From JDSupra, Emma Follansbee, Brendan Lowd and Savannah Wormley discuss a recent case in which Massachusetts law applied in a misclassification case because Massachusetts had the most significant connection to the parties’ working relationship. Emma, Brendan, and Savannah write:
Massachusetts employers know the importance of complying with the state’s Wage Act, G.L. c. 149, § 148. Two recent court decisions offer fresh guidance to help employers achieve compliance, including around paying PTO upon separation of employment and regarding the Wage Act’s reach beyond state borders.
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Serebrennikov v. Proxet Group LLC d/b/a Rails Reactor and Vladimir Medvedovsky
In Serebrennikov, the Massachusetts federal district court, after finding that the executive at issue was an employee and not an independent contractor, held that the Wage Act applied to an out-of-state resident because Massachusetts was “the state with the most significant connection to the parties’ working relationship.” In applying the “significant relationship test”, the court considered the following factors in reaching its conclusion: the employer’s location, the location where the employee performs work, the frequency of interactions between employer and employee in Massachusetts, whether another state has a significant relationship with the employee and work performance, and whether a contract exists that includes a choice of law provision.
The court concluded that the executive’s work benefitted, and was directed by, a Massachusetts entity, and allowed claims for unpaid vacation time and certain travel expenses to proceed (although it dismissed the employee’s discretionary bonus claim).
Key Takeaways for Employers from Serebrennikov
- As has always been the case, labels in agreements do not override statutory obligations, i.e., one is not an independent contractor just because a written agreement states as much.
- Employers with remote workers or operations across states should evaluate whether Massachusetts law could govern certain aspects of employment, by assessing which state has the most “significant relationship” to the employee.
- Employers should draft employment contracts with due care, particularly with respect to choice of law provisions that govern relationships with employees in states that differ from where the employer is headquartered.
Mintz employment attorneys stand by ready to review employer policies and worker classifications to ensure Wage Act compliance.
Source: Recent Massachusetts Wage Act Decisions: Key Compliance Insights for Employers | Mintz – JDSupra