Massachusetts Business Litigation Session Rejects “ABC Test” for Joint Employer Status

In an attempt to extend the reach of state wage/hour laws to reach more defendants, Plaintiffs’ lawyers have sought to expand the employment relationship in a variety of ways.  One powerful tool in their arsenal is the concept of joint employment, which can saddle an organization with obligations toward workers whom it did not hire and does not supervise.  The most expansive version of this argument leverages the ABC test, familiar from the test for employee vs. independent contractor status in Massachusetts, California, and a seemingly expanding list of jurisdictions.  The ABC test is uniquely stringent because it requires an ostensible employer to prove, among other things, that a given worker was outside of its “usual course of business,” which tends to sweep more workers into employee status than any other standard presently in use.     

Fortunately, the courts have begun to recognize that the ABC test is a clumsy fit for the joint employer inquiry.   One of the clearest rebukes of this theory under Massachusetts law so far came from the state’s Business Litigation Session on March 31, 2020, in Jinks v. Credico (USA) LLC, et al.  The Jinks plaintiffs worked as door-to-door sales people for an independent sales office, DFW Consultants.  They argued that they were jointly employed not only by DFW, but also by Credico, the broker that arranged for DFW to provide sales and marketing services to large, national companies selling phones, utilities contracts, and other goods and services.  Despite having no communications or material contact with Credico, Plaintiffs argued that Credico was their joint employer because their door-to-door sales work was within Credico’s usual course of business.  In rejecting that argument, the court found that “[t]he test adopted in the independent contractor statute does not determine whether someone who is the employee of one company is also the joint employee of another.”  The court concluded that the proper test for joint employment is the common law “right to control” test, finding “[w]here a business arranges for a particular person to provide services to it and to no one else, the business may be liable under the wage statues as an employer even if it contracts with an intermediary corporate entity that in turn contracts with the employee.”  This result, which the court found was foreshowed by an earlier Massachusetts high court decision known as DePianti v. Jan Pro Franchising, provides much more latitude to organizations in structuring their relationships with corporate vendors and other business partners, without exposing themselves to legal claims from the vendors’ employees.

In applying this right to control test, the Jinks court found that Credico “had no power to hire or fire DFW’s workers, did not supervise or control their work schedules or other conditions of employment, did not and had no power to establish the rate or method for paying DFW’s workers, and did not maintain employment records for those workers.”  Because Credico did not jointly employ the Plaintiffs, it could not be liable to them for any alleged unpaid wages under the Massachusetts wage and hour laws, and Credico escaped the lawsuit entirely.

In addressing the Plaintiffs’ claims against DFW, the trial court also resolved a lingering question about the scope of the outside sales exemptions to Massachusetts’ minimum wage and overtime statutes.  One exemption, found in Mass. Gen. Laws ch. 151, § 2, applies to both minimum wage and overtime requirements, but reaches only outside sales employees who do not make daily visits to the office or plant of their employer.  The Plaintiffs argued that this “daily visits” criterion also applied to the overtime exemption found at Mass. Gen. Laws ch. 151, § 1A, which contains no similar language.  The court rejected this argument as a matter of statutory interpretation and held the Plaintiffs to be exempt from overtime requirements, even if they made daily visits to DFW’s offices.

Together, these two holdings from the Jinks case provide some welcome relief to companies doing business in the Bay State weary from ever expanding wage/hour laws and pockets of unexpected liability.