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.