Monell v. Boston Pads, LLC , 471 Mass. 566 ( 2015 )

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SJC-11661
NESTO MONELL & others1 vs. BOSTON PADS, LLC, & others.2
Suffolk. December 2, 2014. - June 3, 2015.
Present: Spina, Cordy, Botsford, Duffly, Lenk, & Hines, JJ.
Independent Contractor Act. Broker. License. Real Property,
License to sell. Labor, Wages. Massachusetts Wage Act.
Civil action commenced in the Superior Court Department on
October 17, 2011.
A motion for partial summary judgment was heard by Robert
C. Cosgrove, J., and entry of final judgment was ordered by
Edward P. Leibensperger, J.
The Supreme Judicial Court granted an application for
direct appellate review.
Hillary Schwab (Brant Casavant with her) for the
plaintiffs.
1
Jonathan Gibson, Rachael Butcher, Benjamin Smith, Lindsey
Burnes, and Ann McGovern. The plaintiffs sued on behalf of
themselves and others similarly situated.
2
Jacob Realty, LLC; NextGen Realty, Inc.; RentMyUnit.Com,
Inc., doing business as Boardwalk Properties; Demetrios
Salpoglou; and Yuan Huang.
2
Stephen M. Perry (Robert S. Kutner with him) for the
defendants.
Ian O. Russell & Nicole Horberg Decter, for Massachusetts
Employment Lawyers Association & another, amici curiae,
submitted a brief.
Philip S. Lapatin & Nathaniel F. Hulme, for Massachusetts
Association of Realtors & another, amici curiae, submitted a
brief.
HINES, J. We granted the plaintiffs' application for
direct appellate review to determine whether the independent
contractor statute, G. L. c. 149, § 148B, which makes it a
violation of the statute to fail "to properly classify an
individual as an employee," applies to real estate salespersons
licensed under, and affiliated with and working for a licensed
brokerage firm pursuant to G. L. c. 112, § 87RR. A Superior
Court judge concluded that the independent contractor statute
did not apply in these circumstances to the salespersons in this
industry. We affirm.
1. Background. We summarize the material undisputed
facts. The defendants Jacob Realty, LLC (Jacob Realty); NextGen
Realty, Inc. (NextGen); and RentMyUnit.Com, Inc., doing business
as Boardwalk Properties (Boardwalk Properties) (collectively,
business entities), are licensed Massachusetts real estate
brokerage firms that are in the business of renting and selling
real estate in Massachusetts.3 The defendants Demetrios
3
The defendants deny that defendant Boston Pads, LLC,
operates a real estate office and that it had any real estate
3
Salpoglou and Yuan Huang are members of Jacob Realty and
shareholders of NextGen and Boardwalk Properties, and are
involved in the operations of these business entities.
Salpoglou serves as the broker of record for the business
entities.
The plaintiffs Nesto Monell, Jonathan Gibson, Rachael
Butcher, and Lindsey Burnes were licensed real estate
salespersons who worked for Jacob Realty under its real estate
broker's license. The plaintiff Ann McGovern was a licensed
real estate salesperson who worked for NextGen under its real
estate broker's license. The plaintiff Benjamin Smith was a
licensed real estate salesperson who worked for Boardwalk
Properties under its real estate broker's license.
Throughout the course of their relationship, the defendant
business entities classified the plaintiffs as independent
contractors.4 The defendant entities required the plaintiffs to
agents associated with it. The defendants contend that Boston
Pads, LLC, is a professional consulting services firm that does
not trade, lease, buy, or sell real estate for commissions. For
the purpose of this opinion, when we refer to the defendants or
to the business entities, such references shall not include
Boston Pads, Inc.
4
The defendants assert that the business entities are
legally distinct entities and that a salesperson associated with
one business entity was not otherwise associated with another
business entity. This assertion has no bearing on the issues
before us. Therefore, we decline to address the point.
4
work sixty "front desk hours" during training5 and, thereafter,
in some cases complete monthly "office hours" duty, which
involved answering telephone calls from, and greeting,
prospective clients.6 The salespersons were able to select the
"office hours" that they wished to work. The business entities,
however, allowed salespersons only one shift change every two
months.
