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We frequently get inquiries from employees who are unsure of their rights regarding cannabis. Their confusion is understandable, since marijuana is very much in a legal gray area. Although possession of any amount of marijuana is a federal crime, Congress and Justice Department priorities have sharply limited enforcement of federal law against most people who have marijuana only for personal use. Under Massachusetts state law, different statutes authorize medical and recreational sale and use of cannabis. State-licensed dispensaries sell cannabis in cities and towns across Massachusetts for medical purposes and increasingly for non-medical purposes as well. Depending on the situation, employees who use cannabis may or may not have legal protections. This general overview will focus on three areas: drug testing, the use of medical cannabis under state law, and recreational marijuana.
Massachusetts employers may require employees to take drug tests under some circumstances, but the employers must meet specific legal criteria. Under federal and state laws against disability discrimination (the Americans with Disabilities Act and Chapter 151B), an employer may be permitted to require an applicant to undergo a test for illegal drugs after offering the applicant a job, if the test is relevant to the employee’s ability to perform the job and is applied equally to all employees in the same job category. After an employee has been hired, any drug test must be job-related and consistent with business necessity. Because marijuana is illegal for federal purposes but legal under state law, it is unclear whether Massachusetts employers may test for marijuana even if they can test for other drugs; however, if there is a specific federal requirement to test for marijuana, such as for truck drivers, the federal law would govern.
An employer’s drug testing program must also account for employees’ privacy rights. An employer’s business interests (such as the safety of its employees and protection of company property) must be balanced on a case-by-case basis against the employee’s interest in his or her privacy. In Webster v. Motorola, the Supreme Judicial Court held that an employer was permitted to randomly test a salesperson because he had to drive a company vehicle for work, and the employer had an interest in ensuring that the employee was not driving while impaired by drugs or alcohol. However, the same random testing program was not legitimately applied to a technical writer whose work did not implicate the same safety issues. Specific workplace safety concerns, potential danger to the public, and specific regulatory requirements make a testing program more likely to be found valid under the Massachusetts privacy statute.
Massachusetts law gives medical marijuana users some protection in the employment context. For those who have a medical marijuana card and comply with state law concerning the medical use of marijuana, the Supreme Judicial Court gave a clear analysis of the applicable law in Barbuto v. Advantage Sales and Marketing, which we have previously covered. As explained in Barbuto, if an employee uses cannabis off-site under the medical marijuana law, the employer must specifically assess whether that use can be reasonably accommodated, and must make accommodations unless doing so presents an undue hardship. (The law does not require employers to accommodate marijuana use at the workplace.) Such an undue hardship might include an unacceptably significant safety risk, or specific federal laws or regulations (such as the Drug-Free Workplace Act for federal contractors) that might make it illegal for the employer to accommodate off-site use. In the absence of specific hardships, employers are expected to make accommodations as they would for any disability under the law. An employer cannot simply rely on a zero-tolerance drug testing regime, as the employer in Barbuto tried to do, because an exception to the zero-tolerance policy can be (and often will be) a reasonable accommodation. These protections are specific to the medical marijuana law: employees who informally use marijuana for medicinal purposes but do not have a state permit or buy from a medical dispensary may not have the same rights.
There are very few protections for the recreational use of marijuana. While there are laws in some states that protect employees for their off-the-job use of recreational marijuana, Massachusetts does not have such a law; indeed, the recreational marijuana law as it currently stands explicitly does not require employers to accommodate recreational marijuana use. In many ways, recreational marijuana is treated similarly to alcohol in terms of employees’ rights. Both alcoholism and drug addiction are considered disabilities, and employers are not permitted to discriminate against employees on the basis of those conditions. However, casual or recreational drug or alcohol use is not considered a disability and does not have the same protections. Thus, aside from general privacy interests that may come into play, an employer may be permitted to take adverse action against an employee who uses cannabis recreationally, even on his or her own time.
This is a fast-changing and complex area of the law. If you feel your employer has treated you unfairly based on marijuana use, contact us hereor call us at 617-742-6020.
Zalkind Law’s David Russcol participated in a Wage Theft Legal Clinic yesterday through the Volunteer Lawyers Project. There were many people who had not been paid fairly by their employers. VLP and other community organizations are helping them get legal assistance. Thanks to the MA Attorney General’s Office and Suffolk University Law School for organizing and hosting!
The Supreme Judicial Court in the recent case of Ferman v. Sturgis Cleaners, Inc. addressed a limited but important question under state law: when an employee brings a claim for violation of the Wage Act or similar statutes and then settles the claim before trial, can the court award attorney’s fees to the employee? This is a common situation because wage cases, like any other civil cases, typically are resolved one way or another before going all the way to trial. The SJC held that, in contrast to federal law, a plaintiff who obtains a favorable settlement is a prevailing party under state law, and therefore can seek attorney’s fees. There are unique aspects of the Wage Act that make settlements especially common, such as mandatory treble damages, but the provision requiring an award of attorney’s fees to prevailing plaintiffs works the same under other employment-related and civil rights statutes. Thus, this decision is likely to be applicable beyond the specific context of the Wage Act.
