Jinks v. Credico (USA) LLC.

• Decision Date: 13 December 2021
• Docket Number: SJC-13106
• Parties: Kyana JINKS & others v. CREDICO (USA) LLC.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

177 N.E.3d 509

Kyana JINKS ¹ & others²

v.CREDICO (USA) LLC.

SJC-13106

Supreme Judicial Court of Massachusetts, Suffolk.

Argued October 4, 2021.

Decided December 13, 2021.

Harold L. Lichten, for the plaintiffs.

Barry J. Miller (Alison H. Silveira also present) Boston, for the defendant.

Ben Robbins & Martin J. Newhouse, Boston, for New England Legal Foundation, amicus curiae, submitted a brief.

Ana Muñoz, Joseph Michalakes, & Audrey Richardson, Roslindale, for Massachusetts Employment Lawyers Association & others, amici curiae, submitted a brief.

Present: Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, & Georges, JJ.

WENDLANDT, J.

This case presents the issue whether G. L. c. 149, § 148B (independent contractor statute), which sets forth the standard to classify an individual as an employee or an independent contractor for purposes of the minimum wage and overtime statutes, G. L. c. 151, §§ 1 and 1A (wage laws), also establishes the standard to determine whether an entity is that individual's joint employer for purposes of those laws. We conclude that it does not. Instead, we borrow the test applied to determine joint employer status under the Fair Labor Standards Act (FLSA), from which the Massachusetts wage laws derive. Pursuant to that test, whether an entity is a joint employer of an individual is determined by considering the totality of the circumstances of the relationship between the individual and the entity, guided by a framework of four factors: whether the entity (1) had the power to hire and fire the individual, (2) supervised and controlled the individual's work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.

Considering these factors in light of the undisputed material facts in the record before us, we affirm the Superior Court judge's allowance of summary judgment in favor of the defendant, Credico (USA) LLC (Credico). More specifically, the plaintiffs were salespersons directly retained by DFW Consultants, Inc. (DFW), an entity with which Credico subcontracted to provide regional direct sales services for its national clients. The record, when considered in view of the aforementioned factors as a whole, does not support the conclusion that the plaintiffs had a reasonable expectation of proving that Credico exercised the type of control over their employment necessary to conclude it was their joint employer. Further determining that the claims of the plaintiff Justin Jackson were barred by the doctrine of claim preclusion, we affirm.³

1. Background. The undisputed material facts are as follows. Credico was a client broker for independent direct marketing companies; for years, it contracted with DFW to provide regional door-to-door and other face-to-face sales services for Credico's nationally based telecommunications and energy clients. DFW, in turn, retained the services of the plaintiffs -- Kyana Jinks, Antwione Taylor, and Lee Tremblay -- as salespersons to work on various marketing campaigns in Massachusetts for Credico's clients.⁴ Without any apparent input from Credico, DFW classified Jinks and Taylor as independent contractors and Tremblay as an employee.

Two agreements governed DFW's relationship with Credico during the years that the plaintiffs worked for DFW -- a 2013 "Subcontractor Agreement" (2013 agreement) and a 2015 "Services Agreement" (2015 agreement), which apparently superseded the 2013 agreement. Relevant to the issues on appeal, the 2013 agreement provided that DFW would comply, and have its employees comply, with Credico's "Code of Business Ethics and Conduct"; otherwise, "[DFW] retain[ed] sole and absolute discretion, control, and judgment in the manner and means of carrying out the assignment," including "filing all necessary and required tax filings, reports, payments, and similar obligations," as well as "any workers’ compensation, Medicare, Medicaid, or other similar deductions or contributions." The 2013 agreement also provided that "[i]nvoicing by and payment to [DFW] shall be in accordance with the Subcontractor Commission Schedule." The schedule governed when Credico would pay DFW, made provisions in case of fraud on the part of DFW, reserved Credico's right to amend the schedule, and provided a table of the rates at which Credico would compensate DFW for particular types of sales. The plaintiffs cite to no record support for their contention that the schedule additionally governed the commissions DFW paid to them; to the contrary, the records show that Credico had no involvement in DFW's policies regarding the compensation DFW paid to its salespersons.

