Supreme Judicial Court Advises Legislature Should Clarify Independent Contractor Test

CLIENT ALERT

by

Mark J. Ventola and Paul S. Lopez

In Massachusetts, there are four distinct methods that are used to determine whether a worker should be considered an employee or an independent contractor, depending upon the reason for the inquiry: a three-prong test under the Massachusetts Wage Act, an alternative three-prong test under the Unemployment Statute, a twelve-factor test under the Workers’ Compensation Act, and a twenty-factor test under the Internal Revenue Code. The variations among these tests inevitably creates confusion and unpredictability for employers, workers, courts, and regulatory agencies alike, as a worker could conceivably be considered an employee under one test and an independent contractor under another. The Massachusetts Supreme Judicial Court (“SJC”) was recently tasked with determining which test applied to a specific worker’s claim in Carmago’s Case, for which a decision was issued on May 10, 2018.

Background

The plaintiff in this case, Ives Carmago, worked as a newspaper delivery agent for a company that does not publish its own newspapers, but rather acts as a middleman in delivering newspapers published by other companies. Ms. Carmago signed a number of contracts over the years that identified her as an independent contractor. The job also carried with it many of the indicia typically associated with an independent contractor relationship: she could make her deliveries in any order and at any time within a certain window, she used her own vehicle, and she was paid based on the number of newspapers delivered, not the number of hours worked.

In late 2010 and early 2011, Ms. Carmago suffered two injuries while delivering newspapers, and those injuries resulted in her needing two surgeries: one on her right knee, and the other on her right hand. In 2012, Ms. Carmago filed an initial claim for workers’ compensation benefits to cover her medical expenses. The Massachusetts Department of Industrial Accidents (“Department”) denied her claim, deciding that she was an independent contractor under the twelve-factor test historically used in analyzing workers’ compensation cases, and therefore not entitled to workers’ compensation benefits. Ms. Carmago appealed that decision, and the SJC transferred the case from the Appeals Court on its own initiative.

The Decision

On appeal, Ms. Carmago argued that the Department should have applied the three-prong test found in The Wage Act, rather than the twelve-factor test under The Workers’ Compensation Act.

Unfortunately for Ms. Carmago, the SJC was not convinced by her arguments. In deciding to uphold the Department’s decision, the SJC cited the intent of the legislature as well as the basic principle that a statute should be construed “so that effect is given to all its provisions, so that no part will be inoperative or superfluous.” Clearly and not surprisingly, the Legislature intended the test in The Workers’ Compensation Act to apply to workers’ compensation claims. Any other holding would render the workers’ compensation test meaningless.

Justice Gants calls on Legislature to reconsider scheme

The SJC’s decision was fairly predictable. While the concurring opinion, authored by Chief Justice Gants, was anything but predictable. In the first sentence, Justice Gants noted that he only wrote separately “to express [his] concern about the practical consequences of this statutory scheme, which . . . may exacerbate the already complex problem of worker misclassification.” He noted that with so many different standards, it is difficult for employers to classify their workers properly, even where they intend to comply with the law. A statutory scheme that may result in the same worker being classified differently under The Wage Act, The Workers’ Compensation Act, The Unemployment Statute, and the State and Federal Revenue Codes, places employers in extraordinarily difficult situations. In an attempt to solve this problem, Justice Gants calls on the Massachusetts Legislature to consider harmonizing the laws, perhaps even going so far as to create a single, uniform standard for determining employment status under all of the employment laws (as Maine recently did).

Employers who have struggled with this very conundrum understand the importance and practical reality which Justice Gants and several of his colleagues are calling to the attention of the Legislature. Improvement and additional clarity in this complex area would be a welcome development for employers and workers alike. Whether the Legislature heeds Justice Gants’ exhortation remains to be seen, but the needed attention is finally being brought to light.

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Mark J. Ventola and Paul S. Lopez are attorneys at Sheehan Phinney Bass & Green.  Mark co-chairs the firm’s Labor, Employment and Employee Benefits Group.

This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.