In Ferman, the plaintiffs sued their employer for alleged unpaid wage and overtime violations, and after engaging in mediation, agreed to settle the case for $20,500, but allowed the court to decide whether, and how much, the plaintiffs should be awarded for attorney’s fees. In the end, a judge awarded fees in the amount of $16,153 out of the nearly $40,000 the plaintiffs sought. The defendant employer argued that the SJC should reverse the fee award, applying the approach required by the Supreme Court for federal law, as articulated in the Buckhannon case. Under the federal approach, a plaintiff is only a “prevailing party” entitled to a fee award if the court approves a settlement and orders the defendant to change its behavior. This often does not happen when private cases (and particularly employment cases) settle because the parties typically want to keep the terms and conditions of settlement private and avoid having continued court involvement. For instance, in Ferman, all that appeared on the public court docket to document the settlement was a stipulation to dismiss the case. Under the Buckhannon approach, then, a private settlement usually does not make a plaintiff a “prevailing party” under federal law.
However, the SJC rejected this approach and instead adopted the “catalyst” test, by which “if the plaintiff’s lawsuit is a necessary and important factor in causing the defendant to grant a material portion of the requested relief, a settlement agreement, even without any judicial involvement, may qualify the plaintiff as a prevailing party for fee-shifting purposes.” Under the catalyst test, a settlement that gets the plaintiff a material amount of relief, as opposed to a frivolous or unmeritorious claim that the defendant settles to avoid the nuisance of litigation, will entitle the plaintiff to a reasonable award of attorney’s fees. The SJC cited the purpose of the wage laws, and similar fee-shifting statutes like the Massachusetts Civil Rights Act and the Consumer Protection act, Chapter 93A, to enlist private attorneys to help enforce public values even when the dollar amounts involved can sometimes be small, in rejecting Buckhannon and accepting the catalyst test as the only viable alternative.
Rather than assuming that they can avoid an award of attorney’s fees by settling anytime before trial, employers now must factor in attorney’s fees at all stages of litigation in these types of cases. And based on the broad language in the decision and the references to other fee-shifting statutes, this development is likely to apply to a range of state statutes that provide for awards of attorney’s fees. However, in my experience settlement agreements for such claims usually address and incorporate awards of attorney’s fees – it has already been part of the negotiation. Indeed, it can make it easier for both parties to know ahead of time how much will be paid for attorney’s fees rather than leave it up to a judge to award an amount that might be more or less than what either party expects. But for parties that did not or cannot agree on an amount for attorney’s fees, it is useful to know that they can turn to the court for a decision. This case is a small but important development; it changes the background assumptions for employment lawyers and increases the ability and willingness of lawyers to take on the types of claims that the Legislature intended to promote through its wage and hour and antidiscrimination statutes. It is also important for legal advocacy organizations to be able to take on what may be small-dollar claims to vindicate important principles, with the certainty that they will be able to seek a fee award from the court.
Last week the Supreme Judicial Court (SJC) issued its decision in Yee v. Massachusetts State Police, an employment discrimination case raising the question of whether denying a police officer a lateral transfer to different troop could be a discriminatory under our state anti-discrimination law. (As a note of disclosure: I wrote an amicus brief on behalf of the Massachusetts Employment Lawyers’ Association and other groups in support of the plaintiff, Lt. Yee.) The SJC reaffirmed that chapter 151B—Massachusetts’ law addressing discrimination in employment—is to be read broadly to protect employees. The Court held that when an employer makes a decision that causes a material disadvantage to an employee in objective aspects of their job, even if the employee doesn’t lose money as a result of the decision, that decision is illegal employment discrimination if it is based on the employee’s membership in a protected class.
Lt. Yee was a Chinese-American lieutenant for the State Police in Troop H, located in South Boston. In 2008, when he was 54 years old, he requested a transfer to Troop F at Logan Airport. He requested that transfer because, among other reasons, he believed officers who worked at Troop F had more opportunities for overtime pay and paid detail work than officers in Troop H. He repeatedly reaffirmed his interest in transferring to his supervisors over the course of the next four years but was never even interviewed for the position. In that time period, the State Police transferred or promoted seven white men to the position of lieutenant in Troop F. Five of them were younger than Lt. Yee. In September 2012, Lt. Yee wrote a letter to the State Police Superintendent, complaining of discrimination. Two weeks later, another younger white man was promoted to lieutenant and transferred from Troop H to Troop F.