At the commencement of their relationship with the business
entities, the plaintiffs signed nondisclosure, nonsolicitation,
and noncompete agreements7 and were required to undergo a
training program. The business entities encouraged the
plaintiffs to purchase a day planner and required them to obtain
5
During "front desk hours," the business entities asked
salespersons to perform "warm calling," which included speaking
with landlords, entering information into the business entities'
database, and arranging times to meet with landlords to obtain
keys and visit properties.
6
Specifically, the training guide provided that during
office hours shifts the salespersons were to answer the
telephone, greet clients and landlords, take out the trash,
update facsimiles, telephone landlords, acquire new listings,
and answer agent telephone calls. Under the guide, salespersons
were prohibited during this time to schedule showings of
available apartments for rent or property for sale.
7
Various forms used by the business entities, including an
application for employment, an equal opportunity statement, and
an antiharassment policy, contained language referencing the
salesperson's "employment" with the business entities. The
defendants admit that the various forms were used by them at one
time or another, but make no admissions regarding whether the
forms were used with the named plaintiffs.
5
a cellular telephone with a "617" area code,8 to adhere to a
dress code, and to submit to various disciplinary actions if
they did not meet their productivity goals.
The defendant entities compensate their salespersons
pursuant to a commission policy. Under the policy salespersons
are paid on a "commission-only basis" and expressly will not be
treated as employees "with respect to compensation for taxes or
any other purpose." A commission is earned on completion by the
salesperson of a rental or sales transaction involving a
client's real estate. The commission due to the salesperson
usually amounts to a percentage (typically fifty per cent) of a
transaction's gross commission, less any applicable deductions.9
The business entities receive the balance as their portion of
the fee charged to the client. Commissions are paid "only when
a transaction is completed in its entirety" as defined by the
policy. Pursuant to the policy, the business entities "will
issue [a] Form 1099-MISC" to each salesperson and each
8
The business entities instructed salespersons on what
information they must enter into their cellular telephones and
on how they were to answer their telephones.
9
Deductions include a monthly "desk fee" of fifty dollars
for part-time salespersons and seventy-five dollars for full-
time salespersons. For salespersons who elect to participate in
a "farm program," whereby a contractor would manually update a
salesperson's real estate listings on Web sites, a deduction of
five dollars per day also is assessed. There is a dispute in
the record whether the plaintiffs were compelled to elect to
join the farm program.
6
salesperson "agrees to provide [the business entities] with a
signed W-9 [form]." Thus, the plaintiffs were responsible for
paying their own taxes.
In 2011, the plaintiffs filed a complaint against the
defendants in the Superior Court. As relevant here, the
plaintiffs alleged that the defendants violated the independent
contractor statute by misclassifying them as independent
contractors when they actually were employees.10 On this count
of the complaint, the plaintiffs moved for partial summary
judgment, which the judge denied. The judge then granted
partial summary judgment in favor of the defendants.11 The judge
determined that there is a conflict between the independent
contractor and real estate licensing statutes insofar as a real
estate salesperson would not be able to satisfy all three
indicia of an independent contractor relationship while
simultaneously complying with the real estate licensing statute.
Based on his determination that the real estate licensing
10
The plaintiffs also alleged that the defendants failed to
pay them wages owed under G. L. c. 149, § 148; failed to
compensate them in accordance with minimum wage laws pursuant to
G. L. c. 151, § 20; and failed to pay them time and one-half for
all hours worked over forty hours per week in violation of G. L.
c. 151, § 1A. The judge did not rule on these claims.
11
The plaintiffs then filed an assented-to motion to
dismiss the remaining counts of their complaint without
prejudice should the judge's ruling be reversed on appeal, which
was allowed.
7
statute was more recently amended and is more specific than the
independent contractor statute, the judge concluded that,
pursuant to statutory construction principles, the independent
contractor statute did not control, meaning that the defendants
did not fail properly to classify the plaintiffs as employees
and therefore could not be liable for a violation of G. L.
c. 149, § 148B.
