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COMMONWEALTH OF MASSACHUSETTS
SUPREME JUDICIAL COURT
Suiiolk, No. SUCV2011-3756
SAC-11661
NESTO MONELL, JONATHAN GIBBON, R...
TABLE OF CONTENTS
I. STATEMENT OF THE ISSUES PRESENTED FOR REVIEW. ...1
II. STATEMENT OF THE INTEREST OF THE AMICI. .........
D. HYPOTHETICAL CONCERNS ABOUT COMPLYING
WITH THE LAW IS NOT A VALID REASON
FOR EXEMPTING THE REAL ESTATE INDUSTRY
FROM M....
TABLE OF AUTHORITIES
Cases
Awuah v. Coverall North America, Inc.,
460 Mass. 484 (2011)...............................24
.....
M.G.L. c. 149, §~ 47 ................................23
M.G.L. c. 151A, ~ 6 .................................18
M.G.L. C. ...
I. STATEMENT OF THE ISSUES PRESENTED FOR REVIEW.
Amici adopt the statement of the issues presented
by Plaintiffs-Appellant...
as a means of avoiding application of the
Commonwealth's wage laws. Often, the improper acts of
these employers include at...
Independent Contractor, Overtime., and Non-payment of
Wages statutes protect all workers' economic security
and physical s...
III. ARGUMENT.
A. THE INDEPENDENT CONTRACTOR STATUTE EMBODIES
VITAL STATE INTERESTS AND MUST BE BROADLY
CONSTRUED TO EFFEC...
driving down violators' taxes, wages, and other
overhead costs; (3) defrauds the government of
substantial tax revenues; a...
workers by classifying them as employees, and thereby
grant them the benefits and rights of employment,
where the circumst...
i one that is not supported by the statute's language or
its purpose. They argue that the statute was
originally intended ...
service not authorized under this chapter deemed
employees; exception." M.G.L. c. 149, ~ 148B. The
language in the body of...
amendment, applies more broadly to a wide range of
industries." Id. (emphasis added). The Attorney
General recognizes no e...
The MAR Amici's argument that the existence of
criminal remedies in the statute "further supports the
conclusion that the ...
In order to protect all employees in the
Commonwealth from wage theft and other abuses arising
from misclassification, it ...
B. THE PLAIN LANGUAGE OF M.G.L. c. 112, ~ 87RR,
THE REAL ESTATE LICENSING STATUTE, DOES NOT
CREATE AN EXCEPTION TO M.G.L. ...
Nothing in the language of this licensing statute
creates an exemption from the Independent Contractor
Statute. On its fac...
independent contractor. Thus, a broker may not avoid
providing the required supervision merely by ',
classifying an agent ...
applying the test established by ~ 148B. Because ~
87RR does not address the question of whether a real
estate agent is an...
Chapter 149, a salesmen or broker may be
affiliated with a broker either as an
employee or as independent contractor, as
d...
this amendment as creating an exemption and vetoed it
because he did not believe an exemption was good
policy. Had the 200...
'' 2. A worker may be an employee for some.
purposes and not others and when the
Legislature. has exempted workers from
co...
Legislature has made the exemption explicit.
Specifically, when it has exempted real estate agents
paid on a commission-on...
the Commonwealth have exempted real estate agents from
certain tax laws. Brief of Defendants-Appellees at
~~~
Notably, rea...
an employee under § 148B turns on the language and
interpretation of that statute as applied to the
specific facts of this...
See also Weems v. Citigroup Inc., 453 Mass. 147, 151
(2009) (noting that ~ 148 "expressly states that .
commissions that a...
The MAR Amici go on to discuss specifically M.G.L. c.
149, ~~ 47, 52, 100, and 150A. However, none of those
are statutes u...
employees make customer calls, perform delivery
services, or otherwise do their work in numerous
locations and/or are on c...
estate professionals typically earn their compensation
in the form of commissions MAR Amici Br. at
16. However, as noted a...
manner that does not resemble the "industry standard"
described by the MAR Amici and elsewhere. The MAR
Amici claim that "...
specific shifts for a specific number of hours each
month. Append. 50-54, ~~ 29-34.5 Instead of
"determin[ing] their own b...
items on the list, the facts establish that
Defendants-Appellees engage in four:
.Activity to be Avoided Defendants-Appell...
Respectfully submitted,
MASSACHUSETTS EMPLOYMENT LAWYERS
ASSOCIATION & THE MASSACHUSETTS
BUILDING TRADES COUNCIL, AFL-CIO,...
CERTIFICATE OF SERVICE
I hereby certify that on July 31, 2014, two true
and accurate copies of this brief were delivered b...
CERTIFICATE OF COMPLIANCE
I hereby certify that this brief complies with
the rules of this Court that pertain to the forma...
', ADDENDUM TABLE OF CONTENTS
An Advisory from the Attorney General's Fair Labor
Division on M.G.L. c. 149, ~ 148B, 2008/1...
An Advisoryfrom the Attorney General's Fair Labor Division on
M.G.L.c.149,s.148B
2008/11
The Office ofthe Attorney General...
B. The History ofthe Law
The proper classification ofemployees haslong been an issue ofgreat concern in the Commonwealth.
...
See also Commonwealth v. Gee°mano,379 Mass.268,275-76(1979). Because prongs one and three of
M.G.1.c. 1~9,s. 1~8B and M.G....
Prong Three:IndependentTrade,Occupation,Profession or Business
Prong three provides thatthe individual"is customarily enga...
The statute authorizesthe Attorney Generalto impose substantial civil and criminal penalties,and in
certain circumstances,...
• The contracting entity provides equipment,tools and supplies to individuals orrequires the
purchase ofsuch materials dir...
N.-CONCLUSION
Asthis Advisory reflects,the AGO will carry outits enforcementresponsibilitiesto serve the goals ofthe
Law a...
THE COMMONWEALTH OF MASSACHUSETTS
;, EXECUTIVE DEPARTMENT
w
~ d STATE HOUSE • BOSTON 02133
'` (617) 726-4000
p~ e
~~M s~~v...
unlawful businesses an unfair competitive advantage over lawful
businesses by illegally driving,down violators'taxes,wages...
Section 3. The Task Force shall coordinate joint efforts to
combat the underground economy and employee rriisclassificatio...
f. Work cooperatively with employers,labor,and community
groups to diminish the.size ofthe underground economy
and reduce ...
or regulatory changes to strengthen the Task Force's operations and
enforcement efforts and reduce or eliminate any barrie...
AG~.S
24}f~$
Ch~ptet` 3Q4 AN ACT PROVIDING FOR CAPITAL FACILITY REPAIRS AND IMPP.OVEMEI4TS FQR THE
COf~1MONWEALTH.
tNherea...
1 ~00-92Q0..For costs associated with the purchase and procurementofequipmentfar general
governmentoperations................
by project;and provided furtherth~t$1,800,400 shelf be expended far informati€~n technalogy
systems upgrades afithe appeal...
imprc~ver~ents,asset managementand demolition,dispasition and ~eme~iation ofstate-owned and
former cauntyfacilities end gr...
senior centerin Newburyport,provided further,that notless than $7,000,000sha[( be expended far
improvements to the Haverhi...
pifat pragr~m forimplementing automatic meter-reading technc~[ogy,to be administered jointly by
the Braintree ~le~tric Lig...
Topsfield town hail; provided #urther,that$500,OQ0 shalE be expended forcapital impravements to
the Trailside museum;provi...
provided further,that not
less than ~30Q,000 sf~a(I be e~er~ded for ADA compliance and entry wayimpravements atthe
town ha...