Lt. Yee brought a discrimination claim against the State Police, arguing that the denial of the transfer he requested was discriminatory on the basis of his race, age, or national origin. The key evidence he provided to support his claim was that the officer who was promoted earned $30,000 more each year working in Troop F than he had in Troop H, and after two years when he was transferred back to Troop H he was earning $30,000 less. A Superior Court judge granted the State Police’s motion for summary judgment, finding that Mr. Yee had not met his burden of showing that the State Police took an “adverse action” against him in denying the transfer request. The Superior Court judge held that to show that there was an adverse employment action, Lt. Yee would have to show that he actually lost money by not being transferred either because officers in Troop F automatically made more than lieutenants in Troop H (which is not the case) or by presenting statistical data showing that lieutenants in Troop F routinely made more than those in Troop F. (As the SJC noted in its opinion, the State Police has that kind of compensation data, and didn’t use it as evidence to support an argument that the opportunity for overtime earnings were the same in the two troops.) The SJC reversed the lower court, rejecting its reasoning, and sent the case back for the court to consider the summary judgment motion again.
The SJC’s Key Holdings
The SJC’s decision broadly construed the concept of an “adverse action” to find in favor of Lt. Yee. Its interpretation is consistent with the remedial purpose of c. 151B and commonsense understandings of how workplaces operate, including what factors make jobs more or less desirable to employees.
The Court highlighted bedrock principles of employment discrimination law in Massachusetts. The Court reiterated the statute’s language that it must be “construed liberally” to effectuate its remedial purpose and applied that liberal construction to its assessment of what constitutes an “adverse action” in employment discrimination cases. The Court also noted that c. 151B is at least as protective, and at times read more broadly, than Title VII, the federal employment discrimination law.
For the first time, the SJC defined the phrase “terms, conditions, and privileges of employment” as it is used in G. L. c. 151B. In defining “conditions,” the Court noted that they “may also encompass the general environment, atmosphere, or quality of the work place.” The Court defined a “privilege” of employment as something that is not a right of employment but is “customarily provided by an employer to its employees.”
The Court held that an adverse action is one that would work a material disadvantage to the employee in objective aspects of his or her employment. That much had previously been held by the Massachusetts Appeals Court. The SJC added, however, “The disadvantage must be objectively apparent to a reasonable person in the employee’s position,” and that whether an employee suffered an adverse action has to be examined on a case-by-case basis. While holding that the aspects of employment affected must be “objective” and that the disadvantage must be “objectively apparent” the Court indicated that the employee’s subjective feelings about what would advantage or disadvantage him or her are also critical. The Court gave the example of a transfer from an evening shift to a day shift—for some employees that transfer would be advantageous, for others, based on other aspects of their lives or their personal preferences, it would be disadvantageous. The employee’s own feeling about whether or not the transfer would disadvantage him or her would be relevant to deciding if the action was adverse.
The SJC concluded that where there are material differences between two jobs with respect to the terms, conditions, and privileges of employment, “the failure to grant a lateral transfer to the preferred position may constitute an adverse employment action under c. 151B.”
Going forward, employees who want to make a prima facie case must put forward “evidence of any ‘objective indicator of desirability’ that would ‘permit a reasonable factfinder to conclude that the sought for position is materially more advantageous.’” The Court found that denying an employee a position with the potential to earn more compensation was “undoubtedly” an adverse action and held that Lt. Yee’s “desire” to move to a troop where there was more opportunity to earn additional compensation was one such “objective indicator of desirability.” While the Court did not discuss other factors that could be objective indicators of desirability, in developing this holding it relied on a federal case from New York that highlighted a wide range of “objective indicators,” including: rumors that the employee’s current job site was going to close, the fact that the sought-after-position had better technology for employees to use than the employee’s current position, that high number of employees had applied to the sought-after position, and that the sought-after position would teach the employee new skills.
What Questions Remain Open?
The Court explicitly noted that in deciding Lt. Yee’s case—which involved a transfer denial that deprived Lt. Yee of the potential to earn additional compensation—it was not deciding the question of whether the transfer denial would have been adverse if less traditional conditions of employment had been at play. In Lt. Yee’s case, he had also noted that he wanted to transfer to Troop F because his fluency in Chinese could be of assistance to travelers at Logan, and he wanted to use those language skills. The Court said it was not reaching the question of whether if the only difference between Troops H and F was the ability to use Chinese, Lt. Yee would have made out a prima facie case of discrimination. However, given the Court’s reliance on the Second Circuit case, and its repeated statements about the need to construe c. 151B liberally, it seems clear that there will be many different factors that may make one position objectively more desirable to an employee than another.
The Court also noted that it was not deciding whether there would be any c. 151B violation if an employer established a location where it excluded members of protected classes, but there were no other material differences between the working conditions at the two locations. The Court noted that Title VII, unlike c. 151B, contains an explicit prohibition on employers segregating or classifying employees in any way that would deprive an individual of “employment opportunities.” While it would be shocking if the Court read c. 151B, with its mandate of liberal interpretation, to allow employers to provide explicitly segregated, “separate but equal” job sites, the Court decided not to reach that question in this case.