2. Standard of review. Summary judgment is appropriate
where there are no genuine issues of material fact in dispute
and the moving party is entitled to judgment as a matter of law.
See Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716
(1991); Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404
(2002). Moreover, "[w]e exercise de novo review over questions
of statutory construction." Atlanticare Med. Ctr. v.
Commissioner of the Div. of Med. Assistance, 439 Mass. 1, 6
(2003). Because the issue before us is one of statutory
construction, we begin by providing an overview of the relevant
statutes.
3. Statutory overview. a. Independent contractor
statute. The Commonwealth's wage laws are set forth in
provisions in G. L. c. 149 (Wage Act). Within the Wage Act is
the independent contractor statute. G. L. c. 149, § 148B.
Effective July 19, 2004, the Legislature amended § 148B by
8
striking out its language and replacing it in its entirety. See
St. 2004, c. 193, § 26. The statute has not since been amended.
The independent contractor statute, states, in relevant
part:
"(a) For the purpose of this chapter and chapter 151[12]
an individual performing any service, except as authorized
under this chapter, shall be considered to be an employee
under those chapters unless:--
"(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
fact; and
"(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.
"(b) The failure to withhold federal or state income
taxes . . . shall not be considered in making a
determination under this section.
". . .
"(d) Whoever fails to properly classify an individual
as an employee according to this section and in so doing
fails to comply, in any respect, with [G. L. c. 149], or
[G. L. c. 151, § 1, 1A, 1B, 2B, 15, or 19], or [G. L.
c. 62B],[13] shall be punished and shall be subject to all of
the criminal and civil remedies, including debarment [from
public bidding], as provided in [§ 27C] of this chapter.
12
General Laws c. 151 is known as the minimum fair wage law
and has provisions pertaining to the minimum fair wage as well
as overtime pay. G. L. c. 151, §§ 1, 1A, 1B, 22.
13
General Laws c. 62B sets forth the Commonwealth's wage
withholding laws.
9
Whoever fails to properly classify an individual as an
employee according to this section and in so doing violates
[G. L. c. 152][14] shall be punished as provided in [G. L.
c. 152, § 14,] and shall be subject to all of the civil
remedies, including debarment [from public bidding],
provided in [§ 27C] of this chapter. . . ."
G. L. c. 149, § 148B.
As noted above, the independent contractor statute was
adopted as part of St. 2004, c. 193, which is entitled, "An Act
further regulating public construction in the Commonwealth."
The act's emergency preamble states the purpose of the act is
"to regulate further public construction in the commonwealth."
Id. Although the statute was part of legislation making changes
to the public construction industry, the Legislature kept it in
c. 149, thus leaving it applicable to a wide range of
industries. See Lipsitt v. Plaud, 466 Mass. 240, 245 (2013)
(since enactment of Wage Act in 1886, Legislature has broadened
scope of employees covered).15
We have stated that the purpose of the independent
contractor statute is "to protect workers by classifying them as
employees, and thereby grant them the benefits and rights of
14
General Laws c. 152 pertains to worker's compensation
benefits.
15
Under the Wage Act provisions in G. L. c. 149, the
Legislature has also broadened the type of eligible compensation
covered, extending coverage to commissions that are "definitely
determined" and "due and payable." Lipsitt v. Plaud, 466 Mass.
240, 245 & n.8 (2013), quoting St. 1943, c. 467.
10
employment, where the circumstances indicate that they are, in
fact, employees." Depianti v. Jan-Pro Franchising Int'l, Inc.,
465 Mass. 607, 620 (2013), quoting Taylor v. Eastern Connection
Operating, Inc., 465 Mass. 191, 198 (2013). See Cumpata v. Blue
Cross Blue Shield of Mass., Inc., 113 F. Supp. 2d 164, 168 (D.