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
MELA and MA Unions Amicus Brief
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MELA and MA Unions Amicus Brief

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MASSACHUSETTS EMPLOYMENT LAWYERS ASSOCIATION & THE MASSACHUSETTS BUILDING TRADES COUNCIL, AFL-CIO

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MELA and MA Unions Amicus Brief

  1. 1. COMMONWEALTH OF MASSACHUSETTS SUPREME JUDICIAL COURT Suiiolk, No. SUCV2011-3756 SAC-11661 NESTO MONELL, JONATHAN GIBBON, RACriAEL BUTCHER, BENJAMIN SMITH, LINDSEY" BURNS, and ANN McGOVERN, on behalf of themselves and others sirr.ilarly situated, Plaintiffs - Appellants, V. BOSTON PADS, LLC, JACOB REALTY, LAC, NEXTGEN REALTY, INC., RENTi~IYUNIT.CONI, INC., D~NI~TRIOS SALPOGLOU, and YUAN HUANG, Defendants - Appellees. B~ZIEF OF THE MASSACHUSETTS EMPLOYMENT LAWYERS ASSOCIATION & THE MASSF,CHUSETTS Bt7II,DING TRADES COUNCIL, AFL-CIO, AMICI CURIAE Ian O. Russell (BBO #673387.) PYLE ROME EHRENBERG ~C 2 Liberty Square, 10th door Boston, MA 02109 (617) 367-7200 irussell@pylerome.com Nicole Horberg Decter (BBO #658268) SEGAL ROITMAN, LLP 111 Devonshire Street, 5th 'Floor Boston, MA 02109 (617) 742-0208 z~decter@segalroitman.com
  2. 2. TABLE OF CONTENTS I. STATEMENT OF THE ISSUES PRESENTED FOR REVIEW. ...1 II. STATEMENT OF THE INTEREST OF THE AMICI. .........1 III. STATEMENT OF THE CASE. ..........................3 III. ARGUMENT. .......................................4 A. THE INDEPENDENT CONTRACTOR STATUTE EMBODIES VITAL STATE INTERESTS AND MUST BE BROADLY CONSTRUED TO EFFECTUATE THOSE INTERESTS. ................4 1. Misclassification of employees harms employees and the Commonwealth. .......4 2. Consistent with its language and purpose the Independent Contractor Statute must be construed broadly. ....6 B. THE PLAIN LANGUAGE OF M.G.L. c. 112, ~ 87RR, THE REAL ESTATE LICENSING STATUTE, DOES NOT CREATE AN EXCEPTION TO M.G.L. c. 149, § 148B, THE INDEPENDENT CONTRACTOR STATUTE. ...........12 C. THE LEGISLATIVE HISTORY OF THE RELEVANT STATUTES CONFIRMS THAT REAL ESTATE AGENTS ARE NOT EXEMPT FROM M.G.L. c. 149, ~ 148B. ...............15 1. The only attempt to exclude real estate agents from coverage under ~ 148B failed. .................15 2. A worker may be an employee for some purposes and not others and when the Legislature has exempted workers from coverage by laws intended to protect employees, it has done so explicitly. ...........18 3. The 2010 amendment to M.G.L. c. 112, ~ 87RR, merely acknowledged that real estate agents - like other types of employees - may be paid on a commission basis. ...............21 i
  3. 3. D. HYPOTHETICAL CONCERNS ABOUT COMPLYING WITH THE LAW IS NOT A VALID REASON FOR EXEMPTING THE REAL ESTATE INDUSTRY FROM M.G.L. c. 149, ~ 148B. ...............22 E. BOSTON PADS IS NOT A TYPICAL REAL ESTATE COMPANY. ..................................25 CONCLUSION ...• .....................................29 CERTIFICATE OF SERVICE ..............................31 CERTIFICATE OF COMPLIANCE ...........................32 ii
  4. 4. TABLE OF AUTHORITIES Cases Awuah v. Coverall North America, Inc., 460 Mass. 484 (2011)...............................24 .....Cook v. Patient Edu, LLC, 465 Mass. 548 (2013)........ ......................10 Depianti v. Jan-Pro Franchising Int'1, Inc., 465 Mass. 607 (2013)...........................passim Donovan v. Agnew, 712 F.2d 1509 (lst Cir. 1983)......................18 Duracraft Corp. v. Holmes Products Corp., 427 Mass. 156 (1998)...............................16 Lutl2er v. Z. Wilson, Inc., 528 F. Supp. 1166 (S.D. Ohio 1981).................20 Perdomo v. Ask 4 Realty & Mgmt., Inc., 298 F. App'x 820 (11th Cir. 2008)..................20 Smith v. Winter Place, LLC, 447 Mass. 363 (2006)................................9 Somers v. Converged Access, Inc., 454 Mass. 582 (2009).............................5, 9 Taylor v. Eastern Connection Operating, Inc., 465 Mass. 191 (2013)................................6 Weems v. Citigroup Inc., 453 Mass. 147 (2009)...............................22 Statutes 26 U.S.C. ~ 3121 ....................................18 29 U.S.C. ~ 201 .....................................18 29 U.S.C. § 203 .....................................18 M.G.L. c. 112, ~ 87RR .......................12, 13, 21 M.G.L. c. 149, ~ 148 ........................18, 21, 25 M.G.L. c. 149, § 148B ......................5, 6, 8, 22 M.G.L. c. 149, ~ 150 ................................22 M.G.L. c. 149, ~ 150A ...............................23 iii
  5. 5. M.G.L. c. 149, §~ 47 ................................23 M.G.L. c. 151A, ~ 6 .................................18 M.G.L. C. 151A~ ~ 6(P) ... ..........................19 M.G.L. c. 152, ~ 1 ..................................18 M.G.L. c. 152, ~ 1(4) ............................ 19 Other Authorities An Advisory from the Attorney General's Fair Labor Division on M.G.L. c. 149, s 148B, 2008/1........4, 8 ', Regulations ' 26 C.F.R. § 31.3121 .................................18 455 CMR ~ 2.01 ......................................25 iv
  6. 6. I. STATEMENT OF THE ISSUES PRESENTED FOR REVIEW. Amici adopt the statement of the issues presented by Plaintiffs-Appellants. II. STATEMENT OF THE INTEREST OF THE AMICI. The Massachusetts Employment Lawyers Association ("MELA") is a voluntary membership organization of over 100 lawyers who regularly represent employees in labor, employment, and civil rights disputes in Massachusetts. MELA is an affiliate of the National Employment Lawyers Association (~~NELA"), a membership organization of over 3,000 lawyers who regularly represent employees in such disputes. NELA is one of the largest organizations in the United States whose members litigate and counsel individuals, employees, and applicants with claims arising out of the workplace. As part of its advocacy efforts, MELA has filed numerous amicus curiae briefs before this Court, singly or jointly with other amici. The interest of MELA in this case is that of protecting the rights of its members' clients, by ensuring that M.G.L. c. 149, ~ 148B's goals of preventing employee misclassification and wage theft are fully realized. Amici have frequently dealt with employers who rely upon the misclassification of workers as independent contractors 1
  7. 7. as a means of avoiding application of the Commonwealth's wage laws. Often, the improper acts of these employers include attempting to impose the costs and risks of running a business upon their workers by charging workers improper fees and making improper deductions from their wages. Amici believe that it is vitally important that M.G.L. c. 149, ~ 148 continue to be applied as it was drafted and thus that it be construed to cover all industries in the Commonwealth. The Massachusetts Building Trades Council, AFL-CIO ("N.~TC"), is a statewide coalition consisting of 74 local labor unions who represent over 75,000 men and women employed in Massachusetts in the construction industry. The MBTC's affiliated local unions represent workers in every facet of private and public sector construction work, including but not limited to, electricians, laborers, elevator constructors, carpenters, drivers, masons, plumbers, pipefitters, and painters, sprinkler fitters and teamsters. The MBTC has, on a routine basis, submitted amicus briefs to this Court where issues critical to workers' economic security, health, and safety within the Commonwealth. This case is of exceptional. importance to the MBTC and its affiliates, because stringent enforcement of the 2
  8. 8. Independent Contractor, Overtime., and Non-payment of Wages statutes protect all workers' economic security and physical safety, maintain a level playing field for law-abiding companies, and ensure that the Commonwealth has appropriate enforcement tools to garner compliance with its laws. Narrowing the scope of the Independent Contractor Statute to exclude categories of workers - without any implicit, much less explicit, statutory exclusion (as the Defendants-Appellees and their amici advocate) - strains credulity. More importantly, such an interpretation could compromise the vital protections guaranteed under the Statute, not only to real estate agents, but to any category of workers that an employer elected to misclassify for the purpose of denying the payment of compensation due under the Commonwealth's laws. III. STATEMENT OF THE CASE. Amici adopt the Statement of the Case presented by Plaintiffs-Appellants, including the Statement of Prior Proceedings and the Statement of Facts. 3
  9. 9. III. ARGUMENT. A. THE INDEPENDENT CONTRACTOR STATUTE EMBODIES VITAL STATE INTERESTS AND MUST BE BROADLY CONSTRUED TO EFFECTUATE THOSE INTERESTS. 1. Misclassification of employees harms employees and... the.....Commonwealth... The need for proper classification of individuals in the workplace has been recognized at all levels of government in the Commonwealth. The Attorney General has stated that: Entities that misclassify individuals are in many cases committing insurance fraud and deprive individuals of the many protections and benefits, both public and private, that employees enjoy. Misclassified individuals are often left without unemployment insurance and workers' compensation benefits. In addition, misclassified individuals do not have access to employer-provided health care and may be paid reduced wages or cash as wage payments. An Advisory from the Attorney General, Amendments to Massachusetts Independent Contractor Law, Advisory 2008/1 (Add. 1).l Similarly, Governor Deval Patrick, in creating a Joint Task Force to address employee misclassification, stated .that: [T]he practice of employee misclassification: (1) exploits vulnerable workers and deprives them of.. legal benefits and protections; (2) gives unlawful businesses an unfair competitive advantage over lawful businesses by illegally 1 References to the Addendum to this brief are cited as "Add. [page number]." - 0
  10. 10. driving down violators' taxes, wages, and other overhead costs; (3) defrauds the government of substantial tax revenues; and (4) harms consumers who suffer at the hands of unlicensed businesses that fail to maintain minimum levels of skills and knowledge. Executive Order No. 499 (Add. 8-9). The Legislature has attempted to address these concerns by passing legislation aimed at .curbing misclassification. One such piece of legislation is M.G.L. c. 149, § 148B, the Independent Contractor Statute. This statute, inter a1ia, establishes a test for determining whether a worker is an "employee" for purposes of the application of chapter 149, which includes the minimum wage and overtime laws, and allows for a suit to be brought against an employer for failing to properly classify its workers. This Court has recognized that one of the "legislative purposes] behind the independent contractor statute is to protect employees from being deprived of the benefits enjoyed by employees through their misclassification as independent contractors." Somers v. Converged Access, Inc., 454 Mass. 582, 59.2 (2009); see also Depianti v, ~7an-Pro Franchising Int'1, Inc., 465 Mass. 607,. 620 (2013) ("The purpose of the independent contractor statute is `to protect
  11. 11. workers by classifying them as employees, and thereby grant them the benefits and rights of employment, where the circumstances indicate that they are, in fact, employees'."), quoting Taylor v. Eastern Connection Operating, Inc., 465 Mass. 191, 198 (2013). 2. Consistent with its language and purpose the Independent Contractor Statute must be construed broadly. In "light of the statute's broad remedial purpose," this Court has held that it would be an "error" to read a limitation into the statute where the statutory language does not require it. Depianti, 465 Mass. at 621. The statute explicitly applies to individuals "performing any service." M.G.L. c. 149, ~ 148B (emphasis added). Nothing in the text of the statute limits its application to certain industries operating in the Commonwealth. However, the Superior Court, in ruling that real estate agents are exempt from coverage under ~ 148B, wrongly created a limitation that the statutory language does not require. In their amicus brief, the Massachusetts Association of Realtors and the Greater Boston Real Estate Board ("MAR Amici") likewise urge the Court to adopt an exceedingly narrow interpretation of the Independent Contractor Statute, C~