Finally, the Court ducked a major question that has been coming up in Massachusetts appellate cases for years, which is whether the courts will adopt the standard for retaliation claims that the Supreme Court set out for Title VII cases in Burlington Northern & Santa Fe Railway Co. v. White in 2006. In that case, the Supreme Court held that for retaliation claims, an “adverse action” is one that could “dissuade a reasonable worker from making or supporting a charge of discrimination.” This definition of “adverse action” for the purpose of a retaliation claim (which was not raised by the plaintiff here) is different and could be construed more broadly than the definition of “adverse action” used in discrimination cases (even the definition the SJC announced in Yee). Given the precedent making clear that c. 151B is generally interpreted the same as Title VII, except for those instances where it is broader, it seems inconceivable that this definition of a retaliatory adverse action is not the definition that should be used under c. 151B, and indeed, the Burlington Northern definition of retaliation has been repeatedly adopted by lower courts. Yet since the Supreme Court decided Burlington Northern nearly 13 years ago, the Massachusetts appellate courts have continually avoided clarifying that issue, and again declined to decide it in Yee.
Given the Court’s focus on the fact-intensive nature of determining what constitutes a discriminatory adverse action, and its broad interpretation of the term “adverse action,” while employers may continue to try to litigate this issue, it seems unlikely they will succeed in winning summary judgment motions on cases advancing these claims. Instead, it will be for juries to decide whether one position has material advantages over another, guided by the Court’s clear language requiring the plaintiff’s own circumstances and desires be considered.
If you have been a victim of employment discrimination, contact us here or call us at 617-742-6020.
Zalkind Law’s Naomi Shatz filed an amicus brief on behalf of the Massachusetts Employment Lawyers’ Association (MELA) and other civil rights groups in Yee v. Massachusetts State Police, which was heard by the Supreme Judicial Court on Monday. The SJC is considering whether denial of a purportedly “lateral” job transfer can be considered an adverse action that violates anti-discrimination laws if done for discriminatory reasons. Attorney Shatz argued that the broad remedial purpose of Massachusetts’ anti-discrimination laws require employers to equally provide employment opportunities of all kinds to employees. In addition to MELA the coalition of groups submitting the brief included: Fair Employment Project, Inc., GLBTQ Legal Advocates & Defenders, Greater Boston Legal Services, Jewish Alliance for Law and Social Action, Lawyers’ Committee for Civil Rights and Economic Justice, and the Union of Minority Neighborhoods.
On August 10, 2018, Governor Baker signed a new law that, among many other things, restricts and reforms noncompetition agreements, which are commonly used by employers in some sectors of the economy. Noncompetition agreements, or noncompetes, restrict what an individual can do during or after their employment – typically, to prevent them from working for competitors or entering market areas where the employer is already present. Although reasonable noncompetes sometimes serve to protect legitimate business interests of an employer, they can also be used to punish employees who decide to leave, or even lock them into their current employers by severely limiting permissible opportunities to work elsewhere. In one egregious case, the sandwich shop Jimmy John’s attempted to use noncompetition agreements to stop fast food workers from leaving for competitors, although they stopped this practice after investigations by multiple state attorneys general.
Existing law in Massachusetts has been made largely by the courts, adopting guidelines and principles over time so that noncompetes would be typically enforced as long as they were “reasonable” and limited in duration and geographical scope. While this did place some limits on the ability of employers to limit competition, there were few bright lines, so that employers and employees would have to guess at what a judge would consider reasonable. Although judges, particularly in the Business Litigation Session of the Superior Court, did their best to develop a coherent body of law concerning noncompetes, decisions were often very fact-specific. Employees who decided not to follow noncompetes because they found them unreasonable would do so at their peril if they were wrong, with few protections. Repeated attempts to reform this situation in the Legislature, dating back at least until 2009, failed until now.
The new law does much to even the playing field between employers and employees, although it retains some aspects of the existing law. It takes aim at the practice of some employers to have new employees sign a noncompete as part of a packet of fine print on the first day of work, when they may not recognize the legal significance of the document. Under the new law, in order to be valid, a noncompete must be provided to the employee at least 10 days before starting work (or, if it is signed after employment starts, at least 10 days before it becomes effective), and the employee must be informed of the right to consult with independent legal counsel before signing. Both the employer and the employee must sign it, and if it is signed after employment starts, the employer must give the employee “fair and reasonable consideration,” i.e., something of value, beyond just continuing employment. The period of restricted competition cannot be longer than a year unless the employee took the employer’s property or breached a fiduciary duty, and even in that case the restricted period cannot be longer than 2 years. The new law also codifies and narrows some of the existing limits on noncompetes, specifying that an agreement must be limited in geographical scope and in the activities it restricts, and “no broader than necessary” to protect certain defined business interests of the employer. Employers may not avoid these limits by writing in the contract that another state’s law applies; the statute applies to any employee who resided or worked in Massachusetts for the last 30 days of employment.
