Jinks et al. v. Credico (USA) LLC: Massachusetts Supreme Judicial Court Agrees mostly with NELF and Holds that Third-Party Company is not Plaintiffs’ “Joint Employer” under the Massachusetts Wage Act.
At issue in this case was whether, and if so when, a third-party company could be held liable as the plaintiffs’ joint employer under the Massachusetts Wage. In its decision of December 13, the Court affirmed the Superior Court’s judgment for Credico, concluding that it was not the plaintiffs’ joint employer under that statute. In reaching its decision, the Court adopted the key argument in NELF’s brief that the plaintiffs would have to show that the facts warranted piercing the corporate veil, but that the plaintiffs had failed to do so. As NELF had argued, the Court discussed its prior approval, in its own Wage Act precedent, of the very contractual relationship that existed in this case, in which one company simply agrees to perform services for another company and uses its own workforce to fulfill its contractual obligations. As NELF had argued, the Court held that, ordinarily, such a common business arrangement does not establish joint employment liability over the third party company. The plaintiffs failed to show that Credico was the “alter ego” of their employer, or that Credico was trying to evade its statutory obligations under the Wage Act by contracting with the plaintiffs’ employer.
As NELF had argued, the Court also rejected as irrelevant the application of the Massachusetts independent contractor statute to the issue of determining joint employer liability under the Wage Act. As NELF had argued, the Court concluded that that statute answers a different question entirely–i.e., who, if anyone, controls a worker’s job performance (and therefore constitutes her employer), as opposed to the altogether different question of whether another entity can also constitute that worker’s employer.
However, the Court departed from NELF’s approach when it also held that veil piercing was not the exclusive test for establishing joint employer liability under the Wage Act. Instead, the Court borrowed from FLSA jurisprudence and recognized a four-part, common-law “joint employer” liability test as an additional way to establish Wage Act liability over a third-party company, but that the plaintiffs had failed to satisfy that test on the facts of this case. That test asks 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.
In NELF’s view, this aspect of the Court’s decision is questionable because the FLSA, unlike the Wage Act, contains a broad definition of “employer” that includes anyone who directly or indirectly assists the employer. The Wage Act simply does not define the term at all. NELF had underscored this point in its brief by arguing that the Massachusetts Legislature saw fit to include that same broad definition of “employer” in other Massachusetts employment statutes, but not in the Wage Act. Moreover, NELF had also carefully distinguished a key United States Supreme Court case on which the Appeals Court had relied to recognize joint employment liability. That Supreme Court case concerned the NLRA, which has the same broad definition of “employer” as the FLSA, and certain other Massachusetts statutes, but not the Wage Act.
As a practical matter, however, the Court’s four-part “joint employer” test may be sufficiently demanding, and may sufficiently overlap with the multi-factor veil-piercing test, as applied to the employment relationship, so as to preserve corporate separateness under the Wage Act. As the outcome of this case illustrates, that four-part test places an appropriately high burden on the plaintiff to overcome the core principle of corporate separateness. In this regard, the Court quoted from a Second Circuit FLSA case to reinforce the important point that one company may undertake routine quality control measures over another company in order to ensure contractual performance, without constituting supervision and control over that other company’s employees. “[S]upervision with respect to contractual warranties of quality and time of delivery has no bearing on the joint employment inquiry, as such supervision is perfectly consistent with a typical, legitimate subcontracting arrangement.” (Emphasis added.)