U.S. Court Of Appeals Offers Guidance On Applicability Of Massachusetts Wage And Hour Laws To Out-of-State Workers

• Published date: 13 June 2022
• Subject Matter: Employment and HR, Employee Benefits & Compensation, Employment Litigation/ Tribunals
• Law Firm: Littler Mendelson
• Author: Mr Stephen Melnick

The U.S. Court of Appeals for the First Circuit recently affirmed a district court finding that the Massachusetts Wage Act did not apply to a person who mostly lived and worked in Florida. While the court's decision in Viscito v. National Planning Corp. suggests that this is a fact-specific question, it offers guidance for employers trying to determine what law applies to their out-of-state employees or "wandering workers."

Background

The plaintiff in this case was a financial advisor who had a business (and staff of his own) in Springfield, Massachusetts. In 2013, plaintiff signed an agreement to be affiliated with National Planning Corporation (NPC), a California-based financial services company. In December 2014, he became a resident of Florida and thereafter spent more than half his time working from Florida.

In 2017, plaintiff's relationship with NPC ended. He then filed a lawsuit against NPC, claiming that he had been misclassified as an independent contractor under Massachusetts law and was owed wages under the Massachusetts Wage Act.

The Court's Decision

The district court sided with NPC. The First Circuit agreed, finding the plaintiff could not sustain his claim because Massachusetts law did not apply to him. The appellate court first observed that, when determining what law applied, it had to determine which state "has the more significant relationship to the transaction" between the parties. This test looks at all the circumstances of the parties' relationship.

Applying that (somewhat vague) test, the First Circuit found that Massachusetts law did not govern. The court noted that NPC had its headquarters in California and had no employees in Massachusetts. Almost all the services between NPC and the plaintiff were provided in Florida, where the plaintiff spent more than half his time, not in Massachusetts. The parties' agreement expressly called for application of California law.

The plaintiff argued that he had a business and employees in Massachusetts; kept his clients' files in Massachusetts; and that most of his clients were in Massachusetts, which generated fees there for NPC. The Court of Appeals was not swayed by these facts. In particular, it noted that the income the plaintiff generated went to NPC in...