One of the most far-reaching provisions of the bill, with an important caveat, is the “garden leave” provision, which requires that, during the period of up to a year that a noncompete is in effect, the employer must pay the employee at least half of his or her highest base salary over the two years preceding his or her termination. That would make such an agreement much fairer to the employee, and be a significant deterrent to overuse of noncompetition agreements by employers. The main loophole, however, is that instead of a “garden leave” arrangement, the employer only needs to pay the employee “mutually agreed-upon consideration” that is spelled out in the agreement. It remains to be seen whether employers will be able to circumvent this provision by agreeing in noncompetes to pay employees only a nominal amount.
Although some states, such as California, ban noncompetes entirely, the Massachusetts Legislature exempted only certain employees from noncompetes. Noncompetition agreements are not enforceable against college or graduate student interns, those under 18 years old, employees who are entitled to overtime pay under federal law, and employees who are laid off or terminated without cause. Because the statute does not define “terminated without cause,” it seems likely that the law will generate litigation over the reasons for ending an employee’s service.
It is important to recognize some additional limitations of the reform provisions. The new law does not apply to contracts entered into before its effective date of October 1, 2018, so existing noncompetes are analyzed under the prior legal framework. It does not apply to noncompetition agreements outside the employment context (although it does include independent contractors). And it explicitly does not address related types of post-employment restrictions, such as no-hire or nonsoliciation agreements, nondisclosure or confidentiality agreements, and agreements not to seek reemployment in the future. Moreover, noncompetition agreements that are signed at the end of employment are not subject to these restrictions, as long as the employee is given at least 7 days to rescind his or her signature; thus, employees should be careful to examine what they are being asked to sign when they leave employment and be aware of any applicable deadlines so they can seek counsel if necessary.
This is a partial summary of some of the provisions of the noncompetition agreement reform law. If you have questions regarding a noncompetition agreement, you should seek advice from a knowledgeable employment lawyer. The attorneys at Zalkind Duncan & Bernstein LLP may be reached at (617) 742-6020.
With passage of this law, Massachusetts is now the sixth state (plus Washington D.C.) to offer paid family and medical leave to employees. It will also outdo the U.S., which is currently the only country in the 41 Organization for Economic Cooperation and Development (OECD) and European Union nations that does not offer any paid family or medical leave.
In this post, I will focus on the family and medical leave portion of the new law, which will take effect in 2021, and the legal protections it will provide for Massachusetts employees.
Employees will be entitled to take family leave for up to 12 weeks:
To bond with their child during the first 12 months after the child’s birth or during the first 12 months after the child’s placement for adoption or foster care with the individual.
For a qualifying exigency arising out of the fact that a family member is an active duty serviceperson or has been notified of an impending call to order.
To care for a family member with a serious health condition.
Employees will be able to take family leave for up to 26 weeks to care for a family member who is a service member.
Employees will be able to take medical leave for up to 20 weeks to care for themselves if they have a serious health condition.
Further, if supported by documentation from a doctor, an individual will be able to take medical leave during pregnancy or recovery from childbirth that is immediately followed by family leave.
In any case, an employee may not take more than 26 weeks of family and medical leave in the same year.
One of the biggest changes in family/medical leave that this law provides for is paid leave, which now makes taking these leaves a reality for many working families. Specifically, the pay will be calculated as follows:
The portion of the individual’s average weekly wage equal to or less than 50% of the state average weekly wage will be paid at 80%;
The portion of the individual’s average weekly wage that is more than 50% of the state average weekly wage will be paid at 50%;
The maximum weekly benefit will be $850 a week, which will be adjusted every October by the Commissioner of Unemployment Assistance to 64% of the state average weekly wage.
To pay for these benefits, the law creates the Family and Employment Security Trust Fund, which will be funded with contributions from employers and employees, both combined equaling 0.63% of the employee’s wages. For family leave, employers may recover up to 100% of the total contribution from the employee. For medical leave the employer shall not recover more than 40% of the total contribution from the employee.
A new Department of Family and Medical Leave within the Executive Office of Labor and Workforce Development will be responsible for paying these benefits to covered individuals.
The Legislature has added some significant protections for employees who take leave under this law.
First, an employer must restore an employee who has taken leave to the employee’s previous or equivalent position, unless others with equal length of service and status have been laid off due to “economic conditions.” In the latter case, the employee who was on leave will retain any preferential consideration that the employee was entitled to before going on leave.
An employee’s leave will not affect their vacation, sick time, seniority, advancement, length of service, or other employer benefits. And during the employee’s leave, the employer must continue making contributions to health insurance benefits. An employer cannot compel an employee to “exhaust rights to any sick, vacation or personal time prior to or while taking leave under this chapter.”