Mass. 2000) ("Wage Act is meant to protect employees from the
dictates and whims of shrewd employers"). Indeed,
"[m]isclassification not only hurts the individual
employee; it also imposes significant financial burdens on
the Federal government and the Commonwealth in lost tax and
insurance revenues. Moreover, it gives an employer who
misclassifies employees as independent contractors an
unfair competitive advantage over employers who correctly
classify their employees and bear the concomitant financial
burden."
Somers v. Converged Access, Inc., 454 Mass. 582, 593 (2009).
To this end, the independent contractor statute
"establishes a framework for determining whether a worker is an
employee or an independent contractor." Depianti, 465 Mass. at
621. The statute establishes a presumption that "an individual
performing any service" is an employee. Id. See G. L. c. 149,
§ 148B (a) ("an individual performing any service . . . shall be
considered to be an employee"). Next, the statute "lays out
three indicia [or factors] of an independent contractor
relationship, all three of which must be established to rebut
the presumption of employment." Depianti, supra. In
interpreting the statute, we have stated that, "[i]n light of
11
the statute's broad remedial purpose, 'it would be an error to
imply . . . a limitation where the statutory language does not
require it.'" Id., quoting Psy-Ed Corp. v. Klein, 459 Mass.
697, 708 (2011).
b. Real estate licensing and registration scheme. General
Laws c. 112, §§ 87PP through 87DDD½, and G. L. c. 112, §§ 65A
through 65E, set forth the licensing and registration provisions
governing real estate brokers and salespersons.16 A real estate
"broker," for purposes here, is defined as including:
"any person who for another person and for a fee,
commission or other valuable consideration, or with the
intention or in the expectation or upon the promise of
receiving or collecting a fee, commission or other valuable
consideration, does any of the following: -- sells,
exchanges, purchases, rents or leases, or negotiates, or
offers, attempts or agrees to negotiate the sale, exchange,
purchase, rental or leasing of any real estate, or lists or
offers, attempts or agrees to list any real estate, or buys
or offers to buy, sell or offers to sell . . . real
estate."
G. L. c. 112, § 87PP. In contrast, a real estate "salesman" or
salesperson is "an individual who performs any act or engages in
any transaction included in the foregoing definition of a
broker, except the completing of the negotiation of any
agreement or transaction which results or is intended to result
in the sale, exchange, purchase, renting or leasing of any real
estate." Id. Both brokers and salespersons are required to be
16
Regulations governing real estate brokers and
salespersons appear at 254 Code Mass. Regs. §§ 2.00 through 7.00
(2013).
12
licensed. G. L. c. 112, § 87RR. "The examination for a
[salesperson's] license shall be based upon the same general
subject matter as for a broker's license, but shall be more
elementary in nature." G. L. c. 112, § 87SS.
Real estate salespersons must conduct business with, or be
affiliated with, a licensed broker. G. L. c. 112, § 87RR. See
254 Code Mass. Regs. § 3.00(6) (1998) ("A licensed salesperson
must be engaged by a licensed broker and a licensed salesperson
shall not conduct his own real estate business"). A real estate
salesperson may affiliate with only one broker. G. L. c. 112,
§ 87VV (when real estate salesperson affiliates with broker,
salesperson "shall not act as [salesperson] for any other
licensed broker while so affiliated, nor accept any valuable
consideration for the performance of any act as a real estate
[salesperson] from any person except the broker with whom he [or
she] is affiliated"). Concerning the relationship between the
broker and his or her affiliated salesperson, § 87RR provides in
relevant part:
"No [salesperson] may conduct or operate his [or her]
own real estate business nor act except as the
representative of a real estate broker who shall be
responsible for the [salesperson] and who must approve the
negotiation and completion by the [salesperson] of any
transaction or agreement which results or is intended to
result in the sale, exchange, purchase, renting or leasing
of any real estate or in a loan secured or to be secured by
mortgage or other encumbrance upon real estate. No
[salesperson] shall be affiliated with more than one broker
at the same time nor shall any [salesperson] be entitled to
13
any fee, commission or other valuable consideration or
solicit or accept the same from any person except his [or
her]licensed broker in connection with any such agreement
or transaction. A [salesperson] may be affiliated with a
broker either as an employee or as an independent
contractor and may, by agreement, be paid as an outside
salesperson on a commission-only basis, but shall be under
such supervision of said broker as to ensure compliance
with this section and said broker shall be responsible with
the [salesperson] for any violation of [G. L. c. 112,
§ 87AAA,] committed by said [salesperson]."
