Employee or Independent Contractor?

MA: Workers, Without Whom Company Would Cease to Exist, Are Not Outside the Usual Course of Company’s Business

From JDSupra, Richard Reibstein reports on a Massachusetts case in which the court applied Massachusetts’ ABC test and said, with respect to the requirement that the service provider provides services that are outside the usual course of the company’s business, that without the service providers the company would cease to exist and therefore the services were not outside the usual course of the company’s business. Richard writes:

VENDOR SERVICING WORKERS WIN IC MISCLASSIFICATION CLASS ACTION UNDER MASSACHUSETTS LAW.   A Massachusetts federal court has granted summary judgment in favor of vendor servicing workers in a class action alleging violations of the Massachusetts wage and hour law due to misclassification of the vendor associates as independent contractors and not employees. The InStore Group LLC contracted with retailing and manufacturing clients to provide vendor associates to perform retail services, including inventory correction, order entry, display building, audits, surveys, and rack placing. The company advertises specific project opportunities with retail customers on its internal website for vendors associates registered with the company. If a vendor associate accepts an opportunity with a company’s customer, the work is required to be completed within parameters set by the client, which also provides instructions and directions as to how the project services are to be performed.

In granting the plaintiff’s motion for summary judgment, the court applied the conjunctive three-prong test used in Massachusetts to determine independent contractor/employee status. It concluded that under Prong 1, issues of material fact existed whether plaintiff was free from the company’s control. As to Prong 3, the court ruled that the plaintiff customarily engaged in an independently established trade, occupation, profession, or business because he had the right to contract with other companies and did not depend on the company for all of his engagements. However, under Prong 2, which requires that the business establish that the plaintiff’s services are outside the usual course of business of the company, the court concluded as a matter of law that the plaintiff “was providing services in the company’s usual course of business: retail services.” The company had argued that the plaintiff’s provision of retail services was distinct and incidental to the company’s usual course of business, which it argued was the coordination of retail services. The company contended that it does not actually perform retail services, but rather, “connects retailers and manufacturers seeking vendor associate services with independent contractor vendor associates seeking to perform such services.” In rejecting these arguments, the court said it was following the Massachusetts Supreme Judicial Court’s refusal in another case to accept the “false dichotomy between the administrative and operational aspects of their business.” It also concluded that without the services of the vendor associates, the company would cease to operate. The court also granted the plaintiff’s motion for class certification, finding that it was the superior method for adjudicating the case given “the common evidence and common issue of employment classification under InStore’s policies.” Hogan v. The InStore Group, LLC, No. 17-10027 (D. Mass. Jan. 11, 2021).

Source: Not So Fast: January 2021 Independent Contractor Law Update | Locke Lord LLP – JDSupra

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