It will be illegal for an employer to retaliate against an employee who has exercised their right under this law or who has complained of discrimination or retaliation pursuant to this law. The legislature has given the anti-retaliation provisions real teeth: if there is any negative change in the employee’s status during a leave or during the 6 months after a leave, there is a presumption of retaliation that can only be overcome with clear and convincing evidence that the employer had an independent justification for taking this action. This presumption will also apply for negative actions taken against employees who complain of discrimination/retaliation under this law, within 6 months of such complaint.
An aggrieved employee can file in the superior court and may win reinstatement, three times their lost wages and benefits, and costs and attorneys’ fees, among other forms of relief.
The Law’s Impact on Massachusetts Workers
These protections are significant additions to current Massachusetts law, which provides for just 8 weeks of unpaid leave for the birth or adoption of a child, and federal law, which provides for 12 weeks of unpaid leave for qualifying employees of companies of 50 or more employees.
The Massachusetts Legislature has passed a law that will be incredibly important for families. It offers parents of all economic backgrounds, including both mothers and fathers, the ability to take time off to care for their own medical needs, for family members, or to bond with new babies, without having to sacrifice career security and without a crippling economic loss.
If you are an employee experiencing retaliation or a denial of your right to family or medical leave, contact us here, or call the attorneys at Zalkind Duncan & Bernstein LLP at (617) 742-6020.
It’s not as easy as it used to be to answer the question of who’s the boss. Many employees survive on a patchwork of part-time jobs; the gig economy is growing fast enough to double in the next few years. Indeed, a recent study released by Upwork and the Freelancers Union predicts that most workers will be freelancers by the years 2020. As facts in the workplace evolve, so must the law.
That’s exactly what happened last fall in Gallagher v. Chambers, a case decided by the Massachusetts Appeals Court. There, the Court clarified the test for identifying an employer under the Massachusetts Wage Act. Previously, courts had applied a common-law set of factors that led to inconsistent results in lower courts, which in some cases dismissed corporate defendants even though those entities benefitted from a plaintiff’s work. In Gallagher, a home health aide sued to recover for unpaid overtime wages. She named as defendants both her former customer – who had overseen her work on a daily basis – and the agency that had helped her find the placement and processed her paychecks. That raised the question of whether both were really her “employers” for purposes of the Wage Act. The Appeals Court took the opportunity to refine the rule for answering that question.
As the Court explained, the statute, not a set of common-law factors, defined who is an employer under the Wage Act; in the Court’s words, “G. L. c. 149, § 148B . . . defines the over-all employer-employee relationship for all cases arising under G. L. c. 149 and G. L. c. 151.” That provision is sometimes referred to as the “independent contractor” test, but the Court explained that it applies to a much broader set of cases. So, anytime the question of who exactly employs a person comes up in a Wage Act case, according to Gallagher, the answer lies in the “two-step inquiry” laid out in section 148B: First, a plaintiff must establish that she “provided services” to a defendant; second, the defendant may then rebut that showing with evidence that the plaintiff was (a) controlled by another entity, (b) working outside the defendant’s usual course of business, and (c) truly “independent,” meaning she could perform services for anyone she chose. The Court made clear that multiple entities could be on the hook for a wage violation as long as each qualified as an employer under the test.
That’s good news for workers in increasingly informal employment situations. Gallagher suggests that big companies cannot hide behind their subsidiaries when it comes to wage and hour law, nor can they distance themselves from their legal obligations through an attenuated chain of contracts between them and the people who generate their profits on the ground. A month after Gallagher was decided, a judge in the Superior Court applied the case to a different set of facts. In Malenbreche v. Colonial Automotive Group, Justice Janet Sanders of the Massachusetts Superior Court held that, under Gallagher, a parent company could be liable under the Wage Act, even though employees’ only direct relationship was with a franchisee of that company. There, a group of salesmen at a “family of car dealerships” sued their dealerships as well as the parent company that managed and controlled each of the dealerships named. The Superior Court held that plaintiffs provided services to all the defendants by selling cars under the dealership and parent company’s name. In December, in Cerulo v. Chambers, another Superior Court Justice Thomas P. Billings of the Middlesex Superior Court, came to a different conclusion while analyzing similar facts. There, a group of salesmen sued dealerships and a parent company for unpaid wages. The Superior Court held that the connection between salesmen and the parent company was too remote to make the dealership an “employer.” That case did not apply Gallagher correctly and is currently on appeal. But even if the full reach of Gallagher will depend on how lower courts apply it to different factual circumstances over time, one thing is clear: Any time an employee has not gotten paid in full, she can sue anyone that qualifies as an employer under G. L. c. 149, § 148B – and, if she meets her burden, that can include multiple entities to whom she provided services.
If you are seeking legal advice, we encourage you to contact us here, or call us at (617) 742-6020 to speak with an attorney.
