Joint Employer Lessons From Mass. Contractor Test Ruling

• Published date: 13 January 2022
• Subject Matter: Employment and HR, Employee Benefits & Compensation, Employee Rights/ Labour Relations
• Law Firm: Cooley LLP
• Author: Ms Charlotte Drew, Claire Metcalfe and Bronwyn L. Roberts

On Dec. 13, 2021, Massachusetts' highest court held that the multifactor standard of the Fair Labor Standards Act, and not the Massachusetts independent contractor law's so-called ABC test, determines joint employer status under state law.

This decision brings welcome relief for businesses that now have meaningful guidance for structuring their relationships with contractors, service providers and vendors, and limiting their exposure to employment laws in Massachusetts.

Background

In Jinks v. Credico USA LLC,¹ Credico, a client broker for independent direct marketing companies, contracted with DFW Consultants Inc. to provide sales and marketing services, including door-to-door and face-to-face sales services, for Credico's nationwide clients.

DFW in turn hired the plaintiffs as salespeople. DFW classified the plaintiffs as independent contractors, without any input from Credico.

The plaintiffs sought to hold Credico liable under a joint employer theory for their alleged misclassification and violations of Massachusetts wage and hour laws, including failure to pay minimum wage and overtime.²

The Supreme Judicial Court Adopts the FLSA Test

The Massachusetts Supreme Judicial Court held that:

• Massachusetts wage and hour laws "include the concept of joint employment"; and
• The standard for determining joint employer status is the multifactor, "totality of the circumstances" test applied under the FLSA.

First, the court explained that ordinarily, only the employing entity is liable for misclassification under the wage laws. An exception exists, however, when an entity that does not directly employ the workers is nonetheless a joint employer because it retains sufficient control over the employment terms and conditions for the employees at issue.

The Supreme Judicial Court held that the Massachusetts wage laws, "which neither define 'employer' nor expressly provide for 'joint employers,' include this long-standing concept of joint employment."³

Second, the court held that the appropriate test to determine whether an entity is a joint employer is the multifactor, totality-of-the-circumstances test used to determine joint employer status under the FLSA.

Under that test, courts consider the totality of circumstances of the relationship between the employee and the entity,

guided by a framework of four factors: whether the entity (1) had the power to hire and fire the individual, (2) supervised and controlled the individual's work schedules or conditions of...