United States: The Supreme Judicial Court Of Massachusetts Refuses To Apply The "ABC" Test To Determine The Existence Of A Joint Employment Relationship.

In a recent ruling, Jinks v. Credico (USA) LLC, 177 N.E.3d 509 (Mass. 2021), three individual Plaintiffs brought suit alleging that the Defendant jointly employed them with another entity.  The Massachusetts court applied a "totality of the circumstances" test to determine the Plaintiffs' status instead of the more employee-friendly "ABC" test.  In doing so, the Court held the Defendant was not a joint employer.  This case is important for franchisors concerned that they may be in joint employment relationships with their franchisees' employees.

Background

Credico USA, LLC ("Credico"), a client broker for independent direct marketing companies, contracted with DFW Consultants, Inc. ("DFW") for DFW to provide regional door-to-door sales services.  DFW in turn hired Kyana Jinks, Antwione Taylor, and Lee Tremblay as salespersons to work on various marketing campaigns for Credico's telecommunications and energy clients.  DFW classified Jinks and Taylor as independent contractors and Tremblay as an employee.

In June 2019, Jinks, Taylor, and Tremblay filed suit against Credico alleging that Credico, as Plaintiffs' joint employer with DFW, violated Massachusetts law by misclassifying Jinks and Taylor as independent contractors.  Tremblay's claim was limited to one of an employment relationship with Credico because there was no dispute about his relationship with DFW.  Additionally, each Plaintiff alleged that Credico was their employer, too, and violated Massachusetts law by failing to pay them minimum wage and overtime.  The trial court granted summary judgment for Credico holding it was not the Plaintiffs' joint employer with DFW.  The Plaintiffs appealed.

Analysis

On appeal, the Plaintiffs urged the court to apply the "ABC" test from Massachusetts' independent contractor statute and find that Credico was a joint employer.  Under the test, an employment relationship is presumed unless the alleged employer can prove the worker satisfies all three parts of the test:  1) the individual is free from control and direction in connection with the performance of the service; 2) the service is performed outside the usual course of the business of the employer; and 3) 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 Court declined to apply the "ABC" test in this instance.  The Court observed that the "ABC" test focuses on "who, if anyone, controls the work other than the worker herself."  The Court held this analysis did not fit in a claim of joint employment.  In such a claim, it is a given that the worker is an employee of at least one entity and under its control.  Here, that was DFW.  The issue in Jinks was whether there was an employment relationship with a second entity, Credico, the alleged joint employer.

Instead, the court adopted the standard set forth in the Fair Labor Standards Act, which examines the totality of the circumstances of the parties' working relationship.  Four factors guide this standard.  Did the alleged employer:  (1) have the power to hire and fire the employees; (2) supervise and control employee work schedules or conditions of employment; (3) determine the rate and method of payment; and (4) maintain employment records?

The Jinks Plaintiffs presented no evidence that Credico had the power to hire or fire DFW employees, determine the rate and method of payments, or maintain employment records.  Additionally, the Court was unconvinced that Credico had any role in supervising and controlling work conditions.  Therefore, the Court held that the Plaintiffs could not have had a reasonable expectation that Credico was their joint employer.

Takeaway

The decision is a setback for workers seeking broad application of the "ABC" test in joint employment claims.  It offers some hope for a more balanced approach regarding entities like franchisors that contract with other firms who employ their own workers.

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