On January 29, the Supreme Judicial Court in Mui v. Massachusetts Port Authority held that accrued but unused sick pay is not subject to the state Wage Act, even if the employer has agreed to pay out some or all of the sick pay when an employee separates from employment. While the result may make sense on the facts of this case, and is generally consistent with the way the Wage Act is currently drafted, the Court’s decision sweeps more broadly than it needs to. It removes a powerful incentive for employers to promptly pay compensation that is due to some employees at the end of their employment.
In Mui, MassPort (the agency responsible for Logan Airport, among other things) began the process of discharging the plaintiff, a longtime employee, after he made an apparent suicide attempt that caused property damage. Before that process completed, Mui retired from MassPort, and an arbitrator later decided that MassPort could not fire him because he had already retired. MassPort had a policy of paying a portion of accrued but unused sick time to employees upon their departure, unless they were discharged for cause. MassPort at least initially refused to give Mui his sick pay (which amounted to about $47,000) because it claimed he had been discharged for cause.
Mui brought his suit against MassPort under the Wage Act. The Massachusetts Wage Act requires employers to pay wages timely – generally every week or two – and also governs when other forms of compensation like commissions and vacation pay are due. If an employee is let go by the employer, then all outstanding wages, including accrued vacation time, must be paid on the last day of employment. If an employee leaves voluntarily, the employee must be paid in full on the next regular pay day. An employee who does not receive his or her compensation can sue for triple damages, including lost wages and other benefits, as well as attorney’s fees and costs. Those strong remedies give employers a large incentive to pay workers on time. One question presented by Mui’s case is whether sick pay can be subject to the Wage Act.
The SJC held that it is not. While vacation pay is specifically included within the Wage Act, sick pay is not mentioned. An earned sick time law was enacted by the voters a few years ago, so employers with 11 or more employees are required to provide at least some paid sick leave, but that law specifies that “[e]mployers shall not be required to pay out unused earned sick time upon the separation of the employee from the employer.” The Court noted that sick time is frequently subject to a use-it-or-lose-it policy, and that unlike vacation time, sick time can only be used for specific reasons and thus has only contingent value. Therefore, sick time is never considered “wages” that the Wage Act requires to be paid, even if there is a policy requiring payment.
In my view, the Court went too far. If an employer has agreed to compensate an employee for unused sick time, perhaps as an incentive for increased attendance, then that agreement should be enforceable just as much as the agreement to pay wages, salaries, and commissions. Treating it as only a contract claim would require an employee to hire counsel at his or her own expense and go through a costly lawsuit in order to vindicate his or her rights. That effort will rarely be worth the time and expense without the protection of a statute like the Wage Act. The Wage Act was designed to get around this problem by giving an employer a reason to think twice before saying, “sue me,” to a departing employee demanding the promised compensation.
The SJC was concerned that MassPort would have been in an untenable position in this case because it was disputing whether it owed Mui any sick pay at all – a question decided later on by the arbitrator. Therefore, MassPort had no way to comply with the Wage Act, which is a strict liability law with no exception for good faith mistakes. The Court should have addressed this concern by limiting the holding to the case’s facts and leaving open the possibility that at least a clear, undisputed agreement to pay out sick time could be subject to the Wage Act. In some situations, sick pay can be a substantial portion of an employee’s total compensation over time, and employers should not be able to renege on their agreements to compensate their employees without penalty. The law prevents employers from circumventing the Wage Act through “special contracts,” but now employers are free to play contractual games with sick pay. The Legislature should strongly consider amending the Wage Act to include sick pay in order to protect the Commonwealth’s workers.
If you have been terminated from your job in violation of your rights, have had your wages unlawfully withheld, or need advice or counseling on a severance agreement or other workplace matter, call an employment attorney at our Boston firm at (617) 742-6020 or fill out our contact form to get in touch with us.
In this series, I look at some of the protections afforded by Title IX that have received less attention in the media and political arena than Title IX’s applications to equity in athletics and campus sexual assault.
The common conception of Title IX is that it is a law aimed at protecting students. That conception is too limited. Title IX’s reach is broader than the student body—it is directed at the educational program that receives federal funds, and broadly prohibits discrimination in such programs. The language of the statute states: “No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance.” Federal Regulations promulgated by the Department of Education make clear that Title IX prohibits employment discrimination in educational programs. 34 C.F.R. § 106.51 et seq.
In North Haven Board of Education v. Bell (1982), the Supreme Court noted that under the plain language of the statute “a female employee who works in a federally funded education program is ‘subjected to discrimination under’ that program if she is paid a lower salary for like work, given less opportunity for promotion, or forced to work under more adverse conditions than are her male colleagues.” The Court went on to note that the legislative history of Title IX indicated it was meant to address discrimination in employment as well as discrimination in the receipt of educational benefits. In North Haven, two public school boards challenged federal regulations issued by the then-Department of Health, Education, and Welfare related to employment discrimination under Title IX; the Court upheld the regulations. The case did not involve a claim by an actual employee alleging she had been subjected to prohibited discrimination.
