SJC Rejects Expansive Standard for Joint Employment Under Massachusetts Wage Laws, Aligning with Federal Standard

On December 13, 2021, the Massachusetts Supreme Judicial Court answered longstanding questions about which entities may be jointly responsible for wage violations under Massachusetts law.  In Jinks v. Credico (USA) LLC, a copy of which can be found here, the plaintiffs argued that they were employees of not only the direct sales company that hired and paid them but also a third-party sales broker that facilitated their work selling products or services for nationally recognized brands.  Plaintiffs argued that the expansive and stringent ABC test found in the Commonwealth’s Independent Contractor statute, G.L. c. 149, § 148B, also determined whether a third-party can be liable for wage-related violations.  The result of that theory would have made an entity the joint employer of any and every individual in Massachusetts who performed work within the entity’s “usual course of business” (Prong B of the test), regardless of whether the entity had any direct contact with or control over those employees.

The SJC rejected plaintiffs’ theory, finding that the ABC test answers only the question of “who, if anyone, controls the work” performed by a worker and holding that joint employer status turns on who controls a given employee.  In order to determine who controls an employee – and is therefore a joint employer - the Court adopted the four-prong “totality of the circumstances” test applicable to joint employment claims under the federal Fair Labor Standards Act.  That test looks to “whether the alleged employer (1) had the power to hire and fire the employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records.”  The SJC reasoned that application of this framework “will capture both the nature and structure of the working relationship as well as the putative employer’s control over the economic aspects of the working relationship.”  Because Credico, which Seyfarth represented in this case, performed none of these functions in relation to the plaintiffs at issue in the Jinks case, the Court found that Credico was not their joint employer under the Massachusetts wage laws and had no liability for any violations by its corporate business partners relating to their Massachusetts-based employees.

In addition to aligning Massachusetts with federal law, the Jinks opinion provides helpful guidance as to what companies may do to ensure that quality control standards and other commercial expectations are met, without being deemed to control the workers who will be expected to comply with those standards or expectations.  The Court noted that measures such as requiring workers to comply with regulatory requirements, requiring that workers receive proper training, monitoring to prevent fraudulent activity, providing workers with hardware or access to software for purposes of processing transactions, or maintaining records of workers’ background checks and drug test are insufficient to establish joint employment. 

The SJC’s holding in Jinks is critical for employers nationwide that do business with entities operating in Massachusetts, as it provides long-awaited clarity around the circumstances in which those entities could be on the hook for the wages and/or benefits owed to employees of their business contacts, including mandatory treble damages.