Massachusetts SJC Adopts Federal Standard for Determining Joint Employer Status | Nelson Mullins Riley & Scarborough LLP

In a Dec. 13, 2021 decision, the Massachusetts Supreme Court adopted a standard previously applied in federal court for determining joint employer status. In Jinks v Credico (USA) LLC, four employee plaintiffs alleged violations of the Massachusetts Independent Contractor Statute, GL v. 149, § 148B, as well as the provisions of the applicable wage laws, GL c. 151.

Credico (USA) LLC (“Credico”), “a client broker for independent direct marketing companies,” has had a long-standing relationship with DFW Consultants, Inc. (“DFW”). DFW has hired salespeople to work on behalf of Credico customers.[1] A 2015 agreement between Credico and DFW provided that DFW would retain primary control over who it hired. DFW’s control extended to matters of compensation, taxes, benefits, and the manner and means of performing assignments. While Credico required DFW to ensure compliance with regulatory requirements and other quality control measures, DFW had ultimate authority to hire or fire employees. The plaintiff employees had no significant direct contact with Credico.

The CJS transferred the case spontaneously of the Court of Appeal after the plaintiffs appealed the lower court’s decision to grant summary judgment in favor of Credico. In determining whether Credico was the Plaintiffs’ employer for the purposes of the Acts, the SJC considered several exceptions to the traditional direct employer-employee relationship.

One of these exceptions is the concept of joint employment. “The basis of [joint employer] The conclusion is simply that an employer, while entering into a good faith contract with an otherwise independent company, has retained for itself sufficient control over the terms and conditions of employment of employees who are employed by the other employer.[2] Although the statutes in question do not explicitly contemplate joint employment, the CJS interpreted the statutory meaning of “employer” to include joint employment based on the well-established existence of the concept at common law.

In deciding on the appropriate standard for determining joint employment, the SJC rejected the plaintiffs’ argument that the “ABC” test should prevail. The “ABC” criterion, which is used to distinguish employees from independent contractors for the purposes of GL c. 149 and c. 151, inquiry into the nature of the employer-employee relationship. The CJS rejected this approach as inappropriate in the context of joint employment.

Instead, the SJC determined that it would determine joint employer status using a four-factor framework applied by federal courts interpreting the Fair Labor Standards Act (“FLSA”). The SJC noted that applying a standard normally used in the context of federal law was appropriate here because the Massachusetts legislature shaped its wage laws after the FLSA. The four-factor framework asks “whether the alleged employer (1) had the authority to hire and fire employees; (2) supervised and controlled working hours or conditions of employment of employees; (3) determined the rate and mode of payment; and (4) maintained employment records.[3]

Applying the four factors, the SJC determined that Credico did not exercise substantial control over the structure or economics of the employment relationship. Importantly, the SJC pointed out that Credico’s imposition of quality control requirements for training, fraud prevention and record keeping was not sufficient to make it a joint employer. For these reasons, the SJC affirmed summary judgment in favor of Credico.

Massachusetts employers who outsource recruitment and staffing to third parties should familiarize themselves with the four factors outlined above. A decision like this reinforces the importance of establishing a clear delineation of control and liability between employers and employment agencies to minimize complex issues of liability under Massachusetts law.

While the full scope of this decision remains to be determined, it could have broad implications in other areas of labor law where employer control is an important factor. CJS’s willingness to adopt standards previously confined to federal law or other statutory regimes demonstrates a flexibility that employers and practitioners should continue to monitor.