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.
Doug Gillette and Bill Goddard will be featured panelists during the UConn School of Law's Symposium on Municipal Distress on Friday, September 15.
Day Pitney partner Francine Esposito will speak at the upcoming webinar "Workplace Leave Laws: Strategies to Navigate the Changing Landscape in the U.S." Taking place on Sept. 14 at 2 p.m., the webinar is the first in a series of webinars hosted by the Employment Law Alliance (ELA) on workplace leave laws around the globe.
Patrick McCarthy and Christopher Stracco spoke about Project Labor Agreements on Friday, February 10, at the New Jersey Institute of Continuing Legal Education's Annual 2017 Redevelopment Law Institute at the Renaissance Woodbridge Hotel in Iselin, New Jersey.
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).
Day Pitney associate Arianna Mouré was featured in an article, "Practicing Law and Contributing to the Greater Good," published in the Fall/Winter 2018 edition of the Rutgers University School of Arts and Sciences Access Newsletter.
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.