Section 87AAA enumerates numerous grounds for the suspension,
revocation, or refusal to renew the license of a broker or
salesperson. These grounds include a range of conduct, the
prohibition of which is intended to promote fairness and
integrity in real estate transactions.17 Id. See 254 Code Mass.
17
The proscribed conduct is set forth in G. L. c. 112,
§ 87AAA, as follows: "(a) knowingly made any substantial
misrepresentation; (b) acted in the dual capacity of broker and
undisclosed principal in the same transaction; (c) acted for
more than one party to a transaction without the knowledge and
consent of all the parties for whom he [or she] acts; (d)
failed, within a reasonable time, to account for or remit any
moneys belonging to others which have come into his [or her]
possession as a broker or [salesperson]; (e) paid commissions or
fees to or divided the same with any person, who, being required
to be licensed as a broker or [salesperson] in this or any other
[S]tate, is not so licensed; (f) accepted, given or charged any
undisclosed commission, rebate or profit on expenditures for a
principal; (g) induced any party to a contract or lease relating
to real estate to break the same when such action is effected
for the personal gain of the licensee; (h) commingled the money
or other property of his [or her] principal with his [or her]
own; (i) failed to give to both the buyer and seller a copy of
the purchase and sale agreement; (j) committed any act expressly
prohibited in [§§ 87RR to 87CCC]; (k) affirmatively solicited
for sale, lease, or the listing for sale or lease, of
residential property on the grounds of alleged change of value
due to the presence or the prospective entry into the
neighborhood of a person or persons of another race, economic
14
Regs. § 3.00 (2005) (setting forth professional standards of
practice as well as additional grounds for discipline).
4. Discussion. In this appeal, we address the conflict
between the independent contractor statute and the real estate
licensing statute which, respectively, support the plaintiffs'
claim that they are "employees" and the defendants' claim that
the plaintiffs are or can be "independent contractors." The
plaintiffs rely on the independent contractor statute insofar as
it creates a presumptive employee status that, in its
application, includes real estate salespersons. The defendants
rely on the real estate licensing statute providing that a
"[salesperson] may be affiliated with a broker either as an
employee or as an independent contractor." See G. L. c. 112,
§ 87RR.
"The general and familiar rule is that a statute must be
interpreted according to the intent of the Legislature
ascertained from all its words construed by the ordinary and
approved usage of the language, considered in connection with
the cause of its enactment, the mischief or imperfection to be
level, religion or ethnic origin or distributes, or causes to be
distributed, material or makes statements designated to induce a
residential property owner to sell or lease his [or her]
property due to such change in the neighborhood; or (l) accepted
from a prospective seller a net listing, an agreement to sell
real estate for a stated price which authorized the broker to
keep as commission any amount of money received from the sale of
said real estate in excess of the stated price."
15
remedied and the main object to be accomplished." Lowery v.
Klemm, 446 Mass. 572, 576-577 (2006), quoting Hanlon v. Rollins,
286 Mass. 444, 447 (1934). Clear and unambiguous language in a
statute is conclusive as to legislative intent. Commissioner of
Correction v. Superior Court Dep't of the Trial Court for the
County of Worcester, 446 Mass. 123, 124 (2006). In addition, "a
remedial statute . . . should be given a broad interpretation
. . . in light of its purpose . . . to 'promote the
accomplishment of its beneficent design.'" Seller's Case, 452
Mass. 804, 810 (2008), quoting Neff v. Commissioner of the Dep't
of Indus. Accs., 421 Mass. 70, 73 (1995). In cases "[w]here two
or more statutes relate to the same subject matter, they should
be construed together so as to constitute a harmonious whole
consistent with the legislative purpose." Federal Nat'l Mtge.
