Massachusetts High Court Chooses FLSA's Joint Employment Standard, Dealing Plaintiffs A Double Blow

• Published date: 16 February 2022
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Employee Benefits & Compensation, Employment Litigation/ Tribunals, Trials & Appeals & Compensation
• Law Firm: Seyfarth Shaw LLP
• Author: Mr Barry Miller

In its recent landmark decision, Jinks v. Credico (USA) LLC, the Massachusetts Supreme Judicial Court set the standard for joint employer status in the context of the Commonwealth's notoriously stringent wage laws. By adopting the joint employer standard from the federal Fair Labor Standards Act (FLSA), the court provided a relatively clear and limiting standard for determining whether a defendant can be liable for wage violations asserted by individuals that the defendant did not hire, supervise, or pay. In aligning Massachusetts with the federal standard, the SJC also rejected an expansive interpretation that would have enabled a flood of joint employer litigation against a wide range of potential defendants.

The primary defendant in the case, Credico, is a broker of face-to-face marketing services that connects national companies like utility providers, cell phone providers, and a host of other large, national companies to local, independent sales companies that sell the products offered by Credico's national clients, often through door-to-door sales campaigns or in kiosks in big-box retail stores. The plaintiffs were each hired by an independent sales office known as DFW, Inc., which recruited, hired, trained, supervised, and paid them. The plaintiffs asserted that they were improperly classified as outside sales personnel, and as such, had been denied minimum wage and overtime pay due under Massachusetts law. Instead of filing their claims against their direct employer, the plaintiffs sued both DFW and Credico, contending that Credico was their joint employer, notwithstanding their limited interactions with Credico.

Rejecting the Expansive ABC Test as a Standard for Joint Employment

The basis of the plaintiffs' claims against Credico was a theory that the standard for joint employment in the Commonwealth should be the three-factor ABC test found in the Commonwealth's independent contractor statute, Mass. Gen. Laws ch. 149, ' 148B. That uniquely stringent test deems a worker to be an employee of any entity for which the worker performs services, unless the putative employer can show: (A) the individual is free from direction and control in performing the services; (B) the individual's services are outside the usual course of business of the putative employer; and (C) that the individual is engaged in an independently established trade or profession. A defendant bears the burden to establish each of these elements, and a failure to prove any one of them results in a finding of joint employer status. Athol Daily News v. Board of Review of Div. of Employment and Training, 439 Mass. 171, 175-76 (2003).

Prong B is often the most difficult showing for a defendant to make because its "usual course of business" requirement tends to sweep in any individuals over whom the defendant is able to exercise control (as is relevant for Prong A), and it tends to raise many of the same considerations as to whether an individual is engaged in an independent occupation (as is relevant for Prong C). As such, whether a worker is an employee under this test very often becomes distilled down to a question of whether the worker is providing services in the defendant's usual course of business. This test is onerous by design and typically results in a finding of employee status.¹

Credico argued that the ABC test is unworkable as a standard for joint employment because such a rule would massively expand the number and nature of entities that may be responsible for an...