  12. 12. i one that is not supported by the statute's language or its purpose. They argue that the statute was originally intended to govern the construction industry and that, therefore, "the Court should not presume that the legislature intended to disrupt the settled expectations of those in the real estate industry." MAR Amicus Br. at 20. As discussed in more detail below, see infra at 15-17, this would not be the first time that the real estate industry has tried - and failed - to exclude itself from the Independent Contractor Statute. In any event, the language, purpose, and legislative history of the Statute all require the Court to reject Defendants- Appellees' and their amici's attempts to artificially narrow its scope. The plain language of the Independent Contractor Statute applies to all industries. While the MAR Amici cite the title of the chapter of the session laws through which the Independent Contractor Statute was enacted as evidence that it was intended to be limited to the public construction sector, MAR Amicus Br. at 21, the title of th`e Independent Contractor Statute itself is not limited to any particular industry; the statute is entitled: "Persons performing
  13. 13. service not authorized under this chapter deemed employees; exception." M.G.L. c. 149, ~ 148B. The language in the body of the statute is similarly broad. It applies to "any service" and its remedies ,. apply against "(w]hoever fails to properly classify an individual as an employee Id., (a), (d) (emphasis added). A broad interpretation of the Independent Contractor Statute is similarly supported by its purpose, as this Court has enunciated in Somers and Depianti, discussed above. The Attorney General's Office has similarly emphasized the importance of a broad application of the statute, stating that "[t]he need for proper classification of individuals in the workplace is of paramount importance to the Commonwealth." An Advisory from the Attorney General's Fair Labor Division on M.G.L. c. 149, ~ 148B, 2008/1 (Add. 1). Notably, the Attorney General made clear in its Advisory that the statute is not limited to the public construction industry, explaining: "The 2004 amendment was part of legislation making broad changes to.the laws governing the public construction industry. However, the Law, including the 2004 '3
  14. 14. amendment, applies more broadly to a wide range of industries." Id. (emphasis added). The Attorney General recognizes no exemption from the statute for the real estate industry - a significant point, given that the Attorney General's interpretation of ~ 148B is entitled to substantial deference. See Smith v. Winter Place, LLC, 447 Mass. 363, 368 (2006). The fact that the real estate industry customarily classifies agents as independent contractors is also not a basis for exempting that industry from the Independent Contractor Statute. All industries are affected when a new statute governing the treatment of workers is enacted. If those industries have a custom of violating the law, then naturally they will be more greatly affected. However, that is no reason not to enforce the statute against them. To the contrary, to effectuate the public policy underlying the Independent Contractor Statute — "to protect employees from being deprived of the benefits enjoyed by employees through their misclassification as independent contractors," Somers, 454 Mass. at 592 — courts must apply the statute to industries that have traditionally violated it. ~~
  15. 15. The MAR Amici's argument that the existence of criminal remedies in the statute "further supports the conclusion that the statute should not be interpreted to apply to real estate professionals," MAR Amici Br. at 27, must fail for two reasons. First, this is not a criminal case advanced by the Attorney General; it is a civil case brought by employees. The private civil action and the criminal enforcement provisions are separate parts of the wage statutes. Depianti, 465 Mass. at 612 ("The Attorney General's right to enforce G.L. c. 149 and the right of private citizens to enforce provisions of that chapter represent parallel and distinct enforcement mechanisms."). Second, where, as here, there is no ambiguity in either the language or intent of the statute, there is no basis for construing it to exclude an entire industry despite the absence of any statutory language suggesting such an exclusion. See Cook v. Patient Edu, LLC, 465 Mass. 548, 555-56 (2013). This is true whether the statute contains criminal penalties or not. Id.z 2 Moreover, the fact that common la.w vicarious liability principles may apply to the broker-agent relationship does not mean, as the MAR Amici suggest, that it would be impossible for real estate companies m
  16. 16. In order to protect all employees in the Commonwealth from wage theft and other abuses arising from misclassification, it is vitally important that this Court not adopt a limitation to the application of ~ 148B that is not required by the statutory language. There is no indication that the Legislature ever determined that wage theft through misclassification does not occur in the real estate industry or that businesses within that industry should be immune from suits for recovery of lost wages.3 to comply with the requirements of the Independent Contractor Statute. The vicarious liability doctrine applies in all sorts of non-employment contexts, including, for example, the franchisor-franchisee context, as this Court recognized in Depianti, 465 Mass. at 616. There is simply no correlation between this doctrine, which applies in actions brought by consumers or other third parties, and the Independent Contractor Statute, which applies to determine whether an entity must comply with the wage laws. 3 This is true even where a real estate agent is paid only through commissions, which are, as explained below, indisputably considered wages under the laws of the Commonwealth. 11
  17. 17. B. THE PLAIN LANGUAGE OF M.G.L. c. 112, ~ 87RR, THE REAL ESTATE LICENSING STATUTE, DOES NOT CREATE AN EXCEPTION TO M.G.L. c. 149, § 148B, THE INDEPENDENT CONTRACTOR STATUTE. Real estate licensing is regulated by M.G.L. c. 1.12, ~ 87RR That....statute provides ....that..... A salesman 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 the section and said broker shall be responsible with the salesman for any violation of section eighty-seven AAA committed by said salesman. M.G.L. c. 112, ~ 87RR. A plain reading of this language establishes only: (1) that the Legislature acknowledges that real estate agents have been classified as both employees and independent contractors within the real estate industry, (2) that real estate agents may be paid on a commission-only basis, and (3) that, regardless of whether a real estate agent ~s classified as an employee or an independent contractor, and regardless of whether a real estate agent is paid on a commission basis, a real estate agent must be under sufficient supervision by a broker in order to ensure compliance with the other obligations spelled out in ~ 87RR. 12
  18. 18. Nothing in the language of this licensing statute creates an exemption from the Independent Contractor Statute. On its face, the statutory language gives no indication that it is intended to guarantee that a broker be allowed to classify all real estate agents as independent contractor for all purposes. Nor does it indicate that it is intended to exempt real estate agents from coverage under M.G.L. c. 149, ~ 148B. Rather, it is intended solely to address the requirement that a broker supervise an agent to ensure compliance with the licensing requirements of the statute, and mandates that, regardless of the manner in which the real estate agent is classified, this supervision will be provided. In other words, a broker may classify a real estate agent as either an employee or an independent contractor, so long as the agent meets the applicable tests for those classifications, "but" the agent must still be subject to the statutorily required supervision, regardless of how the agent is classified. M.G.L. c. 112, ~ 87RR (emphasis added). The use of the word "but" informs a broker that the proper supervision must be provided, regardless of whether the real estate agent is an employee or an ~~
  19. 19. independent contractor. Thus, a broker may not avoid providing the required supervision merely by ', classifying an agent as an independent contractor. The Superior Court erroneously interpreted M.G.L. c. 112, ~ 87RR, to guarantee that a real estate business may, at its discretion, treat a real estate agent as an independent contractor for all purposes. r Indeed, the entire opinion is based upon the Superior Court's conclusion that, under ~ 87RR, a real estate business must be able to treat real estate agents as independent contractors and that the Independent Contractor Statute cannot apply to real estate agents. Thus, the Superior Court held that ~ 87RR created an exemption from coverage under ~ 148B for real estate agents. However, ~ 87RR does not address the issue of whether a real estate agent is an independent contractor or an employee for purposes of the payment of wages - despite also acknowledging that real estate agents can be "employee[s] or independent contractor[s]." M.G.L. c. 112, ~ 87RR. Accordingly, the question of whether a real estate agent is an employee for wage purposes. is determined in the same way as it. is for any other employee, namely, by 14
  20. 20. applying the test established by ~ 148B. Because ~ 87RR does not address the question of whether a real estate agent is an employee for the purposes of the payment of wages, it does not conflict with ~ 148B and it does not create an exemption to that statute. C. THE LEGISLATIVE HISTORY OF THE RELEVANT STATUTES CONFIRMS THAT REAL ESTATE AGENTS ARE NOT EXEMPT FROM M.G.L. c. 149, ~ 148B. 1.. The only attempt to exclude real estate agents from coverage under ~ 148B failed. Had the Legislature intended to exempt the real estate industry from the Independent Contractor Statute through the real estate licensing statute, it would have done so through the use of clear and explicit language. Yet the real estate licensing statute does not even mention §.148B. Indeed, the only time that an attempt was made to explicitly exempt real estate agents from coverage under M.G.L. c. 149, ~ 148, the legislation was vetoed by the Governor. The Legislature included the following language in Section 8 of Chapter 304 of the Acts of ~~: The second paragraph of section 87RR of chapter 112 of the General Zaws is hereby amended by striking out the third sentence and inserting in place thereof the following sentence: Notwithstanding section 1488 of 15
  21. 21. Chapter 149, a salesmen or broker may be affiliated with a broker either as an employee or as independent contractor, as determined by their written agreement and customer work practices, but shall be under such supervision of the broker as will ensure compliance with this section ... (Add. 42)(emphasis added). However, Governor Patrick vetoed this language. In his message to the Legislature, he stated: I am disapproving section 8 because it seeks to exempt real estate sales persons and brokers from the independent contractor laws, G.L. c. 149, ~ 148B, recently enacted to reduce employee misclassification and abuse of workers' status. The section would allow real estate sales persons and brokers to rely on written agreements to avoid the classification rules for independent contractors. The Secretary of Labor and Workforce Development and I are working to address employee misclassification in our underground economy task force, and we are concerned that this section is inconsistent with that objective. (Add. 47). This legislative history establishes that the Legislature believed that real estate agents were covered by ~ 148B and that an explicit amendment was necessary to create an exemption.4 The Governor viewed 4 See Duracraft Corp. v. Holmes Products Corp., 427 Mass. 156,, 163 (1998) ("Statutes ar.e to be interpreted, not alone according to their simple, literal or strict verbal meaning, but in connection with their development, their progression through the ~~~
