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.
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