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State-specific laws What state-specific laws govern the employment relationship?
- Massachusetts Equal Pay Act (149 MGLA §1 et seq.)—covers multiple topics, including:
- lie detector tests;
- leave laws;
- wage laws;
- government contracts;
- youth employment laws;
- staffing agencies; and
- non-compete agreements.
- Massachusetts Fair Employment Practices Law (151 B MGLA §1 et seq.)—covers multiple topics, including:
- background checks;
- pre-employment inquiries; and
- sexual harassment.
- Laws prohibiting discrimination—Massachusetts Civil Rights Act (Mass Gen. Laws Ann. Ch.12 §§11H and 11I) and Massachusetts Equal Rights Act (Mass Gen. Laws Ann. Ch. 93 §§102 and 103).
- Background checks—Massachusetts Consumer Credit Reporting Act (Mass Gen. Laws Ch. 93 §§50 – 68); HIV testing (Mass. Gen. Laws Ch. 111, § 70F); Mass. Gen. Laws Ch. 6, §171 et seq.; Mass. Gen. Laws Ch. 15D, § 7; and Mass. Gen. Laws Ch. 71, § 38R.
- Laws related hiring requirements—Workers' Compensation Act (Mass. Gen. Laws Ch. 152, § 22).
- Leave laws—jury duty and court attendance leave (Mass. Gen. Laws Ch. 234A, §§ 48-49 and 60-61); termination because of jury service (Mass Gen. Laws Ch. 268 §14A and Ch. 234A, §61); and victim and witness leave (Mass. Gen. Laws Ch. 258B, § 3(l)).
- Laws regarding non-compete agreements—lawyers (Mass. R. Prof'l Conduct 5.6); physicians (Mass. Gen. Laws Ch. 112, § 12X); nurses (Mass. Gen. Laws Ch. 112, § 74D); and social workers (Mass. Gen. Laws Ch. 112, § 135C).
- Wage and hour laws—minimum wage (Mass. Gen. Laws Ch. 151, § 1); overtime (Mass. Gen. Laws Ch. 151, § 1A); Sunday payment (Mass. Gen. Laws Ch. 136, § 6).
- Smoke-free Workplace Law (Mass. Gen. Laws Ch. 270, §22).
- Right to freedom from sexual harassment (Mass. Gen. Laws Ch. 213 §1C).
- Handicap under the Worker’s Compensation Act (Mass. Gen. Laws Ch. 152, §75(B)(1)).
Who do these cover, including categories of workers? “Employment” includes any service performed by an individual that is employed by:
- the commonwealth or any of its instrumentalities (subject to exceptions);
- a farm employing unit in agricultural labor;
- a domestic employing unit in a private home, local college club, or local college fraternity or sorority; or
- a religious, charitable, education, or other organization (subject to exceptions).
The individual must be:
- a citizen of the United States outside the United States (except Canada and the Virgin Islands); or
- employed by an U.S. employer (subject to exceptions) on or in connection with U.S. vessels and aircraft under a contract of service with the United States (151A M.G.L.A. §4A).
“Employment” does not include:
- agricultural labor, except as provided in 151 MGLA §4A;
- domestic service in a private home, local college club, or local chapter of a college fraternity or sorority, except as provided in 151 MGLA §4A;
- service performed by an individual employed by his or her son, daughter, or spouse;
- service performed by a child in the employ of his or her parents;
- service performed in the employ of the U.S. government or an instrumentality thereof;
- service performed in the employ of a state or political subdivision or instrumentality thereof;
- service that is not performed in the course of the employer’s trade or business in any calendar quarter by an employee, unless the cash remuneration paid for such service is $50 or more and such service is performed by an individual who is regularly employed by such employer to perform such service;
- service performed by an individual as an “employee” or “employee representative,” as defined in Section 1 of the Federal Railroad Unemployment Insurance Act;
- service performed in any calendar quarter in the employ of any organization exempt from income tax under Section 501(a) of the Federal Internal Revenue Code, other than an organization described in Section 401(a) of the code, or exempt from income tax under Section 521 of the code, if the remuneration for such service is less than $50;
- service performed in the employ of a school, college, or university, if such service is performed by a student who is enrolled and is regularly attending classes at such school, or such a student’s spouse (subject to some limitations found in Mass. Gen. Laws Ann. Ch. 151A, § 6);
- service performed as a student nurse or medical resident;
- service performed in the employ of a foreign government;
- service performed by an individual as an insurance agent or as an insurance solicitor, if the service is performed for remuneration solely by way of commission and such service is excluded from the term “employment” under Section 3306 of the Federal Internal Revenue Code or any acts in addition thereto and amendments thereof; however, service performed by any agent selling or servicing policies of industrial life insurance (as defined by Section 1 of Chapter 175) that is also employed by any life insurance company authorized to do business in this commonwealth—whether his or her remuneration for such service is by way of commission or otherwise—is considered employment within Chapter 175;