  22. 22. this amendment as creating an exemption and vetoed it because he did not believe an exemption was good policy. Had the 2008 amendment been enacted, it would clearly have exempted real estate agents from coverage under ~ 148B. However, the amendment did not become law - the Legislature passed a different amendment taking into account the Governor's comments. Consequently, the exemption relied upon by the' Superior Court and Defendants-Appellees simply does not exist. Accordingly, the legislative history regarding this issue is clear. No specific exemption for real estate agents from coverage under M.G.L. c. 149, ~ 148B, has ever existed. The one time that the Legislature sought to adopt such an exemption, it was vetoed because the Governor did not agree with the. attempt "to exempt real estate sales persons and brokers from the independent contractor laws, G.L. c. 149, ~ 148B." (Add. 47). No such exemption has been become law. legislative body, the history of the times, prior legislation. "). ?_7
  23. 23. '' 2. A worker may be an employee for some. purposes and not others and when the Legislature. has exempted workers from coverage by laws intended to protect employees, it has done so explicitly. The various statutes that protect emp,loye~es often have their own definition, or test, that establishes whether a worker is an "employee." For example, the definition of employee is different under the wage - laws, workers' compensation laws, and unemployment laws. See M.G.L. c. 149, ~ 148; M.G.L, c. 152, ~ 1; M.G.L. c. 151A, ~ 6. Similarly, the test for determining whether someone is an employee for federal income tax purposes is different than the test for determining whether someone is an employee under the federal Fair Labor Standards Act, 29 U.S.C. ~ 201, et seq, Compare 26 U.S.C. ~ 3121(d)(2) (defining "employee" status for federal tax purposes) and 26~ C.F.R. ~ 31.3121 (adopting test for determining if worker is an "employee" for tax purposes), w.i.th 29 U.S.C. ~ 203 (defining "employee" under the FLSA) and Donovan v. Agnew, 712 F.2d 1509, 1510-11 (1st Cir. 1983) (adopting "economic realities" test for determining if worker is an employee under FLSA). When a category of workers is specifically excluded from coverage by one of these statutes, the
  24. 24. Legislature has made the exemption explicit. Specifically, when it has exempted real estate agents paid on a commission-only basis from coverage under the workers' compensation laws and the unemployment compensation laws, it has done so explicitly. See M.G.L. c. 152, ~ 1(4) (defining "Employee", as "every ', person in the service of another under any contract of hire, express or implied, oral or written, excepting ... a salesperson affiliated with a real estate broker pursuant to an agreement which specifically provides for compensation only in the form of commissions earned from the sale or rental of real property"); M.G.L. c. 151A, ~ 6(p) ("The term `employment' shall not include [s]ervices performed by an individual as a real estate broker or salesman if he is licensed by the state as a real estate broker o.r salesman, and if he is remunerated solely by way of commission"}. Accordingly, it is hardly dispositive that M.G.L. c. 112, ~ 87RR acknowledges that, depending upon the circumstances, a real estate agent may be an employee or an independent contractor. Neither is it dispositive, as Defendants-Appellees appear to argue, that the United States Congress or the Legislature of 19
  25. 25. the Commonwealth have exempted real estate agents from certain tax laws. Brief of Defendants-Appellees at ~~~ Notably, real estate agents are not specifically exempt from coverage under the most important federal law related to the payment of wages, the FLSA. Real estate agents, or salespersons, are covered by the FLSA except where, based upon the specific facts related to the work performed, they are found to fit under one of the broader exemptions established by that law for an outside salesperson or independent contractor. See, e.g., Luther v. Z. Wilson, Inc., 528 F. Supp. 1166, 1168 (S.D. Ohio 1981) (finding that employer had not established that a real estate salesperson was exempt under outside sales exemption and thus finding that salesperson was owed minimum. wages and overtime); Perdomo v. Ask 4 Realty & Mgmt., Inc., 298 F. App'x 820, 821 (11th Cir. 2008) (applying multi-factor economic realities test to determine whether real estate salesperson was an independent contractor and thus exempt from coverage under the FLSA). Consequently, and as with any other type of worker, the question of whether a real estate agent is 20
  26. 26. an employee under § 148B turns on the language and interpretation of that statute as applied to the specific facts of this case. If a category of worker is exempted from coverage by a statute, that exemption is created through the use of specific language. 3. The 2010 amendment to M.G.L. c. 112, ~ 87RR, merely acknowledged that real estate agents - like other types of employees - may be paid on a commission basis. If the Legislature had intended to exempt real estate agents from the Independent Contractor Statute, it would surely have done so in 2010, when it amended M.G.L. c. 112, ~ 87RR. Instead, the 2010 amendment merely states that a real estate agent "may, by agreement, be paid as an outside salesperson on a commission-only basis." M.G.L. c. 112, ~ 87RR. Contrary to Defendants-Appellees' arguments, this amendment has nothing to do with cementing independent contractor status for real estate agents since there is no inherent or dispositive link between independent contractors and commissions. Indeed, many employees are paid by commissions, and the Massachusetts Wage Act, M.G.L. c. 149, ~ 148, which applies to payments to an "employee," specifically covers "commissions." 21
  27. 27. See also Weems v. Citigroup Inc., 453 Mass. 147, 151 (2009) (noting that ~ 148 "expressly states that . commissions that are definitely determined and due and payable to the employee, are wages within the meaning of the act"). Thus, while the 2010 amendment may make clear that a real estate agent may be paid on a conunission-only basis, it has no bearing on the issue of whether a real estate agent is an employee or an independent contractor for purposes of the payment of wages. D. HYP~TFiETICAL CONCERNS ABOUT COMPLYING WITH THE LAW IS NOT A VALID REASON FOR EXEMPTING SHE RE~,L ESTATE INDUSTRY FROM M.G.L. c. 149, ~ 148. The Independent Contractor Statute states that it applies "[f]or purpose of this chapter and chapter 151." M.G.L. c. 149, ~ 148B(a). The private enforcement mechanism for that statute allows employees to pursue claims only under the following sections: 33E, 148, 148A, 148B, 150C, 152, 152A, or 159C. See M.G.L. c. 149, ~ 150. According to the MAR Amici, applying ~ 1488 in that manner would have a detrimental impact on the peal estate industry because it would then be required to comply with the requirements of Chapter 149. MAR Amici Br. at 14. 22
  28. 28. The MAR Amici go on to discuss specifically M.G.L. c. 149, ~~ 47, 52, 100, and 150A. However, none of those are statutes under which employees are permitted to bring claims, so they are not relevant to the issues before this Court. More significantly though, not one of the so- called burdens identified by the MAR Amici under the wage laws is singular to the real estate industry. These provisions impose obligations, which are at times difficult to satisfy, on all industries. That is the point. It is absurd for the real estate industry to suggest that it should not be held to these requirements of-the wage laws because compliance seems difficult. For example, the MAR Amici cite statutes that require that employers keep records of their employees' hours and that they provide breaks at certain intervals. MAR Amici Br. at 14-15 (citing M.G.L. c. 149, §~ 47, 52, 100). The MAR Amici complain that it would be hard to keep real estate agents' hours because they do a lot of work outside of the office and that breaks would be challenging because they could be called on at any time. However, that is no different from any profession in which 23
  29. 29. employees make customer calls, perform delivery services, or otherwise do their work in numerous locations and/or are on call for their employer or clients. The MAR Amici also argue, somewhat surprisingly, that real estate companies should be able to take deductions from their agents' pay without the risk that those deductions will be deemed to be unlawful under the Wage Act. MAR Amid Br. at 15-16. But if real estate agents are employees under ~ 148B (as will likely be the case as to some real estate companies — like Defendants-AppEllees in this case — but not others), then they are subject to protection against improper deductions from their wages just like any other employee. If a court determines that, for example, monthly "desk fees" charged to agent- employees "operate to require employees to buy their jobs from employers" and therefore "violate public policy," Awuah v. Coverall North America, Inc., 460 Mass. 484, 498 (2011), then of course the employer charging those fees should be held accountable. Finally, the MAR Amici argue that the minimum wage laws should not apply to the real estate industry because they "bluntly contradict[] the fact that real 24
  30. 30. estate professionals typically earn their compensation in the form of commissions MAR Amici Br. at 16. However, as noted above, the wage laws recognize that employees may be paid by commission and explain how the minimum wage and overtime provisions are to be applied to employees paid by commission. See 455 CMR ~ 2.01 (explaining how to calculate regular and overtime rate for employees paid on "commission basis"); M.G.L. c. 149, ~ 148 (stating that it applies "so far as apt, to the payment of commissions when the amount of such commissions, less allowable or authorized deductions, has been definitely determined and has become due and payable to such employee"). It wi11 be an issue for the trial court to determine the damages recoverable for Defendants-Appellees' wage law violations, but their commission payment structure. certainly does not exclude them from the requirements of the wage laws. E. BOSTON PADS IS NOT A TYPICAL REAL ESTATE COMPANY. While Defendants-Appellees attempt to characterize this case as being about the real estate industry in general, it bears noting that Defendants- Appellees operate their real estate company in a 25
  31. 31. manner that does not resemble the "industry standard" described by the MAR Amici and elsewhere. The MAR Amici claim that "real estate industry professionals occupy a unique sphere of the workforce." MAR Amici Br. at 4. This is so, they argue, because "professionals within the real estate industry have long been associated with an independence-based approach to their careers" and because they "make their own hours, determine their own business productivity, are responsible for their own expenses, are paid on commission rather than receiving a base salary, ar~d are responsible for their own taxes." Id. at 4-5. They go on to explain that "the real estate industry is a highly individualistic and innovative business. ." and that real estate professionals enjoy "latitude in terms of setting their own schedules and developing their own personal style and marketing techniques." Id. at 5, 6-7. This description in the MAR Amici's brief of the "independent and self-made" real estate professional, id. at 28, does not match the established facts related to Defendants-Appellees' real estate agents. Rather than "mak[ing] their own hours," id. at 5, Defendants-Appellees require their agents to work ~"
  32. 32. specific shifts for a specific number of hours each month. Append. 50-54, ~~ 29-34.5 Instead of "determin[ing] their own business productivity," MAR Amid Br. at 5, Defendants-Appellees discipline agents who fail to meet the productivity goals they set. Append. 60-61, 9I9[ 44-45. Rather than being "highly individualistic" and "developing their own personal styles and marketing techniques," MAR Amid Br. at 5- 6, Defendants-Appellees' agents must dress a certain way, answer the phone a certain way, and are even told by Defendants-Appellees that their clients are not their own, but instead belong to the company. Append. 44, 64, 9[9I 13, 33; 154-55. Resources from the website of the National Association of Realtors further highlight the difference between Defendants-Appellees and a traditional independent contractor-based real estate company. A document entitled "Independent Contractor Statute - Frequently Asked Questions" contains a list of "types of activities that should be avoided" by companies endeavoring to classify their agents as independent contractors. [Add. 49]. Of the five 5 References to the Joint Appendix in this case are cited as "Append. [page number]."
