I previously wrote about the general issue of the misclassification of employees as independent contractors. This is a hot topic these days in employment litigation in Massachusetts. In this article, I want to focus briefly on the Massachusetts independent contractor law and drivers.
In Massachusetts, as in other parts of the country, motor carrier companies have long classified their delivery drivers, taxi or livery drivers, or other drivers as independent contractors rather than employees. Utilizing this practice saves these companies significant overhead, such as health care costs and worker’s compensation premiums. In some cases, they also pass the inherent legal risks arising out of the work (i.e. compensation for property damage or personal injury) on to their drivers. However, the classification by delivery companies of their drivers as independent contractors rather than employees is illegal in most situations.
In 2004, the Massachusetts legislature enacted the law now found in Chapter 149, § 148B of the General Laws. This law makes it very difficult for any company to classify its workers as contractors. Under that law, an employer bears the burden of proving that all three of the following are true:
(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.
For a typical carrier company, like a furniture delivery company, a parcel service company, or a catering company, it is nearly impossible to demonstrate that driver deliveries fall “outside the usual course of the business” of the company. On the contrary, for a carrier company, driving and making deliveries is the business.
Until recently, carrier-employers faced with lawsuits based on Section 148B argued that they were not required to follow the Massachusetts statute because federal law preempted the state law on the subject. In the 2013 decision of Schwann v. FedEx Ground Package System, Inc. the District of Massachusetts determined that carriers operating in Massachusetts are subject to the state law and the accompanying stiff penalties of the Massachusetts Wage Act. In the case, the plaintiffs were former pick-up and delivery drivers for FedEx whom the company labeled as independent contractors. The court first determined that the Federal Aviation Administration Authorization Act of 1994 (“FAAA”) did not preempt the Massachusetts independent contractor statute, finding that the state law did not have “a sufficient relationship to its prices, routes, or services to trigger preemption.” FedEx’s argument that the state law had a “significant impact” on these business factors failed. As the court noted, “Almost by definition, state employment laws (which almost always place constraints on an employer’s freedom of contract) will impact the operating costs of a business subject to its regulation.”
The court continued to find that because the fundamental nature of FedEx’s business is shipping, the company could not successfully argue that its drivers’ work was “outside the usual course” of their business. Because it failed to meet the second prong of Section 148B, FedEx was subject to the stiff penalties of the Wage Act, including treble (triple) damages.
So what does all this mean for delivery drivers, taxi or livery drivers, and other carriers who are paid as independent contractors? Drivers and delivery personnel working for carrier companies who do the core work of the business must be classified as employees under Massachusetts state law. Companies that try to cut corners by misclassifying these employees as independent contractors are breaking the law, and are liable for all damages, including treble damages, for any wages or benefits that the driver would have been entitled to as an employee. This may include holiday pay, vacation pay, and overtime pay, depending on the individual circumstances. It may also include job expenses paid by workers.
Independent contractor misclassification is a rampant problem in Massachusetts and may entitle you to significant damages if you have a good case. Contact us by phone at 617-338-9400 or by email to firstname.lastname@example.org if you want a free case evaluation on this topic.