- service performed by an individual under the age of 18 in the delivery or distribution of newspapers or shopping news, not including delivery or distribution to any point for subsequent delivery or distribution;
- services performed by an individual as a real estate broker or salesperson if he or she is licensed by the state as a real estate broker or salesperson, and if he or she is remunerated solely by way of commission—provided that the term “employment” includes service performed by a real estate broker or a salesperson, if such service is performed for a “governmental employer” as defined in Section 1;
- service performed by an individual as a polltaker or opinion taker, if the rate of such individual's remuneration is determined by a person other than the person supervising him or her and if said individual is free to accept or decline any given assignment—provided that the term “employment” includes service performed as a polltaker or opinion taker, if such service is performed for a “governmental employer” as defined in Section 1;
- service performed in the employ of a church or convention or association of churches, or an organization operated primarily for religious purposes and which is operated, supervised, controlled, or principally supported by a church or convention or association of churches;
- service performed by a duly ordained, commissioned, or licensed minister of a church in the exercise of his or her ministry or by a member of a religious order in the exercise of duties required by such order;
- service performed in a facility in order to carry out a rehabilitation program for individuals whose earning capacity is impaired by age, physical or mental deficiency, or injury, or to provide remunerative work for individuals who, because of their impaired physical or mental capacity, cannot be readily absorbed in the competitive labor market by an individual receiving such rehabilitation or remunerative work;
- service performed by an individual as part of an unemployment work relief or work training program assisted or financed in whole or in part by any federal agency or an agency of a state or political subdivision thereof or an Native American tribe;
- service performed in a custodial or penal institution by an inmate of said custodial or penal institution;
- service performed by a patient in the employ of a hospital, whether public, non-profit, or proprietary; and
- service performed by a “full-time student” as defined in Section 3306(q) of the Internal Revenue Code of 1954 in the employ of an organized camp, if such camp fulfills the requirements included in this section.
Misclassification Are there state-specific rules regarding employee/contractor misclassification? Whenever assessing the employee/employer relationship, employers should use the criteria set forth in the Massachusetts Misclassification Law, unless specifically dealing with unemployment insurance or workers’ compensation issues. The following statutes provide definitions for “independent contractors.”
a. Wage and hour
The Massachusetts Independent Contractor Law or The Massachusetts Misclassification Law (MGLA Ch. 149 §148B) states that an:
“individual performing any service, except as authorized under this chapter, shall be considered an employee unless:
“(1) the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and
(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.”
Further, the Massachusetts Office of the Attorney General has provided an advisory opinion providing guidance on the three prong test (MGLA Ch. 149 §148B).
b. Unemployment insurance (151A MGLA §2)
The test for whether a worker is an independent contractor for purposes of determining unemployment insurance eligibility is slightly different from the test provided for wage and hour purposes. For unemployment insurance purposes, workers are employees unless it can be shown to the commissioner that:
“(a) such individual has been and will continue to be free from control and direction in connection with the performance of such services, both under his contract for the performance of service and in fact; and
(b) such service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and
(c) such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.”
c. Workers’ compensation
Massachusetts courts apply a “right to control” standard when determining whether a worker is an independent contractor for purposes of determining eligibility for workers’ compensation (e.g., Thorson v. Mandell, 525 N.E.2d 275, (Mass. 1988)).
d. Tax withholding
The Massachusetts Department of Revenue applies the federal Internal Revenue Code’s 20-factor test for determining whether a worker qualifies as an independent contractor (62B MGLA §1-21; 26 U.S.C.A. §3401).
Contracts Must an employment contract be in writing? No. An oral contract can be a valid employment agreement, except if it is subject to the statute of frauds (e.g., Boothbay v. Texon, 608 N.E.2d 1028, 1034-1038 (Mass. 1993)). According to the statute of frauds, any contract—including an employment contract—that is “not to be performed within one year” must be:
- in writing; and
- signed by both parties to be bound (259 M.G.L.A. §1).
