Massachusetts SJC rejects independent contractor ABC test

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In recent years, Massachusetts lower courts have struggled to determine whether the “ABC test” under the independent entrepreneur status provides the appropriate framework for assessing responsibility for joint work. The Supreme Court of Justice (SJC) has finally answered this question. December 13, 2021, at Jinks v. Credico (USA) LLC, the SJC ruled that the “ABC test” of the Independent Contractor Act did not apply and instead adopted the “all the circumstances” approach of the Fair Labor Standards Act (FLSA) to employment. joint.

Credico was a client broker for independent direct marketing companies. She has contracted with DFW Consultants, Inc. (DFW) to provide sales and marketing services to her clients in Massachusetts. To provide these services, DFW hired three of the complainants – Kyana Jinks, Antwione Taylor and Lee Tremblay – as salespeople. DFW classified Jinks and Taylor as independent contractors and Tremblay as an employee.

The plaintiffs brought a lawsuit against DFW, Credico and individual defendants, alleging violations of Massachusetts wages and hours laws on their behalf and that of employees in a similar situation. With respect to Credico, the plaintiffs alleged that he misclassified Jinks and Taylor as independent contractors and failed to pay them all overtime and minimum wage under Massachusetts law.

After the discovery, Credico sought summary judgment on the plaintiffs ‘claims, arguing that he was not the plaintiffs’ co-employer. The trial court accepted and dismissed the claims against Credico. The complainants then appealed.

On appeal, the plaintiffs argued, in part, that Credico was their joint employer because his control over the terms of their employment with DFW satisfied the “ABC test”. Although the SJC recognized that wages and hours laws provide for joint employer responsibility, it rejected the importation of the “ABC test”, which determines whether an individual provides services as an independent contractor. or as an employee, in this analysis. Instead, the SJC applied the FLSA’s “all the circumstances” framework – which considers “whether the alleged employer (1) had the authority to hire and fire employees; (2) the working hours or conditions of employment of supervised and controlled employees; (3) determined the rate and method of payment; and (4) retained employment records ”- complaints from complainants.

The SJC found that none of the FLSA factors supported entering into joint employment:

  • Only DFW had the power to hire and fire its employees. Indeed, under its contract with Credico, DFW “retained” the exclusive right to hire, transfer, suspend, dismiss, recall, promote, assign, discipline, settle grievances and lay off its employees. “

  • Credico’s contracts with its clients required it to ensure “that subcontractors and salespeople receive appropriate training, monito[r] against fraudulent activity and maintain[n] records of background checks and vendor testing ”, but the SJC concluded that“[e]The exercise of such quality control measures does not constitute monitoring and control of working conditions.

  • Although Credico had a commission schedule under which it made payments to DFW, there was no evidence that this scale dictated the payment of commissions by DFW to its employees, or that Credico had played a role in determining when DFW would pay them.

  • Credico did not keep the employment records of DFW employees.

While brain teaser upholds the notion of joint employment under Massachusetts wage and hour laws, its rejection of the strict elements of the “ABC test” in favor of the more flexible analysis of the totality of the circumstances of the FLSA should be beneficial to many companies doing business in the state. Companies operating in Massachusetts may consider reviewing or revising their relationships with other companies – and with the workers provided by those companies – in light of the clarity that brain teaser provides.

© 2022 Epstein Becker & Green, PC All rights reserved.National Law Review, Volume XII, Number 3

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