  33. 33. items on the list, the facts establish that Defendants-Appellees engage in four: .Activity to be Avoided Defendants-Appellees "Requiring the worker to Agents must work perform the services mandatory shifts, during during set work hours" which time they must answer the phone, take out of the trash, update faxes, and are prohibited from going out on showing. Append. 50-51, y[9I 29-30. Agents must also work "front desk" shifts to perform "warm calling" (i.e., calling landlords to obtain listings), update the company's database, set up meetings, and market properties. Append. 52, 9I 31. "Requiring the worker to Agents must perform "warm perform the services at a calling" and other specific location" activities from the office during the mandatory office and front desk shifts. Append. 50-52, yI9[ 29-31. "Making attendance at Agents must regularly staff meetings mandatory" attend mandatory meetings with Defendants- Appellees' management.' Append. 35, 9I 4; 114. "Providing training to Agents must extensive the worker" complete mandatory training, which includes 60 hours of "front desk" shifts and time spent completing 23 "galleries" (photographic and videographed tours of properties). Append. 45- 50, 9I9I 21-28. Add. 50.
  34. 34. Respectfully submitted, MASSACHUSETTS EMPLOYMENT LAWYERS ASSOCIATION & THE MASSACHUSETTS BUILDING TRADES COUNCIL, AFL-CIO, BY...their_ attorneys. 11~~~~~ Ian 0. Russell (BBO #673387) PYLE ROME EHRENBERG PC 2 Liberty Square, 10th Floor Boston, MA 02109 (617) 367-7200 irussell@pylerome.com Nicole Horberg Decter (BBO #658268) SEGAL ROITMAN, LLP 111 Devonshire Street, 5th Floor Boston, MA 02109 (617) 742-0208 ndecter@segalroitman.com DATED: July 31, 2014 30
  35. 35. CERTIFICATE OF SERVICE I hereby certify that on July 31, 2014, two true and accurate copies of this brief were delivered by first class mail to: Hillary Schwab Brant Casavant FAIR WORK P.C. 192 South Street, Suite 450 Boston, MA 02111 Robert Kutner Stephen Perry Christopher Maffucci CASNER & EDWARDS LLP 303 Congress Street Boston, MA 02110 31 Ian 0. Russell
  36. 36. CERTIFICATE OF COMPLIANCE I hereby certify that this brief complies with the rules of this Court that pertain to the format and filing of briefs. Ian 0. Russell 32
  37. 37. ', ADDENDUM TABLE OF CONTENTS An Advisory from the Attorney General's Fair Labor Division on M.G.L. c. 149, ~ 148B, 2008/1......Add. 1 Executive Order No. 499 .........................Add. 8 St. 2008, c. 304, ~~ 1-32 ......................Add. 13 House No. 5075, Letter to Senate and House of Representatives from Gov. Deval Patrick (Aug. 2008)................Add. 45 National Association of Realtors, "Independent Contractor Status - Frequently Asked Questions" ..................Add. 49
  38. 38. An Advisoryfrom the Attorney General's Fair Labor Division on M.G.L.c.149,s.148B 2008/11 The Office ofthe Attorney General(AGO)issues the following Advisory regarding M.G.L,c. 149,s. 1483,the Massachusetts Independent ContractorLaw orthe Massachusetts Misclassification Law(the "Law"). This Advisory provides guidance with respectto the Attorney General's understanding ofand i enforcement ofthe Law. This Advisory is not aformal opinion. Opinions ofthe Attorney General are formaldocuments rendered pursuantto specific statutory authority. M.G.L.e. 12.s.3,6 and 9. The Advisory is intended to provide guidance only and does not create any rights or remedies. I. INTRODUCTION A. The Need for Enforcement The need for proper classification ofindividuals in the workplace is ofparamount importance to the Commonwealth.z Entities that misclassify individuals are in many cases committing insurance fraud and deprive individuals ofthe many protections and benefits,both public and private,that employees enjoy. Misclassified individuals are often left withoutunemploymentinsurance and workers'compensation benefits.In addition,misclassified individuals do nothave accessto employer-provided health care and may be paid reduced wages or cash as wage payments. Similarly,entities that misclassify individuals deprive the Commonwealth oftaYrevenue thatthe state would otherwise receivefrom payroll taxes. In addition,as a result ofmisclassification,the Commonwealth often incurs additional costs,such as providing health care coverage for uninsured workers. Other potential costs forthe Commonwealth include providing workers'compensation benefits paid by the Workers'Compensation TrustFund,and unemployment assistance without employer contribution into the Division ofUnemployment Assistancefund,.among other indirect costs. Finally,businesses that properly classify employees and follow all ofthe relevant statutes regarding employment are likely to be at a distinctcompetitive disadvantage when vying forthe same work, customers or contracts as those businesses that do not play by the rules. Further,by paying the proper taxes and insurance premiums,businesses following the Law are,in effect,subsidizing those businesses that do not. Misclassification undermines fair market competition and negatively impacts the business environmentinthe Commonwealth. The AGO expects businesses to contract only with businesses that properly classify their workers. 1 This Advisory supersedesthe Attorney General's prior Advisories regarding M.G.L.c. 1~9.s. 14$B,including "An Advisoryfrom the Attorney General,Amendments to MassachusettsIndependent ContractorLaw,"Advisory 2004/2;and an"Advisoryfrom the Attorney General'sFairLabor and BusinessPractices Division on the Issue of Employee Versus Independent Contractor," Advisory 94/3. z The Commissioner ofRevenue is charged with administering the Massachusetts wage withholding laws under M.G.L.c.6~8,which provides a different definition ofemployee than ii~.C~.L, c. 149,s. 14~~3,for purposes of Massachusetts income tax withholding. See.T~e,~~artrnc;nt aflZevenare T7R OS-II~ F{fect of~~'e~i~ Fm,~~Tovee ~Jassifzcc~tion under;tilG.L. c. 1=1.9..s. 14813 nn l3ritlalaolclin~ r~f7ax ors ~T'ae•e.s undef• ~17CTI c t'~1i. In addition,a definition similar but notidentical to M.G.L.c. 149,s. 148B,exists for unemploymentinsurance purposes. NI.Ci.L. c. 1S1A.s.2. The Massachusetts Workers'Compensation Law also provides a different definition ofemployee. 14~LG:L.c. t52,s.'I(4). Advisory 2008/1 Add. 1 Page 1 of7
  39. 39. B. The History ofthe Law The proper classification ofemployees haslong been an issue ofgreat concern in the Commonwealth. Under commonlaw,a number offactors determined the existence ofan employer/employee relationship based on the totality ofthe relationship. See,e.g., Commonwealth v. Savage,31 Mass.App.Ct.714 (1991). Those factors included the degree ofcontrol;the opportunity for profit and risk ofloss,the employee's investmentin the business facility,the permanency ofthe relationship,the skill required and the degree to which the employee's services were integralto the business. In 1990,Massachusetts enacted the first version ofthe Law. By enacting the Law,the Legislature established thatnotwithstanding that a working relationship could be considered to be one ofindependent contractor under common law,the worker may still be deemed in employmentforthe purposes ofthe Law. Boston Bicycle Cour^ieNS v. DeputyDi~ecto~ ofthe Division ofEmployfnentand Ti^aining,56 Mass. App.Ct.473,477(2002). Subsequentto its enactmentin 1990,the Law has undergone several amendments including:Section 214 ofChapter 286 ofthe Acts of1992;Section 165 ofChapter 110 ofthe Acts of1993;Section 12of Cha~~ter 23~ oftlie Acts ofIt398; and Section26 ofCl~a~ter 193 a[the acts 012004. The 2004 amendment was part oflegislation making broad changes to the laws governing the public construction industry. However,the Law,including the 2004 amendment,applies more broadly to a wide range of industries. The 2004 amendmentkeptintact,in large part,the standard for determining whether an individual is an employee,but made several changesfrom the earlier version ofthe statute. The amendment deleted the element"or is performed outside ofall places ofthe business ofthe enterprise" as an alternative factor in prongtwo. In addition,the first element ofprongtwo ofthe Law had read:"such service is performed ... outside the usual course ofbusinessfor which the service ispegfoamed..." After the 2004 amendment,the elementreads:"the service is performed outside the usual course ofbusiness of the employe)°." Finally,the amendmentadded"trade"to the list ofactivities eligible forindependent contractor statusin prong three. II. THE LAW M.G.I,.c. 149,s. 1488,provides athree-parttest which requires-that allthree elements(commonly referred to as prongs one,two and three orthe A,B,Ctest)must existin order for an individualto be classified otherthan as an employee. The burden ofproofis on the employer,and the inability ofan employer to prove any one ofthe prongsis sufficientto conclude thatthe individual in question is an employee. M.CJ.L,c. 149 s. 14SB(using the term"unless"). See also Sealli v. Citizens I'i~zancial Gror.~n, 2006 WL 1581625,*14(D.Mass.2006);Rainbow Development,LLC v. Com.,Dept. ofIndustrial Accidents, 2005 WL 3543770,*2(Mass.Sup. Ct.2005). Courts have had a limited opportunity to interpret M.G.L,,c. I49ts. 148B. In College NewsSeNVice v. DeparhnentofIndustrialAccidents,21 Mass.L.Rptr.464,2006 WL 2830971,the Superior Court noted that M.G.L.c. 14},s. 148is almostidenticalto M.G.L.c. 151A,s,2,the statute used by the Division of UnemploymentAssistance,and therefore relied onthe case law analyzing 1VI.G.L. c.151.s.2. to interpret ?~1.G.I,. c. 149,s. l~&L. See *4("Ifthe Legislature uses the samelanguage in several provisions concerning the same subject matter[e.g.,the definition ofan employee in distinctionfrom an independent contractor],the courts will presume itto have given the language the same meaning in each provision."). Advisory 200811 Add. 2 Page2of7
