Mass-Peculiarities: An Employers Guide to Wage & Hour Law in the Bay State 2022 Edition

154 | Massachusetts Wage & Hour Peculiarities, 2022 ed. © 2022 Seyfarth Shaw LLP B. Real Estate Brokers Are Exempt from the ABC Test In a 2015 decision, the SJC held that the Independent Contractor Statute does not apply to real estate brokerage companies and the salespersons with whom they affiliate. 911 The plaintiffs in that case, licensed real estate agents, alleged that the defendants, licensed real estate brokers, misclassified them under the Independent Contractor Statute, thus depriving them of wages under Massachusetts law. 912 The SJC observed that the real estate statute, M.G.L. ch. 112, § 87PP, et seq ., expressly allows real estate salespersons to be affiliated with brokers as independent contractors. 913 On the other hand, the Independent Contractor Statute “makes it impossible for a real estate salesperson to satisfy the three factors required to achieve independent contractor status” given the specific requirements under the real estate statute. 914 The Court observed, for example, that the real estate statute prohibits a salesperson from operating his or her own real estate business or acting as anything other than a representative of a single broker, making it impossible to satisfy the second and third prongs. 915 Regarding the first prong, the Court observed that the real estate statute requires brokers to supervise salespersons, to a certain extent, in order to ensure compliance with an array of statutory and regulatory provisions. 916 The SJC held that the real estate statute controls to the exclusion of the Independent Contractor Statute. 917 In reaching that decision, the SJC relied on the cannon of statutory construction providing that a specific statute controls over the provisions of a general statute. 918 Here, the real estate statute provides a specific and comprehensive regime governing the real estate industry in Massachusetts, while the Independent Contractor Statute applies generally across all industries. Of note, however, the SJC did not rule that all real estate salespersons in Massachusetts are or can be classified properly as independent contractors. 919 The ruling provides no standard or guidance on what a real estate broker and salesperson need to do, or refrain from doing, to establish an independent contractor relationship given the real estate statute’s requirements. C. Liability for Misclassification as an Independent Contractor An employee misclassified as an independent contractor has a private right of action against his or her “employer.” To recover damages, the misclassified employee must demonstrate that in the 911 Monell v. Boston Pads, LLC , 471 Mass. 566, 577-78 (2015). 912 Id . at 568 n.10. 913 Id . at 576. 914 Id . at 575. 915 Id . 916 Monell , 471 Mass. at 577. 917 Id . 918 Id . See also Patel v. 7-Eleven, Inc. , 485 F. Supp. 3d 299, 308-310 (D. Mass. 2020) (holding that the Federal Trade Commission (“FTC”) Franchise Rule authorizing franchisors to exert “a significant degree of cont rol” over franchisees was in direct conflict with the Independent Cont ractor Statute and, therefore, the Independent Cont ractor Statute did not apply, reasoning that the “ franchise-specific regulatory regime of the FTC governs over the general independent cont ractor test in Massachuset t s”). 919 Id . at 578.