On May 17, the Massachusetts Supreme Judicial Court (SJC) issued its ruling in Taylor v. Eastern Connection Operating, Inc., holding the Massachusetts independent contractor, wage and overtime statutes may apply, in certain circumstances, to out-of-state workers of Massachusetts companies.
Headquartered in Woburn, Massachusetts, Eastern Connection Operating Inc. (Eastern) is in the business of delivering packages in various states along the East Coast. As part of its business, Eastern contracted with couriers, who were treated as independent contractors, to deliver and pick up packages on its behalf. Their contracts stated the following: "This Contract and all rights and obligations of the parties shall be construed in accordance with the laws where [Eastern] is headquartered and any action shall be commenced in that jurisdiction in the closest [S]tate court."
In 2010, several couriers (who work exclusively in New York) sued Eastern in Massachusetts Superior Court, claiming (1) Eastern misclassified them as independent contractors, in violation of the Massachusetts independent contractor statute, Mass. Gen. Laws ch. 149, § 148B (which makes it far more difficult for an employer to establish contractor status than does the applicable New York statute); and (2) Eastern failed to pay them wages and overtime as employees, in violation of the Massachusetts wage and overtime statutes. Eastern moved to dismiss the plaintiffs' claims on the theories that (1) the Massachusetts independent contractor statute did not apply to out-of-state workers, and (2) the Massachusetts wage and overtime statutes did not apply to independent contractors. The Superior Court granted Eastern's motion, and the plaintiffs appealed.
The SJC first noted that, in light of the forum selection clause in the couriers' contracts, the plaintiffs properly brought their lawsuit in Massachusetts. It then engaged in a choice of law analysis, based on the parties' express choice of Massachusetts law in their contracts, finding (1) because Massachusetts has a "substantial relationship" to the transaction, and (2) because the application of Massachusetts law would not be contrary to a fundamental policy of New York (as both laws purport to protect workers, albeit in different ways), the express choice of Massachusetts law was effective. And because the Massachusetts independent contractor law does not contain any geographic limitation of reach, the SJC held that the law applies to the plaintiffs' misclassification claim, vacated the dismissal and remanded the case back to the Superior Court. The issue of whether Eastern violated the Massachusetts wage and/or overtime statutes will depend, in the first instance, on whether the plaintiffs were, in fact, misclassified as independent contractors.
This case highlights the potentially extensive reach of the Massachusetts independent contractor, wage and overtime statutes, providing in certain circumstances Massachusetts statutory remedies to workers who may never step foot in the Commonwealth. Of particular concern to employers, the Massachusetts wage statutes provide for mandatory treble damages and attorneys fees to prevailing plaintiffs. Employers need to take note of this possibility when including Massachusetts choice-of-law provisions in employment and contractor agreements and should review any existing agreements that apply Massachusetts law to their employees and contractors.
Day Pitney Alert
Rachel Gonzalez, Mary Rogers and Patrick McCarthy wrote an article "NLRB Eases Organizing of Temporary Workers" for CBIA’s H&R Safety Newsletter on the impact of the recent decision of the National Labor Relations Board (NLRB).
On May 13, Francine Esposito will give an Employment Law Update presentation to the HR Committee of the NJ Bankers Association. She will discuss the latest developments in employment law, including but not limited to paid sick leave requirements, EEOC initiatives, recent case law and pending legislation affecting employers.
On April 13, Day Pitney will hold a CLE that will cover two topics at Quest Diagnostics Incorporated, at 3 Giralda Farms in Madison, New Jersey. Benjamin E. Haglund, John W. Cerreta, Thomas A. Zalewski and Sylvia–Rebecca Gutierrez will teach a course on Contract & Tort Law Update for the Health Care Practitioner. The course will cover contract and tort issues for health care practitioners with special emphasis on genetic testing in tort litigation and potential pitfalls regarding provisions contained in contracts with hospitals, health plans, and suppliers. Theresa Kelly and Rachel Gonzalez will also teach a course on Employment Law, which will cover employment law issues with special emphasis on recent National Labor Relations Board activities and the Family and Medical Leave Act.
Francine Esposito and Arielle Sepulveda wrote an article, “Federal Contractors Will Have To Provide Paid Sick Time,” for Pratt’s Government Contracting Law. The article explains the policies federal contractors and subcontractors need to have in place by January 1, 2017 to meet the requirements of a recent Executive Order signed by President Barack Obama for paid sick time. Specifically, federal contractors and subcontractors must allow their employees to earn at least seven days of paid sick time each year if they do not already have policies in place that provide the same amount.
Rachel Gonzalez was mentioned in an article, "Unions set to begin voting on NJ Transit rail contract," in NJ.com. Gonzalez provided an explanation of the approval process concerning union agreements in connection with the NJ Transit rail unions voting on the proposed settlement to avert a strike.
Kate Coffey, Rachel Gonzalez and Peter Wolfson were mentioned in the "New Partners Yearbook 2016" in New Jersey Law Journal. This is the Law Journal's annual yearbook devoted to recognizing both newly promoted partners and newly hired lateral partners at law firms in New Jersey.
Patrick McCarthy was quoted in an article, “Former exec's conviction puts spotlight on safety for high-risk industries; Deadly mine explosion resulted in underwriting rethink by insurers,” in Business Insurance. McCarthy was quoted in connection with the significance of a case, in which Don Blankenship, the former CEO of Massey Energy Co., was acquitted of all felony charges, but convicted of a misdemeanor conspiracy charge for willfully violating U.S. mine health and safety standards that resulted in a 2010 explosion that killed 29 coal miners in West Virginia.
The Day Pitney alert, "Federal Contractors Must Provide Paid Sick Time in the Future," authored by Francine Esposito and Arielle B. Sepulveda was referenced in a Staffing Industry Analysts article, "New Bill Would 'Ban the Box' for Federal Contractors." In addition to the Fair Chance Act, the article discusses the executive order signed by President Obama that requires federal contractors to provide paid sick time leave. Esposito and Sepulveda noted that the requirement applies to all federal contracts awarded on or after January 1, 2017.
Stamford, Conn., August 24, 2015 - Day Pitney is pleased to announce that 68 attorneys have been selected for inclusion in the 2016 Best Lawyers in America. Best Lawyers ranks lawyers through peer-review surveys, and has been published annually since 1983.