  40. 40. See also Commonwealth v. Gee°mano,379 Mass.268,275-76(1979). Because prongs one and three of M.G.1.c. 1~9,s. 1~8B and M.G.L.c. 1~1A,s.2 are nearly identical and because prongtwo ofM.G.L,. c. 149,s. 14sB contains one ofthe two steps ofprong two in M.G.L.c. 151A,s.2,Massachusetts case law interpreting IvI.G.L. c. 151A,s.2provides a useful guide to interpreting 1!C.G.L. c. 149,s. 14~4B. A.The Three Prong Test Prong One:Freedom from Control The first prong ofM.G.I..c. 149,s, 1488 providesthatthe individual must be"free from control and direction in connection withthe performance ofthe service,both under his contractforthe performance ofservice and in fact"in orderforthe individualto be an independent contractor. In Commissioner ofthe Division ofUnenzploymentAssistance v. Town Taxi ofCape Cod,68 Mass.App.Ct.426,434(2007),the Court noted in interpreting the nearly identical language ofprong one ofM.G.L.c, 151A,s.2that: The first part ofthetest examines the degree ofcontrol and direction retained by the employing entity over the services performed. The burden is upon the employer to demonstrate thatthe services atissue are performed freefrom its control or direction. The test is notso narrow as to require that a worker be entirely free from direction and control from outside forces. Id.(citations omitted). The first prong ofthe testincludes a determination ofthe employer's actual control and direction ofthe - individual. See M.CT.I.,. c. 149,s, l4f~B(using the phrase"in fact"). An employment contract orjob description indicating that an individual is freefrom supervisory direction or control is insufficient by itselfto classify an individual as an independent contractor underthe Law.To be free from an employer's direction and control,a worker's activities and duties should actually be carried out with minimal instruction.For example,an independent contractor completes thejob using his or her own approach with little direction and dictates the hours that he or she will work on thejob. Prong Two:Service Outside the Usual Course ofthe Employer's Business Prong two ofM.G.I... c. 149,s, l~8I3(a)(2}provides thatthe service the individual performs mustbe "outside the usual course ofbusiness ofthe employer"in order forthe individualto notbe classified as an employee. Prior to the 2004 amendment,the employer could alternatively demonstratethatthe work was performed "outside ofall places ofthe business ofthe enterprise." The Law does not define"usual course ofbusiness"and Massachusetts courts have had limited opportunities to do so. In AtholDaily News v. Division ofEmploymentand Training,439 Mass.171,179(2003),the Courtfound that newspaper carriers were performing the"usual course ofbusiness" ofthe newspaper relying on the employer's own definition ofits business. In American Zurich v. Dept. ofIndustrialAccidents,2006 WI, 2205085,*4(Mass.Super.2006),JudgePaul Troy noted that"a worker whose services form aregular and continuing part ofthe employer's business"and"whose method ofoperation is notsuch an independent business"through which workers'compensation costs can be channeled,"should be found to be an employee." Id. Yet,"ifthe worker is performing services that are part ofan independent,separate, and distinct business from that ofthe employer," prong two is notimplicated. Id. Advisory 2008/1 Add. 3 Page 3 of7
  41. 41. Prong Three:IndependentTrade,Occupation,Profession or Business Prong three provides thatthe individual"is customarily engaged in an independently established trade, occupation,profession or business ofthe same nature as thatinvolved in the service performed"in order for the individualto be classified otherthan as an employee. M..Ci.L. c. 1~9,s. ].4$:I~(a)(3}."Under the third prong,the court is to consider whetherthe service in question could be viewed as an independent trade or business because the worker is capable ofperforming the service to anyone wishing to avail themselves ofthe service or,conversely,whether the nature ofthe business compels the worker to depend - on asingle-employer forthe continuation ofthe services,"-Coverallv.Division ofZlnemployment - - - Assistance,447 Mass.852,857-58(2006)(interpreting prong three ofM.G.L.c. 151A,s. 2). The court went on to note in Coverall: Although the court can consider whether a worker is capable ofperforming the service to anyone wishing to availthemselves ofthe services,the court may also consider whether the nature ofthe business compels the worker to depend on a single employer for the continuation ofthe services [citation omitted]. In this regard,we determine whether the worker is wearing the hatofthe employee ofthe employing company,or is wearing the hat ofhis own independent enterprise. Id. B. Issues Deemed Irrelevant An employer'sfailure to withhold taxes,contribute to unemploymentcompensation,or provide worker's compensation is not considered when analyzing whether an employee has been appropriately classified as an employee. M.G.L,c. 149,s. 1.4~B(b). Hence,an employer's beliefthat a worker should be an independentcontractor has no relevance in determining whetherthere has been violation ofthe Law. Similarly,the Law deemsirrelevantthe status ofa worker as a"sole proprietor or partnership,"forthe purpose ofobtaining worker's compensation insurance. M.C'x:L.c. 1'k9,s. 148B{"c). C.Violation ofthe Law M.G.L.c. 1~9,s. 1~8}3(d)provides that an employer violates thestatute when twa acts occur. First,the employer classifies or treats the individual otherthan as an employee although the worker does not meet each ofthe criteriainthe three prong test. Second,in receiving servicesfrom the individual,the employer violates one or more ofthe following laws enumerated inthe Law: • The wage and hour laws setforth in M.G.L.c. 149. • The minimum wage law set outin:M:.C.T.I.,. c. 1S1.s. lA,lB,and 1J;45S C:IvLR 2.()1,etseq. • The overtime law setforth in NI.G.1~.c. 151 s. 1 1A 1B aad 19. • The law requiring employersto keep true and accurate employee payrollrecords,and tofurnish the records to the Attorney General upon request as required byIvI.G.Z. c. 1ti1 s. 15. • Provisions requiring employersto take and pay over withholding ta~Yes on employee wages. M.Ci.L.c.62B.3 • The worker's compensation provisions punishing knowing misclassification ofan employee. M.G.I,.c. 152,s. 14. 3 As noted infootnote 2,for purposes ofincome taY withholding,M.{i.L. c. ~2B provides a definition ofemployee that differsfrom the three prong testin NI.G:L.c. 1~9,s. 148B. Advisory 2008/1 Add. 4 Page4of7
  42. 42. The statute authorizesthe Attorney Generalto impose substantial civil and criminal penalties,and in certain circumstances,to debar violatorsfrom public works contracts. 1vI.G.I,. c. 149,s.27C(al(31. The penalties and length ofdebarment depend upon the nature and number ofviolations. M.G.L.c. 1~9,s. I4~B d also creates liability for both business entities and individuals,including corporate officers,and those with management authority over affected workers. ...III. ENFORCEMENT GUIDELINES A. GeneralEnforcement Guidelines The AGO recognizesthat enforcement guidelines are usefulto employers,entities and individuals who must determine whether a particular situation or individual has employee status. When enforcing the Law,the AGO attempts to protect workers,legitimate businesses and the Commonwealth,consistent with the goals ofthe Law outlined inthe Introduction. The Law is focused on the misclassification ofindividuals. In the eventthat all individuals performing a service are classified and legitimately treated as employees ofan entity(paid W-2income,received W-2 taxforms,subjectto withholdingsfor federal and state taxes,covered by workers'compensation insurance,eligible for unemployment compensation benefits,etc.)and are performing the service as an employee,then there is no misclassification ofthose workers. Accordingly,in determining whether the Law has been violated,the initial question is whether an individual or individuals are classified otherthan an employee. For example,ifpainting company X cannotfinish a paintingjob and hires painting company Y as asubcontractor to finish the paintingjob,provided that all ofthe individuals performing the painting are employees ofcompany Y,then the Law does not apply. However,ifpainting company X hires individuals as independent contractors to finish the paintingjob,then this would be a violation of prongtwo and a misclassification underthe Law. The AGO is cognizantthatthere are legitimate independent contractors and business-to-business relationships in the Commonwealth. These business relationships are importantto the economic wellbeing ofthe Commonwealth and,provided thatthey are legitimate and fulfill their legal requirements, they will notbe adversely impacted by enforcement ofthe Law. -The difficulty arises when businesses are created and maintained in order to avoid the Law. The AGO will enforce the Law against entities that allow,request or contract with corporate entities such as LLCs or S corporations that existfor the purpose ofavoiding the Law. In these situations,the AGO will consider,among other factors, whether:the services ofthe alleged independent contractor are notactually available to entities beyond the contracting entity,even ifthey purportto be so; whetherthe business ofthe contracting entity is no differentthan the services performed by the alleged independent contractor; orthe alleged independent contractor is only a business requested or required to be so by the contracting entity. In reviewing situations for misclassification,the AGO considers certain factorsto be strong indications of misclassification that warrantfurther investigation and may resultin enforcement. These include: • Individuals providing services for an employer that are notreflected onthe employer's business records; • Individuals providing services who are paid"offthe books","underthe table",in cash or provided no documents reflecting payment; • Insufficient or no workers' compensation coverage exists; • Individuals providing services are not provided 1099s or W-2s by any entity; Advisory 2008/1 Add. 5 Page 5 of7
