MA high court adopts FLSA joint employer test, lessens burden on businesses

Massachusetts’ highest court recently eased a burden on businesses by limiting their exposure to claims they are joint employers under state law. The Supreme Judicial Court (SJC) decided the test governing the joint employer inquiry is the multifactor standard of the federal Fair Labor Standards Act (FLSA) and not the “ABC” test of the state’s independent contractor law. In doing so, the SJC (1) confirmed the more employer-friendly FLSA standard applies in Massachusetts and (2) provided important guidance to businesses in structuring their relationships with other firms, contractors, and vendors.

Facts

Credico (USA) LLC contracted with DFW Consultants, Inc., to provide door-to-door and other sales services for Credico’s clients. DFW in turn hired three individuals as salespersons to work on various marketing campaigns in Massachusetts. The company classified them as independent contractors instead of employees, apparently without consulting Credico.

The trio sued DFW, as well as Credico, for their alleged misclassification as independent contractors and related violations of Massachusetts’ wage and hour laws. They claimed Credico should be held liable because it was their joint employer as a result of the influence it had over their employment status and the fact it was profiting from their work.

The trial court disagreed and ruled in Credico’s favor, dismissing the case. The three salespersons appealed the decision to the appeals court. As permitted by the applicable rules of procedure, the SJC on its own initiative transferred the case from the appeals court to itself.