Ass'n v. Hendricks, 463 Mass. 635, 641 (2012), quoting Board of
Educ. v. Assessor of Worcester, 368 Mass. 511, 513-514 (1975).
As an initial matter, there is no question that the
independent contractor statute is a remedial statute. See
Depianti, 465 Mass. at 621. It thus should be given a
construction that furthers, not defeats, its purpose. See id.
The difficulty in seeking to construe it in harmony with the
real estate licensing statute, however, is that the real estate
licensing statute makes it impossible for a real estate
salesperson to satisfy the three factors required to achieve
16
independent contractor status, all of which must be satisfied to
defeat the presumption of employee status. For instance, under
the second factor of the independent contractor statute, the
employer must prove that "the service [of the worker] is
performed outside the usual course of the business of the
employer." G. L. c. 149, § 148B (a) (2). Because under G. L.
c. 112, § 87RR, "[n]o [salesperson] may conduct or operate his
[or her] own real estate business nor act except as the
representative of a real estate broker," an employer can never
prove that the service is performed outside the usual course of
the employer's business. Under the express language of § 87RR,
a salesperson is prohibited from performing any services other
than as the broker's representative and as part of the broker's
business. Under the third factor of the independent contractor
statute, the employer must prove that the worker "is customarily
engaged in an independently established" business in the real
estate industry. See G. L. c. 149, § 148B (a) (3). General
Laws c. 112, § 87RR, however, prohibits a real estate
salesperson from operating his or her own real estate business.
Thus, compliance with this third factor also is not possible.
The exclusion of real estate salespersons from independent
contractor status clearly was not intended by the Legislature.
While § 87RR expressly authorizes a real estate salesperson to
affiliate with a broker as an employee, it also expressly
17
authorizes an association as an independent contractor. See id.
("A [salesperson] may be affiliated with a broker either as an
employee or as an independent contractor . . ." [emphasis
added]). We cannot view this express language as superfluous.
See Casa Loma, Inc. v. Alcoholic Beverages Control Comm'n, 377
Mass. 231, 234 (1979) ("It is a common tenet of statutory
construction, that, wherever possible, no provision of a
legislative enactment should be treated as superfluous").
Unlike the judge, we do not view the 2010 amendment to
§ 87RR to be instructive in resolving the conflict. The 2010
amendment to § 87RR added language authorizing brokers and
salespersons to enter into agreements whereby a real estate
salesperson could be paid on a commission-only basis. See St.
2010, c. 307, § 1 (as applying to salespersons, adding in second
paragraph, in third sentence, "and may, by agreement, be paid as
an outside salesperson on a commission-only basis"). The judge
concluded that, by virtue of this amendment and, in contrast, of
the independent contractor statute being left intact, the
Legislature intended that real estate salespersons qualify as
independent contractors despite the inherent level of control
brokers must exercise over them. Although this interpretation
is reasonable, it is not dispositive of the issue before us
because when enacting St. 2010, c. 307, § 1, the Legislature
could have deleted the reference in § 87RR that permits a real
18
estate salesperson to be affiliated with a broker either as an
employee or an independent contractor. The Legislature took no
action regarding the nature of this affiliation. Thus, the
amendment does not reflect an affirmation that a real estate
salesperson is an independent contractor. It reflects an
affirmation that the salesperson may be an independent
contractor, but he or she also may be an employee.18 Where the
Legislature left the reference in place regarding the nature of
the affiliation, we conclude that the 2010 amendment simply was
intended to address how a real estate salesperson, whether an
employee or an independent contractor, could be paid,
authorizing payment in the form of commissions only.19 The
amendment cannot be said to speak to the nature of the
affiliation between the broker and salesperson other than
confirming the fact that the affiliation may be either as an
employee or as an independent contractor.
The judge's reliance on the familiar canon of construction
providing that a specific statute, in this case § 87RR, controls
18
The defendants concede this point: "It is true that the
November 2010 amendment confirms the lawfulness of engaging
licensed salespersons as employees, just as it is true that the
amendment confirms the lawfulness of engaging them as
independent contractors."