  43. 43. • The contracting entity provides equipment,tools and supplies to individuals orrequires the purchase ofsuch materials directly from the contracting entity;and • Alleged independentcontractors do notpay income taxes or employer contributions to the Division ofUnemployment Assistance. Since it is notfeasible to address in this Advisory every situation thatcould occur and since each case involves its own set offacts,itshould be recognized that each potential enforcement action shall be reviewed by the AGO on a case-by-case basis,consistent with the Law. B. Prong Two Guidelines Dueto the nature ofprongtwo and the lack ofjudicial precedent,the AGO recognizes the complexitythat prongtwo presents and the concerns regarding legitimate independent contractors,particularly among certain segments ofthe workforce. As discussed above,the AGO emphasizesthatthe initial question in determining whetherthe Law has been violated is whether an individual or individuals are classified otherthan as an employee. Only when an individual or.individuals are classified otherthan as an employee willthere be a determination of whether any ofthe prongs — including the complex prong two —are violated. InAtholDaily News,the Court advised that no prong should be read so broadly as to renderthe other factors ofthe testsuperfluous. 439 Mass.at 180. Thus,prongtwo should not be construed to include all aspects ofabusiness such that prongs one and three become unnecessary. In its enforcement actions,the AGO will consider whether the service the individualis performing is necessary to the business ofthe employing unit or merely incidentalin determining whether the individual may be properly classified as other than an employee under prong two. Some examples ofhow the Attorney General will apply prong two4: • A drywall company classifies an individual who is installing drywall as an independent contractor. This would be aviolation ofprongtwo becausethe individual installing the drywall is performing an essential part ofthe employer's business. • A company inthe business ofproviding motor vehicle appraisals classifies an individual appraiser as an independentcontractor. This would be aviolation ofprong two because the appraiser is performing an essential part ofthe appraisal company's business. • An accounting firm hires an individualto move office furniture. Prongtwo is not applicable (although prongs one andthree may be)because the moving offurniture is incidental and not necessary to the accounting firm's business. 4In interpretingthe Illinois independent contractorlaw,the Supreme CourtofIllinois noted in Cmpetland U.S.A., Inc. v.ILDept. ofEmploymentSecui°ity,201 I11.2d 351,386-88(2002): The washing ofwindows or mowing ofgrass for a business is incidental. Butwhen one is in the business ofselling a product,sales calls made by sales representatives are in the usual course of business because sales calls are necessary. When one is in the business ofdispatching limousines, the services ofchauffeurs are provided in the usual course ofbusiness because the act ofdriving is necessary to the business. Although theIllinois statute is notthe same as the Massachusetts statute,the court's analysis is usefulfor guidance on how the Attorney General will undertake prongtwo enforcement. Advisory 2008/1 •.. Page6of7
  44. 44. N.-CONCLUSION Asthis Advisory reflects,the AGO will carry outits enforcementresponsibilitiesto serve the goals ofthe Law as articulated inthe Introduction. The Law has been passed and amended over timeto address serious abuses by various entities,and the AGO's goal is to prevent and remedy those practices without disrupting legitimate business activity. Advisory 2008/1 Add. 7 Page 7of7
  45. 45. THE COMMONWEALTH OF MASSACHUSETTS ;, EXECUTIVE DEPARTMENT w ~ d STATE HOUSE • BOSTON 02133 '` (617) 726-4000 p~ e ~~M s~~v OEVAL L PATRICK GOVFAN~R TIMOTHY P. MURRAY LIEUTENANTGOVERNOR .~ . By His Excellency DEVAL L. PATRICPC GOVERNOR EXECU'T'IVE ORDER NO.499 Establishing a Joint Enforcement Task Force on the Underground Economy and Employee Misclassification WHEREAS,the health ofthe Commonwealth's economy,its workers and its businesses is harmed by the existence of an illegal underground economy in which individuals and businesses conceal their activitiesfrom government licensing, regulatory and taxing authorities; WHEREAS,individuals and businesses that operate in the underground economy do so in violation of labor, employment,tax, insurance and occupational safety laws, by failing to pay required wages,carry workers'compensa~l:ion insurance,comply with health, safety and licensing requirements,or pay income taxes and payroll taxes thatfund unemployment insurance,disability insurance, and Medicare and Social Security benefits; WHEREAS,certain businesses also improperly classify their employees as"independent contractors"(referred to as"employee misclassification")and hire undocumented workers to avoid compliance with labor, erriployment,tax,insurance and regulatory requirements; WHEREAS,'the underground economy and,in particular,the practice of employee misclassification:(1)exploits vulnerable workers and deprives them of legal benefits and protections;{2)gives Add. 8
  46. 46. unlawful businesses an unfair competitive advantage over lawful businesses by illegally driving,down violators'taxes,wages,and other overhead costs;(3)defrauds the government of substantial tax revenues;and(4)harms consumers who suffer atthe hands of unlicensed businesses thatfail to maintain minimum levels of skills and knowledge; WHEREAS,a recentstudy based on audits of Massachusetts unemployment recordsfor construction employers between 2002 and 2005found that up to 14% ofthe employees covered by the ai.~dits were estimated to have been misclassified by employers; WHEREAS,efforts to combat the underground economy and employee misclassification historically have been divided among various agencies, diminishing ~khe timeliness,efFiciency and effectiveness ofsuch efforts; and WHEREAS,the creation ofijoint task forces has proven to be an effecfiive mechanism for enhancing interagency cooperation, information sharing,and the prosecution of violators; NOW,THEREFORE,I, Deva{ L. Patrick, Governor ofthe Commonwealth of Massachusetts, by virEue ofthe authority vested in me by the Constitution,Part2,c.2,§ I, Art. I, do hereby order as follows: Section 1. There is hereby established the Joint Enforcement Task Force on fihe Underground Economy and Employee Misclassification(the"Task Force"). Section 2. The Task Force shall consist ofthe following members or their designees: the Director of Labor,the Commissioner of Revenue,'the Commissioner ofthe Department of Industrial Accidents,the Chiefofthe Attorney General's Fair Labar Division,the Commissioner ofthe Division of Occupational Safety, the Commissioner ofthe Department of Public Safety,the director of the Division of Professional Licensure,the Director of Apprenticeship Training and the Director ofthe Division of Unemployment Assistance. The Director of Labor shall chair the Task Force. 2 Add. 9
  47. 47. Section 3. The Task Force shall coordinate joint efforts to combat the underground economy and employee rriisclassification, including efforts to:(a)foster compliance with the law by educating business ownersand employees about applicable requirements.;._ (b)conductjoint,targeted inves~tigai;ions and enforcement actions against violators;(c)protect the health,safety and benefit rights of workers;and(d)restore competitive equalityfor law-abiding businesses. In fulfilling its mission,the Task Force shall: a. Facilitate timely information sharing between and among Task.Farce members,including through the establishment of protocols by which participating agencies will advise or refer to other agencies matters of potential investigative interest; b. Identify those industries and sectors where the underground economy and employee misclassification are most prevalent and target Task Force members' investigative and enforcement resources againstthose sectors,including through the formation ofjoint investigative and enfiorcement teams; c. Assess existing investigative and enforcement methods, both in Massachusetts and~in otherjurisdictions, and develop and recommend strategies to improve those methods; d. Encourage businesses and individuals to identify violators by soliciting information from the public,facilitating the filing ofcomplaints,and enhancing the available mechanisms by which workers can report suspected vio{ations; e. Solicit the cooperation and participation of district attorneys and other relevant enforcement agencies, including the Insurance Fraud Bureau,and establish proceduresfor referring cases to prosecuting authorities as appropriate; Add. 10
  48. 48. f. Work cooperatively with employers,labor,and community groups to diminish the.size ofthe underground economy and reduce the number ofemployee misclassifications by, among other means,disseminating educational materials regarding the applicable laws,including the legal distinctions between independent contractors and employees,and increasing public awareness ofthe harm caused by the underground economy and employee misclassification; g. Work cooperatively with federal,commonwealth,and local social services agencies to provide assistance to vulnerable populations that have been exploited by the underground economy and employee misclassification, including but not limited to immigrant workers; h. Identify potential regulatory or statutory changes that would strengthen enforcement efforts, including any changes needed to resolve existing legal ambiguities or inconsistencies,as well as potential legal proceduresfor facilitating individual enforcement efforts; and i. Consult with representatives of business and organized labor, members ofthe General Court, community groups and other agencies concerning the activities ofthe Task Force and its members and ways of improving its effectiveness,including consideration of whetherto establish an advisory panel under the secretary of Iabor and workforce development. Section 4. The Task Force shat( transmit an annual report to the Governor summarizing tl~e Task Force's activities during the preceding year. The report shall, without limitation: (a)describe the Task Force's efforts and accomplishments during the year; (b)identify any admiriis~trative or legal barriers impeding'the more effective operation ofthe Task Force,including any barriers to information sharing orjoint action; (c)propose, after consultation with representatives of business and organized labor, members ofthe legislature and other agencies,appropriate administrative,legislative, Add. 11