While not disputing that Title IX prohibits employment discrimination on the basis of sex in education programs, federal appeals courts have split over how Title IX and Title VII—the federal law prohibiting discrimination in employment—interact when it comes to employment in educational programs. The question courts have been called on to address is: Does Title VII, which has a detailed remedial scheme, displace Title IX claims if a particular employee is covered by both laws?
On one side of the split sit the First, Third, Fourth, Sixth, and Tenth Circuits, holding that Title VII does not displace Title IX, and an employee of an educational program can bring discrimination claims under both laws The Department of Justice, in its 2015 Title IX Legal Manual agrees with these circuits: “The Department takes the position that Title IX and Title VII are separate enforcement mechanisms. Individuals can use both statutes to attack the same violations.”
In Doe v. Mercy Catholic Medical Center, the Third Circuit set out four factors that lead it to conclude that employees can bring Title IX claims based on employment discrimination. First, the Court noted that Supreme Court precedent indicates that private sector employees “are not limited” to Title VII to address discrimination claims. Second, it was a policy decision committed to Congress’ discretion whether allowing a remedy that could circumvent Title VII was desirable, and its use of the broad word “person” to describe to whom Title IX applies indicates Congress rejected that policy concern in drafting Title IX. Third, the provision of Title IX wherein the Supreme Court found an implied private right of action is not limited to “students” or “beneficiaries.” Finally, and perhaps most persuasively in my view, the Supreme Court has already held that employees of federally-funded education programs have a private right of action to bring retaliation claims under Title IX.
In that Supreme Court case, Jackson v. Birmingham Bd. of Education (2005), a high school basketball coach complained that his girls’ team was not receiving equal funding and access to facilities as the boys’ teams at the school. He was then removed as the coach. The question presented to the court was whether Title IX provides a right of action for retaliation at all. The Court held that it does: “We conclude that when a funding recipient retaliates against a person because he complains of sex discrimination, this constitutes intentional ‘discrimination’ ‘on the basis of sex,’ in violation of Title IX.” The Court made clear that retaliation is a form of discrimination, and found that the coach could bring his retaliation claim under Title IX. The Court did not specifically address the issue of whether employees and students have different rights with respect to bringing claims under Title IX, but in subsequent decisions reiterated its broad reading of the applicability of Title IX. See Gomez-Perez v. Potter, 553 U.S. 474, 483 (2008) (“[A] private party may assert a retaliation claim under Title IX . . . .”).
On the other side of the split are the Fifth and Seventh Circuits, holding that Title VII does displace Title IX. As a district court in Florida recently explained, under this view of the statutes Title VII and Title IX provide two different remedies for the same right to be free from sex-based discrimination in the workplace. Under Title VII individuals can sue to enforce their rights, while Title IX provides federal agencies with the authority to intervene to address sex-based employment discrimination in educational programs. See Drisin v. Florida International University Board of Trustees, No. 1:16-cv-24939, 2017 WL 3505299 (S.D. Fla. June 27, 2017). Courts adhering to this view argue that by setting up detailed administrative procedures under Title VII (where employees must first file their complaints with the EEOC before being allowed to take them to court), Congress intended Title VII to be the exclusive remedy for employment discrimination.
Although most circuits to have addressed the issue have held that Title VII does not displace Title IX for employment discrimination claims, district courts remain widely split on this issue. Even though, as the court in Doe v. Mercy Catholic Medical Center noted, both the leading Fifth and Seventh Circuit cases were decided a decade before the Supreme Court’s Jackson decision, district courts have continued to rely on them, both within and outside their circuits, to support determinations that Title VII displaces Title IX in the employment context. See, e.g., Drisin v. Florida International University Board of Trustees, supra; Towers v. State Univ. of New York at Stony Brook, No. CV-04-5243 GB TML, 2007 WL 1470152, at *4 (E.D.N.Y. May 21, 2007).
Although Title IX and Title VII are often subjected to the same legal interpretations, being able to bring claims under Title IX may have important benefits for employees. For example, under Title VII there is an administrative exhaustion requirement, whereby claims must first be brought to the EEOC within 180 days from the alleged discrimination. There is no administrative requirement under Title IX; plaintiffs can bring their claims directly to court, and are provided a much longer statute of limitations (in many states along the lines of three years) to make those claims.
It appears to remain an open question as to how individual district courts, the circuit courts that have not yet weighed in on this legal issue, and most importantly the Supreme Court will countenance employment discrimination claims brought under Title IX. The decisions of these courts could have a significant impact on the available remedies for employees of educational institutions who experience sex-based discrimination.
If you are facing disciplinary action from your college or university it is important to get legal advice as early in the process as possible. You can call us at (617) 742-6020 or fill out our contact form to get in touch with us.