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Massachusetts Supreme Judicial Court Rejects “ABC Test” for Determining Joint Employment under Minimum Fair Wage Law

Over the past few years, lower courts in Massachusetts have grappled with determining whether the “ABC test” under the independent-contractor statute provides the proper framework for assessing joint-employment liability. The Supreme Judicial Court (SJC) has finally answered that question.  On December 13, 2021, in Jinks v. Credico (USA) LLC, the SJC held that the independent-contractor statute’s “ABC test” does not apply and instead adopted the Fair Labor Standards Act’s (FLSA) “totality of the circumstances” approach to joint employment.

Credico was a client broker for independent direct marketing companies. It contracted with DFW Consultants, Inc. (DFW) to provide sales and marketing services for its clients in Massachusetts. To provide those services, DFW hired three of the plaintiffs – Kyana Jinks, Antwione Taylor, and Lee Tremblay – as salespeople. DFW classified Jinks and Taylor as independent contractors and Tremblay as an employee.

 

The plaintiffs brought suit against DFW, Credico, and individual defendants, alleging violations of Massachusetts’ wage-and-hour laws on behalf of themselves and similarly situated employees. With respect to Credico, the plaintiffs alleged that it had misclassified Jinks and Taylor as independent contractors and had failed to pay all of them overtime and minimum wage under Massachusetts law.

After discovery, Credico moved for summary judgment on the plaintiffs’ claims, arguing that it was not the plaintiffs’ joint employer. The trial court agreed and dismissed the claims against Credico. The plaintiffs then appealed.

On appeal, the plaintiffs argued, in part, that Credico was their joint employer because its control over the terms and conditions of their employment with DFW satisfied the “ABC test.” Although the SJC recognized that the wage-and-hour laws provide for joint-employer liability, it rejected importing the “ABC test,” which determines whether an individual provides services as an independent contractor or as an employee, into that analysis. Instead, the SJC applied the FLSA’s “totality of the circumstances” framework – which considers “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” – to the plaintiffs’ claims.

The SJC found that none of the FLSA factors supported a finding of joint employment:

  • Only DFW had the authority to hire and fire its employees. Indeed, under its contract with Credico, DFW “retained ‘the exclusive right to hire, transfer, suspend, lay off, recall, promote, assign, discipline, adjust grievances and discharge its employees.’”
  • Credico’s contracts with its customers required it to ensure “that subcontractors and salespersons receive proper training, monito[r] against fraudulent activity, and maintain[n] records of salespersons’ background checks and drug tests,” but the SJC concluded that “[e]xercising such quality control measures does not constitute supervising and controlling work conditions.”
  • Although Credico had a commission schedule under which it made payments to DFW, there was no evidence that this schedule dictated DFW’s payment of commissions to its employees, or that Credico played any role in determining when DFW would pay them.
  • Credico did not maintain the DFW’s employees’ employment records.

While Jinks confirms the notion of  joint employment under Massachusetts’ wage-and-hour laws, its rejection of the stringent elements of the “ABC test” in favor of the FLSA’s more flexible totality-of-the-circumstances analysis is one that should be of benefit to many companies doing business in the state. Companies operating in Massachusetts may want to consider reviewing or revising their relationships with other companies – and with the workers provided by those companies – in light of the clarity that Jinks provides.