19
The fact that a real estate salesperson may be paid in
the form of commissions only and that commissions may be subject
to the Wage Act does not negate the applicability of the
independent contractor statute. See note 15, supra.
19
over the provisions of a general statute, such as the
independent contract statute, however, is appropriate here. See
TBI, Inc. v. Board of Health of N. Andover, 431 Mass. 9, 18
(2000); Doe v. Attorney Gen. (No. 1), 425 Mass. 210, 215 (1997).
As outlined earlier, real estate brokers are responsible for
their affiliated salespersons' compliance with a broad range of
statutory provisions and regulations. No doubt this supervision
and control has been required due in part to the difference in
training and testing that is required of real estate brokers in
comparison to salespersons. It also necessarily is in place to
protect the public, namely the consumers who are selling,
purchasing, leasing, or renting real estate in a highly
regulated field. Despite that level of supervision and control
mandated by law, § 87RR nevertheless expressly preserves a
salesperson's ability to be affiliated with a broker as either
an employee or an independent contractor. Thus, it is § 87RR
that controls in this instance, not the more general independent
contractor statute. Were we to conclude otherwise, we would be
subjecting real estate brokerage firms to potential criminal
penalties for misclassifying its real estate salespersons in a
manner expressly authorized by the real estate licensing
statute. See G. L. c. 149, § 148B (d) (failure to properly
classify individual as employee and to comply with other
20
provisions of Wage Act or Fair Minimum Wage Law subjects
employer to criminal penalties).
That being said, we underscore the limited nature of our
holding. The plaintiffs' complaint alleged four counts: the
first for misclassification under the independent contractor
statute, G. L. c. 149, § 148B; the second for failing to make
timely payment of wages and taking improper deductions, under
G. L. c. 149, § 148; the third for failure to pay the State
statutory minimum wage for all hours worked, in violation of
G. L. c. 151, §§ 1 et seq.; the fourth for failure to pay time
and one-half for hours worked in excess of forty hours per week,
in violation of G. L. c. 151, § 1A. See note 10, supra. The
judge granted summary judgment to the defendants only on the
first count. Following the judge's decision, the plaintiffs
dismissed the remaining counts without prejudice in order to
pursue this appeal.
Because we agree with the Superior Court judge that the
independent contractor statute does not apply to real estate
salespersons, we conclude that the judge properly granted
summary judgment on the first count: the plaintiffs cannot
prevail on a claim based on a statute that does not apply to
them. In reaching that conclusion, however, we take no position
on whether the plaintiffs in fact are employees or independent
contractors, or on how, in the absence of the framework
21
established by the independent contractor statute, it may be
determined whether a real estate salesperson is properly
classified as an independent contractor or employee. Earlier
proposed legislation specifically provided that "a [salesperson]
or broker may be affiliated with a broker either as an employee
or as an independent contractor, as determined by their written
agreement and customary work practices." St. 2008, c. 304, § 8.
The Governor, however, disapproved this language, concluding
that it "would allow real estate sales persons and brokers to
rely on written agreements to avoid the classification rules for
independent contractors." See 2008 House Doc. No. 5075. The
statute ultimately enacted expressly stated that a commission-
only compensation structure may be established "by agreement."
G. L c. 112, § 87RR. It does not, however, indicate how a
broker and real estate salesperson may create an independent
contractor relationship, rather than an employment relationship.
Because the plaintiffs based their argument on appeal on
the contention that they are employees under the framework set
forth in the independent contractor statute, they did not
address how the court should determine the nature of their
relationship if the court determines, as we have, that the
framework does not apply. In light of the potential impact of
that issue on the real estate industry as a whole and its
significant ramifications for real estate salespersons' access
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to the rights and benefits of employment, we think it prudent to
leave that issue's resolution to another day, when it has been
fully briefed and argued. Should the Legislature be so
inclined, it may wish to clarify how a real estate salesperson
may gain employee status under the real estate licensing
statute.
5. Conclusion. For the foregoing reasons, we affirm the
judge's order denying the plaintiffs' motion for partial summary
judgment and granting partial summary judgment to the
defendants.
So ordered.