Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
In Jinks v. Credico (USA) LLC (December 13, 2021), the Massachusetts Supreme Judicial Court concluded that the appropriate method for determining whether two companies were “joint employers” for purposes of the Massachusetts wage and hour laws is to evaluate the “totality of the circumstances of the parties’ working relationship.” This is the same test courts apply when analyzing this issue under the federal Fair Labor Standards Act (FLSA). Under this test, a court focuses on whether the alleged employer: (1) had the power to hire and fire the employee, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.
In this case, defendant Credico provided its clients with door-to-door sales services. Credico subcontracted that work to other companies, including defendant DFW. DFW engaged the plaintiffs to call on potential customers in person as door-to-door salespeople. The plaintiffs subsequently sued both Credico and DFW, alleging that they were entitled to wages and overtime payments, as well as the mandatory awards of treble damages and attorneys’ fees available under the Massachusetts Minimum Wage Law and Overtime Law.
Credico moved for summary judgment, arguing that the plaintiffs were employed solely by DFW. The trial court analyzed this issue under the common law “right to control” test. After applying that test, the trial court concluded that there was not enough evidence in the record to find that Credico joint employed the plaintiffs along with DFW. Therefore, the court entered summary judgment for Credico.
The Supreme Judicial Court Adopts the FLSA Test
The primary issue on appeal was whether Credico could be held liable as the plaintiffs’ joint employer, along with DFW. The Massachusetts wage and hour laws do not (a) define the term “employer,” or (b) provide any specific guidance for determining when two companies will constitute joint employers of the same employee. Accordingly, the parties provided the Supreme Judicial Court with two competing frameworks for analyzing the question of joint employment.
The plaintiffs argued that an entity is an individual’s employer so long as the individual is “performing any service” from which the entity derives an economic benefit. The Supreme Judicial Court rejected this argument as inconsistent with prior case law. In so doing, the court noted that this test was inappropriate because it potentially would make an entity liable even though that entity played no role in the underlying wage and hour violations.
For its part, Credico argued that the court should adopt a “paycheck rule.” Under this test, the term “employer” is defined as the entity with which employees have an express or implied contract to work for compensation and from which they receive pay. The Supreme Judicial Court rejected this test because it effectively precludes a finding of joint employment status in situations where a worker receives only one paycheck.
Ultimately, because the Massachusetts wage and hour laws are modeled after the FLSA, the court decided to adopt the FLSA test for analyzing joint employer status. Under this test, courts evaluate:
the totality of the circumstances of the parties’ working relationship, guided by a useful framework of four factors: 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.
No one of these factors is dispositive in determining whether a joint employment relationship exists.
The court then applied each of those factors to the evidence in the record. First, the court found no evidence that Credico had power to hire or fire DFW’s workers and did not supervise or control their work schedules or other conditions of employment. Plaintiffs, however, argued that Credico retained responsibility under its agreements with clients for (a) ensuring that workers receive proper training, (b) monitoring against fraudulent activity, and (c) maintaining records of workers’ background checks and drug tests. The court rejected this argument, stating that “[e]xercising such quality control measures does not constitute supervising and controlling work conditions.”
The court then concluded that Credico did not, nor did it have the power to, establish the rate or method for paying DFW’s workers, and did not maintain employment records for those workers. Accordingly, the court held that Credico was not their joint employer for purposes of the Massachusetts wage and hour laws. The court then affirmed the entry of summary judgment for Credico.
This decision offers welcome guidance on an issue that has caused much confusion in recent years. Employers now need only apply one test when analyzing the issue of joint employment under the FLSA and Massachusetts wage and hour laws.