Mass.: Worker Is Employee, Not Independent Contractor

By Diane Cadrain Dec 16, 2014

A driver working for a business that provides drivers to clients was an employee, not an independent contractor, the Massachusetts Court of Appeals decided.

Subcontracting Concepts, Inc. (SCI) is a business that provides drivers and vehicles to courier services. It also provides a payroll service, paying the drivers, who are hired as independent contractors. On March 21, 2009, Kenneth Flynn entered into a written contract with SCI to provide services to “SCI and its customers.” The courier client to which Flynn was assigned was Ace Expediters of Alabama. Flynn worked until August 2009, when his employment was terminated.

When he applied for jobless benefits, the Division of Unemployment Assistance decided that he was an employee and that SCI was an employer, which should have been making unemployment contributions on his behalf. SCI appealed, and a hearing upheld that initial determination. SCI then appealed to two additional levels of review, each of which resulted in a decision favoring Flynn. SCI then appealed to the Massachusetts Court of Appeals.

On appeal, SCI argued that it was not an employer because Flynn never provided services for it. The court pointed out, however, that the contract specifically stated that Flynn was to provide services to “SCI and its customers,” and that Flynn did in fact provide services for SCI by delivering goods for SCI's clients, such as Ace, which hired SCI to supply it with delivery drivers.

SCI also argued on appeal that Flynn was an independent contractor. The court stated that Massachusetts law presumes that a worker is an employee unless the company can prove independent contractor status by showing that the individual performed services (a) free from control or direction of the employing enterprise; (b) outside of the usual course of business; and (c) as part of the worker’s independently established trade, occupation, profession, or business.

The court elaborated that the first of these three criteria explores whether the person performing the services controlled the details of how they were performed and worked free of supervision as to the results of the services and the means used in performing them.

Applying that standard to the evidence, the court said that SCI required Flynn to submit to the control or direction of Ace, SCI's client, and that Flynn had a contractual obligation to SCI to perform his work through whatever means or methods Ace required. SCI required that Flynn check with Ace prior to working for any other carrier, follow Ace's delivery routes, wear a T-shirt bearing the Ace logo, and ensure that anyone working with Flynn met SCI's requirements. SCI controlled how Flynn maintained the vehicle he used for deliveries and who he allowed in his vehicle while servicing SCI's customers. Although Flynn had some choice as to the manner in which he performed his deliveries, SCI had authority to exercise a substantial degree of control over numerous details of the performance. For those reasons, the court said, SCI did not meet its burden of showing that Flynn was free from control, direction, and supervision of the employing enterprise.

The third part of the test required an assessment of the degree to which Flynn provided his services as part of an independently established trade or business. The court stated that the fact that Flynn signed an agreement that identified him as an independent contractor was not determinative. SCI, the court said, had to show that Flynn was performing services as an entrepreneur.

Applying that principle to the evidence the court pointed out that Flynn worked five days a week for Ace between 9 p.m. and 6 a.m.., with little time to engage in any independent enterprise. He worked for no one else during the period he was employed by SCI, and was required to obtain approval prior to performing work for any other clients, thus placing limits on his ability to work for anyone wishing to avail themselves of his services.

The Court of Appeals upheld the prior decisions.

Subcontracting Concepts v. Commissioner of the Division of Unemployment Assistance, Mass. Ct. App.,No. 13-P-269 (Nov. 12, 2014).

Diane Cadrain is an attorney who has been writing about employment law issues for more than 20 years.

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