Massachusetts Appeals Court discusses ABC Standard

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In a recent case, Weiss v. Loomis, the Massachusetts Appeals Court reversed a directed verdict in a case alleging a worker was misclassified as an independent contractor. While the court did not reach a conclusion on whether the worker was an employee or independent contractor, the court did discuss the factors that a jury would consider. The worker provided technology services for a financial services business. The court discussed the elements of the ABC test and provided insights into how the court views the application of the ABC test.

The ABC test requires the hiring entity to show “(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 (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.”

The court reviewed these factors in connection with the facts of this case. The court wrote:

i . Freedom from control and direction. Based on the evidence presented, the jury could have reasonably found that Weiss was subject to Loomis control and direction, both under his contract for the performance of the services, and in fact. The issue turns on whether Loomis had the right to supervise, direct, and control the details of Weiss’s performance, or whether Weiss was free from supervision “not only as to the result to be accomplished but also as to the means and methods that are to be utilized in the performance of the work” (citation omitted). Athol Daily News v. Board of Review of the Div. of Employment & Training, 439 Mass. 171, 177 (2003).

Here, JoSol’s contract with Eliassen restricted Weiss’s ability to perform services for others that might have interfered with his work at Loomis.Before agreeing to the engagement, Loomis supervisors interviewed Weiss. McGuire gave Weiss assignments and directions, and actively supervised the performance of Weiss’s services from McGuire’s office directly across from Weiss’s cubicle. Weiss brought McGuire his “issues” and attended meetings where progress was discussed. E-mails established that Weiss and McGuire frequently communicated and discussed the technical details of projects As part of his daily job, Weiss performed required tasks for other Loomis managers. Loomis also provided Weiss with a workstation and the supplies and equipment he needed to perform the services. In order to get paid, Weiss was required to submit his hours weekly to his supervisor at Loomis for approval. Loomis paid Weiss by the hour, not by the project, and had the authority to grant raises. Loomis monitored and limited Weiss’s hours, and terminated Weiss at will without reason. This evidence was sufficient to support a finding of control under the Athol Daily News standard, precluding a directed verdict in Loomis’s favor.12 See Athol Daily News, 439 Mass. at 177.

12 The language of JoSol’s contractor agreements with Eliassen, while relevant, is not dispositive on the right of control issue.    See Boston Bicycle Couriers, Inc. v. Deputy Director of the Div. of Employment & Training, 56 Mass. App. Ct. 473, 483-484 (2002).

ii. Usual course of business. In assessing whether services are performed outside the usual course of business of the company, one relevant factor is whether the services are necessary or merely incidental to the business. See Carey v. Gatehouse Media Mass. I, Inc., 92 Mass. App. Ct. 801, 807 (2018). “[A] service need not be the sole, principal, or core product that a business offers its customers . . . in order to be furnished in the usual course of that business.” Id. at 808. “[T]he manner in which a business defines itself” is another relevant factor in the usual course of business inquiry. Id. at 805. The Supreme Judicial Court has illustrated the concept of services provided within the employer’s usual course of business with three examples: an art instructor providing services on a “regular or continuous basis” within an art museum; musicians performing as a “usual and customary activity” of a beer bar; and an organist playing music as a “usual part of” a funeral home’s business (citations omitted).  Athol Daily News, 439 Mass. at 179. We conclude that the jury applying these principles could have found that Weiss performed services within the usual course of Loomis’s business.

Loomis is in the business of managing and investing money for its clients. The jury could have found that Loomis maintained a large technology group as part of its normal operations; and that Loomis staffed it on a regular and continuous basis with a significant number of independent contractors. Indeed, according to one Eliassen recruiter, the contractors never finished at Loomis. The contractors provided the technology services needed by Loomis’s investment professionals, working full time for years on assignments from their Loomis managers. There was intermingling within the technology group to the point that neither Loomis employees nor contractors knew whether they were interfacing with fellow employees or independent contractors.

Moreover, Loomis publicly advertised the vital role played by the technology group in the success of its business. 13

13 On its website, Loomis listed technology as a specific group within the organization. Under the “Careers” section, Loomis described the role served by the group as follows: “Technological leadership and an ongoing commitment to operating efficiency can significantly impact a firm’s financial success. With that mission in mind, the technology group partners with every person, team and department at Loomis Sayles to ensure our most efficient processes and best tools are in place for the task at hand. The ideal candidate for positions in technology will have the knowledge and experience needed to develop and/or support technology solutions throughout the company.”

Gidman, Loomis’s CIO, acknowledged that the highly regulated investment industry and the sophistication of its clients “place[ed] demands” on Loomis for a deep infrastructure; information and technology is a required component of that infrastructure; and that the work of the technology group is “important to the operation of Loomis.” Finally, Gidman specifically included the services performed by Weiss and the contractors among the accomplishments of the technology group in the annual reports to the board of directors. This evidence would have amply supported a finding that Weiss performed services within the usual course of Loomis’s business.

iii. Independently established business. “The critical inquiry under this prong is whether ‘the worker is capable of performing the service to anyone wishing to avail themselves of the services or, conversely, whether the nature of the business  compels the worker to depend on a single employer for the continuation of the services.'” Sebago v. Boston Cab Dispatch, Inc., 471 Mass. 321, 336 (2015), quoting Athol Daily News, 439 Mass. at 181. Stated differently, the question is whether at the time the services were provided, the individual was “wearing the hat” of the putative employer or the “hat of his own independent enterprise.” Boston Bicycle Couriers, Inc. v. Deputy Director of the Div. of Employment & Training, 56 Mass. App. Ct. 473, 480 (2002). “Essentially, [this prong] requires the [putative employer] to demonstrate that the worker is performing services as an entrepreneur” (citation omitted). Subcontracting Concepts, Inc. v. Commissioner of the Div. of Unemployment Assistance, 86 Mass. App. Ct. 644, 649 (2014). The determination whether this statutory prong is satisfied “must be based upon a comprehensive analysis of the totality of relevant facts and circumstances of the working relationship. No one factor is outcome-determinative.” Boston Bicycle Couriers, Inc., supra at 484. We need not repeat the evidence that would establish that Loomis did not, as a matter of law, necessarily meet its evidentiary burden with respect to this prong. Suffice it to say that a jury could have found that in reality, Weiss was not free to provide services to anyone of his choice; and that the hat he wore for three years through fifteen different projects had a Loomis label on it. Of particular significance was the restriction inserted by Loomis in the contract that Weiss was only free to work for others “so long as such actions [did] not impair [his] ability to perform his . . . services to Loomis Sayles.”

See Weiss v. Loomis and for more on the question of whether a worker is an employee or independent contractor, see Employee or Independent Contractor?

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