by Michelle M. De Oliveira and Michael P. Dickman
On Dec. 13, 2021, the Supreme Judicial Court of Massachusetts (SJC) held in Jinks v. Credico (USA) LLC that the Fair Labor Standards Act (FLSA) test applies when deciding whether an entity is a joint employer – not Massachusetts’ independent contractor test.
The plaintiff employees were salespersons directly retained by DFW Consultants, Inc. The defendant, Credico, is a client broker for independent direct marketing companies and it subcontracted with DFW to provide regional direct sales services for its national clients.
Credico and DFW entered into a 2015 services agreement through which DFW retained exclusive control over its labor and employment practices, including policies on wages, working conditions, and hiring.
Plaintiffs filed suit, alleging that Credico, as their joint employer, violated Massachusetts’ independent contractor statute and wage laws. Since Credico was not the plaintiffs’ “direct employer,” it would not ordinarily be liable for the plaintiffs’ independent contractor misclassification claim, unless it was a joint employer.
The Superior Court concluded that Credico was not a joint employer.
On appeal, plaintiffs argued that the SJC should apply the independent contractor statute test (the ABC test) to determine whether Credico was a joint employer. Under the ABC test, an individual who performs services is an employee (not an independent contractor), unless the following factors are met:
- The individual is free from control and direction in connection with the performance of services, both under a contract for the performance of service and in fact; and
- the service is performed outside the employer’s usual course of the business; and
- the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.
The SJC disagreed, holding that the FLSA (a model for Massachusetts’ wage laws) offers the appropriate test to determine whether an entity is a joint employer. Under the FLSA’s “totality of the circumstances” test, the relevant factors are: whether the alleged employer
- had the power to hire and fire the employee;
- supervised and controlled employees’ work schedules or conditions of employment;
- determined the rate and method of payment; and
- maintained employment records.
After adopting this standard, the SJC concluded that Credico was not a joint employer.
According to the SJC, using the independent contractor test “would be rather like using a hammer to drive in a screw: it only roughly assists the task because the hammer is designed for a different purpose.”
This case resolves what had been unsettled law in Massachusetts. Business entities should keep the FLSA test in mind when contracting with other entities and review those contracts with care to ensure that they are not running afoul of wage and hour laws. Employers with questions should consult with a Kenney & Sams employment attorney.
Michelle M. De Oliveira, Esq. is a partner, and Michael P. Dickman, Esq. is an associate at Kenney & Sams.