Worker Classifications


As I have written before, the Massachusetts Weekly Payment of Wages Act obligates employers to pay all earned wages to employees in a timely fashion. The Wage Act also specifies that the “president and treasurer of a corporation and any officers or agents having the management of such corporation” are personally liable for violations. In Segal v. Genitrix, LLC, et al., the Massachusetts Supreme Judicial Court, interpreting the phrase “agent having the management of the corporation” for the first time since it was added to the Wage Act in 1935, ruled that, as long as board members and investors acted in their ordinary capacities, they were not such agents and could not personally be liable for violations.

In Segal, the former president and chief executive officer of Genitrix, asserted that two former board members of the company, H. Fisk Johnson III and Stephen Rose, should be individually liable for wages that Segal claimed he was owed for services he performed for the company. Neither Johnson nor Rose was the president, treasurer, or any other officer of Genitrix. The Appeals Court, relying on Cook v. Patient Edu, ruled that Segal might have viable claims against Johnson and … Keep reading


On November 22, the U.S. District Court for the Eastern District of Texas granted the request of 21 states to temporarily halt the effective date the U.S. Department of Labor’s Final Rule (“Final Rule”) raising the salary threshold to qualify for the white collar exemptions from minimum wage and overtime requirements from taking effect. Accordingly, the Final Rule will not take effect on December 1, 2016.… Keep reading

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Convincing a court that a company has properly classified a worker as an independent contractor has become increasingly difficult in Massachusetts. So, the Massachusetts Supreme Judicial Court’s decision just last week that taxicab drivers are, in fact, properly classified as independent contractors was somewhat unexpected.… Keep reading

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Historically, Massachusetts courts routinely ruled that it was a violation of  the Massachusetts Wage Act to fail to pay an employee who had been promised payment for her work only after the employer received sufficient funding. For example, in Stanton v. Lighthouse Financial Services, Inc., U.S. District Court Judge Nancy Gertner found not only once, but twice, that John Stanton was an employee under the Wage Act, was entitled to payment of deferred compensation under his employment contract and confirmed that there was no carve out from the Wage Act’s requirements for startups. In reaching her decision, Judge Gertner reasoned that a deferred compensation agreement where the compensation was forfeited violated the Wage Act provision prohibiting the entering into of a special contract to avoid Wage Act obligations. Since Stanton, a number of Massachusetts state and federal court cases have ruled that compensation contingent upon a company’s receiving certain levels of funding were wages that were required to be paid in accordance with the Wage Act and required such wages to be paid promptly and upon termination of employment – even if funding had not then occurred.

In what could be viewed as a new twist, Superior … Keep reading

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Because ’tis the season to give, The In-House Advisor would like to give in-house counsel the following reminders so as to limit their companies’ holiday exposure:

Tip 1:  Religious discrimination and accommodations

As we all know, while the “holiday” season in December often refers to Christmas, there are many other religious holidays celebrated by workers, both now and throughout the year.  In-house counsel may wish to take the opportunity now to advise their companies’ managers to allow, and not interfere with, an employee’s observance of religious obligations.  For purposes of employment discrimination laws, the definition of “religion” is much broader than one might think and is not limited to major, organized religions.  Rather, “religious beliefs” protected by discrimination laws is defined as:

Moral or ethical beliefs about right and wrong that are sincerely held with the strength of traditional religious views.

It would behoove employers to carefully consider scheduling of work on holidays and planning and scheduling of holiday celebrations with an eye towards religious considerations. Likewise, being mindful of the religions practiced by company employees may avoid issues with respect to holiday parties.  For instance, depending upon the make-up of your workforce, scheduling a party for Friday night … Keep reading

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As summer approaches, many companies will face the tempting invitation from students to work “for free” as interns.  While some companies may consider jumping at the chance to enhance their workforce without incurring the costs of compensation, health insurance and other benefits of being an employee, as the U.S. District Court for the Southern District of New York just reminded the business community, having unpaid interns can be perilous if you don’t know – or if you ignore – the law.