The 2015 agreement similarly provided that DFW "retain[ed] sole and absolute discretion, control, and judgment in the manner and means of carrying out the Services." DFW had "exclusive control over its labor and employee relations policies, and its policies relating to wages, hours, or working conditions of its employees," and had "the exclusive right to hire, transfer, suspend, lay off, recall, promote, assign, discipline, adjust grievances and discharge its employees." Credico required DFW to ensure that its workers complied with certain regulatory requirements, including undergoing background checks and signing nondisclosure agreements. Credico provided DFW with access to a data portal, ARC, capable of tracking the number of salespersons working on a particular campaign on a particular day; the plaintiffs’ additional contentions that the portal provided Credico with salespersons’ daily rankings and pay reports and that Credico used the portal to gather information about DFW's salespersons are unsupported.

Aside from reporting to the DFW office at the beginning and end of a workday, the plaintiffs completed their sales work "in the field" via face-to-face interactions with consumers.⁵ The plaintiffs testified that they had never met, communicated with, or seen anyone employed by Credico, and had never been to a Credico office.

In June 2019, the plaintiffs filed the third amended complaint in this action, individually and on behalf of all others similarly situated,⁶ against Credico, DFW, and Jason Ward.⁷ With respect to Credico, the plaintiffs alleged that, as the plaintiffs’ joint employer, Credico violated the independent contractor statute, G. L. c. 149, § 148B, by misclassifying Jinks and Taylor as independent contractors rather than employees, and that it violated the wage laws, G. L. c. 151, §§ 1 and 7, and G. L. c. 151, § 1A, by failing to pay each of the plaintiffs minimum wage and overtime for hours worked in excess of forty hours per week. The claims asserted by Jackson, who was a named plaintiff in the second amended complaint, against Credico, see note 7, supra, were found by the Superior Court judge to be barred by the doctrine of claim splitting based on Jackson's participation in a Federal lawsuit against Credico in which he did not raise his State law claims, see Huffman v. Credico (USA) LLC, U.S. Dist. Ct., No. 1:17CV04242 (S.D.N.Y.).

After a period of discovery, the parties submitted cross motions for summary judgment in December 2019. Credico sought summary judgment on all claims raised against it in the third amended complaint. The plaintiffs sought summary judgment on their claims that Credico violated the wage laws, maintaining that Credico was their joint employer, that they were not exempt under the statutes’ "outside sales" exemption, and that Jinks and Taylor were misclassified by Credico as independent contractors.⁸

The judge granted summary judgment to Credico on all claims on the ground that the undisputed facts established it was not the plaintiffs’ joint employer. The plaintiffs appealed from the allowance of Credico's motion for summary judgment, as well as the allowance of Credico's motion for judgment on the pleadings as to Jackson's claims. This court transferred the case sua sponte from the Appeals Court.

2. Discussion. a. Summary judgment. i. Employer "ordinarily" is entity for whom employee directly performs services. The appropriate test to determine whether an entity is an individual's employer under the wage laws is a legal question, which we consider de novo. Rotondi v. Contributory Retirement Appeal Bd., 463 Mass. 644, 648, 977 N.E.2d 1042 (2012). Relying on the independent contractor statute, G. L. c. 149, § 148B, the plaintiffs urge that an entity is an individual's employer so long as the individual is "performing any service" from which the entity derives an economic benefit.⁹

We rejected such an approach in Depianti v. Jan-Pro Franchising Int'l, Inc., 465 Mass. 607, 990 N.E.2d 1054 (2013), determining instead that the entity for whom the individual directly performs services is ordinarily the individual's employer responsible for compliance with the wage laws. In particular, we posited a hypothetical situation in which "company A contracts with company B for services, and company B enters into arrangements with third parties to perform the work it undertook under its contract with company A." Id. at 624, 990 N.E.2d 1054 n.17. Even though company A derived an economic benefit from the third-party workers, we concluded that "ordinarily, in such circumstances, company A would not be liable for misclassification of the third-party workers. This is because ordinarily, in such circumstances, company B would be the agent of any misclassification" as the third parties’ direct employer. Id.

In the present case, DFW, like company B in the hypothetical scenario, was the direct employer of the plaintiffs. Credico, like company A, did not classify the plaintiffs. Therefore, Credico was not the direct employer of the plaintiffs and thus "ordinarily" would not be liable for any misclassification under the wage laws. See id.

While this is the ordinary outcome, we have recognized at least two exceptions -- first, where the law of corporate disregard is applicable and, second, where an entity has engaged in an ...