regarding whether the alleged employer
As applied to the facts in Jinks, the SJC concluded that Credico could not be held liable for violations of Massachusetts’ wage laws as the plaintiffs’ joint employer. There, Credico had entered into a subcontract with DFW Consultants to provide sales services for Credico’s national clients.
According to the court, the plaintiffs—salespeople directly retained by DFW—presented no evidence that Credico had the power to hire or fire them. The SJC also found that Credico did not supervise and control the plaintiffs’ work conditions, despite exercising various quality control measures. Finally, nothing in the record supported a conclusion that Credico determined the rate and method of payment or maintained any employment records for the plaintiffs.
The SJC’s ruling provides welcome clarity to entities that use services provided by workers in Massachusetts. The SJC resolved an issue of repeated debate in the lower courts, making clear that the ABC test and its presumption of employment does not govern the joint employment inquiry.
Businesses operating in the commonwealth should nevertheless be cautious in exercising any form of control over workers employed by other entities and should carefully review the cases applying the FLSA’s totality-of-the-circumstances test as important guidance in applying Massachusetts’ new joint employment standard.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Boston
Keri L. Engelman
Siobhan E. Mee
New York
David A. McManus
Christopher A. Parlo
Melissa C. Rodriguez
Douglas T. Schwarz
Philadelphia
Michael J. Puma
Princeton
Thomas A. Linthorst
Sean P. Lynch
[1] M.G.L. c. 151, §§ 1 and 1A