Like many businesses, Fox Searchlight Pictures, Inc. hires a number of unpaid interns every year.  In 2011, however, several of their “interns” sued, claiming that they should have been paid for the hours they had worked performing routine tasks that would otherwise have been performed by regular employees in connection with the production of the film Black Swan.  On June 11, 2013, U.S. District Court Judge William H. Pauley III issued a ruling in which he agreed that two interns, Eric Glatt and Alexander Footman, were “classified improperly as unpaid interns and are ‘employees’…”  of Fox Searchlight.  Judge Pauley went on to say that these putative interns:

…worked as paid employees work, providing an immediate advantage to

… Keep reading
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Beware of Choice of Law When Drafting Independent Contractor Agreements


As we have previously posted in Choice of Law in a Contract Can Be Critical, Ensuring Your Dispute Is Resolved in the Forum You Want Is Not Always Easy, and Selection of Forum Other Than Massachusetts May Not Avoid Wage Act Enforcement, choice of law and forum selection provisions should be conscious decisions made in the context of each specific contract.  If in-house counsel do not carefully draft these provisions in their independent contractor or consulting agreements, they may be overlooking a possible means of avoiding or minimizing liability in Massachusetts under the so-called Massachusetts Independent Contractor Law (M.G.L. c. 149, §148B), the Massachusetts Weekly Payment of Wages Act (M.G.L. c. 149, §148) and/or the Massachusetts minimum wage and overtime laws.  Because these statutes do not contain any explicit geographic restriction on their application, their applicability to non-Massachusetts residents performing work outside of Massachusetts for Massachusetts companies has been unsettled.  (I have previously posted here and here on the staggering ramifications of misclassifying a worker as an independent contractor in Massachusetts.) 

In Taylor v. Eastern Connection Operating, Inc., the Massachusetts Supreme Judicial Court took up the issue of whether New York residents who perform … Keep reading

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With the new year, taking the time to review the status of your independent contractors may create valuable savings.  Independent contractors, when properly classified, can often be a valuable and efficient means for both businesses and individuals to conduct business.  Many businesses engage workers on an independent contractor basis as means of avoiding rigorous requirements associated with an employment relationship, including payment of minimum wages and overtime; provision of benefits, workers’ compensation insurance and unemployment benefits; and protections under discrimination and safety laws – all of which may result in significant costs to the operation of a business.  If employees are misclassified as independent contractors, however, the company risks the potentially hefty damages resulting from a misclassification. 

The downturn in the economy has changed the face of independent contractor arrangements for a variety of reasons.  For workers, being classified as employees often means that they receive benefits, including paid vacation time, subsidized health insurance, workers compensation insurance benefits and unemployment benefits.  For many government agencies, classifying workers as employees often generates greater revenue from employment taxes that should have been paid, plus penalties and interest.  According to the National Employment Law Project’s Summary of Independent Contractor Reforms, New State … Keep reading

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Employees Misclassified as Independent Contractors Pose Significant Risks


Many are familiar with Juliet’s tribute to Romeo: “What’s in a name? that which we call a rose By any other name would smell as sweet.”  In the context of employees and independent contractors, however, Juliet is quite wrong.  As I discussed in a prior post, it can be perilous to misclassify workers as independent contractors, and, under the Massachusetts independent contractor law, workers are deemed employees unless all three of the following criteria, commonly known as the “ABC” Test, exist:

  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, misclassifying an employee as an independent contractor could trigger violations of other laws, with the Massachusetts Weekly Payment of Wages Act (“Wage Act”) (and its mandatory treble damages and attorneys’ fees) being the most treacherous. 

… Keep reading

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As summer internship season approaches, employers should carefully institute internship programs which comply with the requirements of the Fair Labor Standards Act (FLSA). 

The Test.

In the case of “for-profit” companies, unpaid internships must meet the strict criteria of the FLSA.  Specifically, as stated in U.S. Department of Labor’s (DOL) FLSA Fact Sheet #71 unpaid interns must:

  1. Receive training similar to that provided in an educational environment
  2. Be for the benefit of the intern, and not the employer
  3. Not displace regular paid employees
  4. Be closely supervised by existing staff
  5. Not be used for the immediate advantage of the employer (and in some cases, may impede the employer’s operations)
  6. Not necessarily be entitled to a job after the end of the internship
  7. Understand that the intern is not entitled to wages for time spent in the internship

… Keep reading

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