Massachusetts courts require a party seeking to enforce an oral agreement to provide sufficient evidence to show that an individual contract existed between that party and his or her employer (e.g., Davis v. Sweetheart Plastics, Inc., 635 F.Supp. 849 (D.Mass. 1986)). An employer can be held liable for an oral promise that would otherwise fall under the statute of frauds under the theory of estoppels—that is, where an employee has detrimentally relied on oral promises made by his or her employer (e.g., Hurwitz v. Bocian, 670 N.E.2d. 408 (Mass. App. Ct., 1996)).
The above analysis also applies to subsidiary oral agreements that are made within an existing employment relationship (e.g., Hall v. Horizon House Microwave, Inc., 506 N.E.2d 178, 182-183 (Mass. App. Ct., 1987)).
Are any terms implied into employment contracts? Absent a written provision to the contrary, Massachusetts courts presume that employment relationships are at will—that is, that the employment relationship may be terminated at any time by either party (e.g., Jackson v. Action for Boston Community Dev., Inc., 525 N.E.2d 411, 412 (Mass., 1988)).
In some cases, Massachusetts courts will interpret a phrase regarding the circumstances that an employer may terminate employment to be “just cause,” regardless of the actual phrasing in the particular employment agreement (e.g.,Klein v. President and Fellows of Harvard College, 517 N.E.2d 167, 208 (Mass. App. Ct., 1987) (Finding where an employee’s letter of appointment provided that “she was subject to removal ‘for grave misconduct whenever …[her] duties are not satisfactorily discharged’, the term “not satisfactorily discharged” should be construed to mean the employee could be terminated for “just, good, or due cause at least, but not more”). Several courts have relied on the Massachusetts Supreme Judicial Court’s definition of “just cause” (e.g., in G&M Employment Serv. Inc. v. Commonwealth(Mass., 1970)) to determine the meaning of the phrase in subsequent cases (e.g., Goldhor v. Hampshire College, 521 N.E.2d 1381, 1385 (Mass. App. Ct., 1998) and Hammond v. T.J. Litle &Co., 82 F.3d 1166, 1170 n.4, 1176-1177 (1st. Cir., 1996)).
Are mandatory arbitration agreements enforceable? Under the Federal Arbitration Act—which pre-empts contrary or impeding state laws—courts can compel arbitration clauses if they find that the agreement to arbitrate:
- reaches the claim in question;
- is mandatory; and
- was voluntarily entered into (Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, 170 F.3d 1, 120 (1st. Cir., 1999)).
With regard to pre-dispute agreements to arbitrate employment disputes, courts apply state contract doctrines of unconscionability and public policy in order to provide minimum protections and to ensure that employees are not forced to give up substantive rights. Some exceptions apply in the context of class arbitration waivers (e.g., American Express Co. v. Italian Colors Restaurant, 133 S.Ct. 2304 (2013)).
Where the Federal Arbitration Act is not found to pre-empt an agreement, the Massachusetts Arbitration Act may apply. Massachusetts courts have not yet ruled whether the Massachusetts Arbitration Act applies to individual employment agreements, although they have had the chance to do so (e.g., Corion Corp. v. Chen, 1991 WL 280288 (U.S. Dist. Ct., D. Mass., 1991)). As it is unclear whether courts in Massachusetts will find that the Massachusetts Arbitration Act applies to employment agreements, enforcement (if it is desired) should be sought through the Federal Arbitration Act, if possible.
If the Massachusetts Arbitration Act does apply, it provides enforcement of agreements to arbitrate summarily through the Superior Court, which may stay any pending judicial proceedings on the matter (11 M.G.L.A. §2). Massachusetts courts will also review and confirm arbitration agreements (11 M.G.L.A. §7).
How can employers make changes to existing employment agreements? An employment agreement may set the terms for making changes. Some employment agreements simply restate the employment at-will status (i.e., that the employee can be terminated at any time, with or without notice, and for any non-illegal reason). Other employment agreements provide that the change must be mutually agreed to and executed in writing by both parties. Under the at-will status, an employee can be terminated at any time and then offered new employment with new terms. Absent an employment agreement for a specific period or which otherwise limits an employer’s ability to change the terms of employment, any prospective change is permissible, because the status of the employee is at will. Before any change to an employee’s status is made, it is necessary to determine that employee’s status and the terms of the employment agreement.
An employment agreement can be oral or written. Most at-will employment arrangements are oral employment contracts. If there is some form of reliance or change in status by the employee based on an oral representation by the employer, the employment arrangement may have been modified from the standard at-will relationship. Once the nature of the employment agreement is determined, then how and when a change can be made can be determined.