Massachusetts Appeals Court Issues Helpful Guidance on Joint Employer Status
In our experience, employers tend to have a myriad of entities involved in the employer-employee relationship. For whatever reason (likely guidance from some tax or other expert) this is the way they decide to structure their business. Seems unnecessarily complicated, but admittedly outside the scope of our expertise. It’s relevant to what we do for one simple reason: who do we sue when we think the law has been broken?
On June 13, 2024, the Massachusetts Appeals Court, in Tran v. Jennings Road Management, issued helpful guidance on this issue. In that case, an employee sued the car dealership she worked for (Herb Chambers) and a company that had a management relationship with the dealership (JRM). JRM claimed they couldn’t be liable for the alleged violations as they were not the employer. The employee argued that JRM was liable for the violations under the joint-employer theory.
Following guidance provided by the Massachusetts Supreme Judicial Court in Jinks v. Credico, the Tran court examined the totality of circumstances of the actual working relationship, including whether the alleged employer: (1) had the power to hire and fire the employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records.
Ultimately, the Tran court held that the entity in question was an employer, due to the following:
It authored the employee handbook, a document that covered a wide variety of employment topics.
It administered human resources, through its own employees, including workplace trainings for dealership employees, notifying employees about changes in company policy or procedure or wage law, employee discipline, and documenting employee leave requests.
It played a role in setting rates of pay and pay plans.
It was fully responsible for the benefits offered to employees, including insurance, and 401(k) plans.
It has access to and control over employment and payroll records.
From a structural standpoint, employer-employee relationships can be complicated. The Tran court has provided helpful guidance to unpack these relationships so employees can be sure they are suing the correct entity to vindicate their rights.