Massachusetts Supreme Court: Real Estate Brokers Not Covered by 2004 Independent Contractor Law Based On Continued Applicability of Real Estate Statute
Litigation regarding the status of workers as independent contractors or employees continues to be a hotbed of litigation. This is true even in industries that have long-considered workers as independent contractors, such as real estate agents. Attorneys representing workers, for example, have turned to state statutes addressing independent contractor status to attempt to upset these long-held classifications. The Massachusetts Supreme Judicial Court, however, ruled that the state’s 2004 independent contractor statute cannot be applied to real estate brokers, relying on a longstanding provision of the state’s real estate law authorizing real estate salespersons to operate as contractors. Monell v. Boston Pads, LLC, 2015 Mass. LEXIS 318 (Mass. June 3, 2015).
In Monell, licensed real estate salespeople who worked for, and under, the real estate broker’s license of one of the larger real estate offices in Boston, sued in state court alleging they were misclassified under MA’s strict independent contractor statute, which provides for treble damages. The trial judge, on summary judgment, found for the brokerage, observing that the two statutes (the Real Estate law and the Independent Contractor law) were irreconcilable because, among other issues, the new contractor statute required freedom from control, but the real estate statute expressly permitted an independent contractor arrangement with some degree of supervision and control. Monell v. Boston Pads, LLC, 31 Mass. L. Rep. 382 (Mass. Super. Ct. 2013). Affirming on direct appellate review, the Supreme Court explained “the real estate licensing statute makes it impossible for a real estate salesperson to satisfy the three factors required to achieve independent contractor status, all of which must be satisfied to defeat the presumption of employee status.”
The Court limited its holding to Plaintiffs’ claim under the independent contractor statute, and declined to address Plaintiffs’ claims of misclassification under other provisions of Massachusetts wage law, taking “no position on whether the plaintiffs in fact are employees or independent contractors, or on how, in the absence of the framework established by the independent contractor statute, it may be determined whether a real estate salesperson is properly classified as an independent contractor or employee.” The court observed that legislation seeking to resolve that question had been proposed but rejected by the Governor.
Use of the independent contractor classification continues to draw scrutiny as an aspect of the “fissured” economy federal and state agencies seeks to police. Businesses utilizing contractors must examine their use of contractors for legal compliance.