  49. 49. or regulatory changes to strengthen the Task Force's operations and enforcement efforts and reduce or eliminate any barriers to those efForts; and(d)identify successful preventative mechanismsfor ..reducing the.extent of the underground economy and employee misclassification,thereby reducing the need for greater enforcement. The Task Force also shall take appropriate steps to publicize its activities. Section 5. To the extent permitted by law,every agency witriin the Executive Branch shall make all reasonable efforts to cooperate with the Task Force and to furnish such information and assistance as the Task Force reasonably deems necessary to accomplish its purposes. Section 6. Nothing in this Executive Order shall be construed to require aci:ion inconsistent with any applicable state orfederal law. Section 7. This Executive Order shall coritinuz in effect until amended,superseded,or revoked by s~sbsequent Executive Order. ~, ~ ,.~ ._~i. Given at the Exe utive Chamber in Boston 'this ~,~~ay of March in the year of our Lord two thousand and eight and ofthe Independence ofthe United States,two hun ~ 'rt -two. M1 Q~ `~ DEVAL L.PATRICK GOVERNOR Commonwealth of Massachusetts WILLIAM FRANCIS GALVIN Secretary ofthe Commonwealth GOD SAVE THE COMMONWEALTH OF MASSACHUSETTS 5 Add. 12
  50. 50. AG~.S 24}f~$ Ch~ptet` 3Q4 AN ACT PROVIDING FOR CAPITAL FACILITY REPAIRS AND IMPP.OVEMEI4TS FQR THE COf~1MONWEALTH. tNhereas,The deferred operation ofthis actwould tend fits defeat its purpose,which is to pravide farthwith fr~rthe irt~medi~te capital improvem~r~t needs ofthe comm~r~wealth,therefore i~ is hereby de~3~recl to be are ee~r~ergencylaw;necessaryfc~rthe irr~mediate preservation ofthy: public convenience. Be if~nac~ed bythe Sena~~ and Nouse cifRepresentativesirr General Cocrrt~sseartbled,and by the authorityofthe same asfoilovis: SECTI~ht 1.To provide fc~r a program ofcapitalfacility repairs ar~d improvements tc~ prntect art improve fihe capitalfacilities ofithe carnmonwealth and for a program ofcapital asset~cquisitic~ns for genera!gaver~mentoperations,the sumssitfiorfih in sectir~ns2A,2B,2C and 2D,inclusive,for the several purposes and subjecttc~ fih~ conditions specified in this actare hereby made available, subjectfo the Paws regulating the disbursementof publicfunds,which sumsshall be in addition to any other amounts previousEyappropriated forthese purposes. NC.~ S~CTI~td Z. ~; EXECUTIVE OFFICE FOR ADNfBNISTRAT~4N ACED FINANCE Office ofthe Secretary ~100-7400..Forthe recapitalization ofthe Massachusetts Community Development Finance Garporation esfablish~d pursuantto s~ctic~n 2ofchapter40F ofthe Genera[Laws;prz~videc~,that the carporation shat!prepare a5-yearsfirategic operatic~r~s plan which shah include,buff not be limited to,{i)identification ofthe financial resources required to meetthe missian and on-going lending operations ofthe corporatian;(ii}a plan to reduce or elim€Hate the need ~c~r public subsidies to meetthe missian ~ffihe carporafiion;ar~d (iii}identificatie~n ofthe corporate rel~tiar~ship tc~ and purpose cifanyaffiliated or subsidiaryco€~parations,including a description of hawthe affiliation or subsidiaryrelationship is cansistentwith the objective offu[~Iling the rr~issian ofthe corparationa and provided further,thatthe corporation sha!!submitthe strategic operations plan to the executive office faradministration and finance and fo the hau~e and senate committees Qr~ ways and means Hatlaterthan December3~,2008$10,000,0(}0 Add. 13
  51. 51. 1 ~00-92Q0..For costs associated with the purchase and procurementofequipmentfar general governmentoperations.......................$25Q,~O.Q,OOQ ~:1'~ TI 117~~Cil~~F7~:1~~.~#C~I4'y,1~~1•/:~~t~y !1lI~~~~ X000-0700..Fnrequipmentfnr the depar~menfofcorrection and other agencies wifihin the........ executive t~fFce of publicsafetyaid securityincluding, but nofilimited t~, medical equipment, securifiJequipmentand ~ommunieations equipment.............................................$25,0OO,OClQ 8Q04-2020..Fc~rthe design,canstructi~n arrd implementation ofthe departmentofst~fe police mobile data network and are automated rr~otorvehicle ciliation system,including the use ofi"MDT" devices............ p15,C?OQ,000 s~aa-~o~~..Forthe rep6ac~menf o~stag police cruisers; provided,thatthe state police shall develap a 5-year plan which specifies the number ofvehicles to be replaced eachfiscal year over a 5-year perifld~ provided fiurther,thatthe departmentshall report annuallyto the house and senate committees an ways and means the number ofvehicles and condition ofeach vehicEe replaced underthis plan; provided further,thatthe r~pa€~ shalE a9so include, but not be limited ta,the tats( amountspentin eachfiscal year;~~d provided further,thatthefrs~ reportshall be Fled byJanuary 1!* ~~1 i1 11 8100-90 0.,farthe purchase cifstate police helicopters; provided,thatthe state police shall trade in 1 helicopterfrcam the currentinventaryofhelicopters each time a repfacemenfi medium lift helicopteris purchased,and the value ofthe trade-in shall be used to reduce fihe negotiated purchase price ofthe replacement helicopter.....,..$25,000,000 EXECUTNE{~FF[CE FC~R ADMINISTRATION AND FINANCE lnformatian and Technology Division 1790-30fl0..for casts assaciate with planning and studies,the preparation of plans and specifications, purchase ar~d procurementofinformation technoEQgy-related equipmentand r~~a~~d projects; provided,thatanyfederal reie~abursementreceived by~ state agencyin connectiar~ with projectsfunded from phis item may bs retained byfihe state agencyand expended for the purposes ofthe project,withoutfurther ~ppropri~ti4n,in addition to tf~e ame~un~s appropriated in this item, provided fiurther,thatanystag agencyreceiving federal reimbursementsfar a projectfunded from this items ~flfle a quarkerly report with fihe executive office ~c~r administration and finance,the house and senate committees on ways and rrieans,and thejointcommiftee an bonding,ca{aital e~enditures,and state assets that details, by projecfi,an annual estimate ofanticipated federal reimbursementto be received can behalfcifand e;ended fortl~e praj~ct,as will as year-to-date actin(federal reimbursementreceived and year-to-date ~ctu~l expenditures ofthe reimbursement, Add. 14
  52. 52. by project;and provided furtherth~t$1,800,400 shelf be expended far informati€~n technalogy systems upgrades afithe appeals courtand the supremejudicial court.........................$451,SOO,OOQ SE~TIOt~ 2C. EXECI~TIV~ OFFICE F4RADM~N3STPATION AND FINANCE. C7ffice ofthe Secretary 1100-8020..Forthe Massachusetts flppc~rtunity Refrcatic~n and Exans'sc~r~ Jobs Capita(Program related fie site remec~iation, preparatian and ancillaryinfrastructure imprav~ment projects; provided, thatthe local executive government bodyand a fflr-profit entityinvolved in the projectshalljointly summita requestforfunding to the secretaryofhousing as~d economicdevelopmentwhich shall include sufFcientdocumenfation including, but netlimited to,a prajecf plan with specific gaal~ and objectives fihafifiulfy documentsfife prflposed projectand demonstrates thatthe businesses assaciated with the projectwiil generate subs#antial salesfrom outside the commonwealth and will resultire the creation ofa netincrease ofatleast100 new permanentfull-timejobs in Massachuse'~s ~~vithin 24 months after receipto~a grantand commitsthatthejabsire to be mair~tain~d for atleast a 5-year period ar~d thejabs da notreplace existingjobs elsewhere in fihe cammonwealth;and pra~ided further,thattwig annu~liythe secretaryshall issue a ~nrritten reportto the clerk ofthe hQUSe ofrepresentatives and the clerk ofthe senate,who smallforward the same to the chairs ofthe pause artd senate commii~ees ran ways and means and the chairs ofthejointcommitt~~ on economic develapmentand emerging technologies which shall include detailed descriptions ofany infrastructure €mprc~vement projectsfunded underthis program,an accoun#ing ofthe variance,if any,be~vueen praposed jobs and actuaE creation afjobs,the currentand estimated amountof taxable income.expected from each projectand alEfiunds expended fc~r this purpose; provided further,thafi nestless than $25,000,000 shall be granted to gafieway cities and cities with more than 40,000 inhabitants butfewerthan 175,OOQ inhabitan#s where:{~}fhe unemployment rate is atleast 1.5 percent higherthanfihe statewide average;or(2}the median income oftie cifiy is80 per cent orI~ss ofthe state median inccame;and provided furkl~er,that nr~tless than $~5,000,040 s9~a11 be expended on projects in cities in which bofih crifieria are applicable.................$100,000,000 0640-0300..forthe Massachusetts Cult~raf Faciiifiies Fund established in secfian42ofchapter 23G ofthe General Lawsfarthe acquisition,design,consfiructic~n,repair,renovation,rehabifi#atiar~ ar c~fiher capitalimprovementardeferred maintenance tQ a culturallac€(ity$ 0,~J4Q,040 Division t~fCapitalA.~sef Marragerrrer~tar~d IUl~inte~►ance The Governor disapproved certain I~nguage and re uced,fc~llowing ifem ~102-2Qt~8..for cos#s associated with planning and studies,dispositions,acquisition ofland and bu'sidings and interests(herein by purchase,6ease for a term,including any e>:tensir~ns, notto exceed 50 years,giftor othertransfers,or byeminentdcamain underchapter79 ofthe General Laws,forthe pre{~ar~tion of plans and specifications,repairs,construction,renc~v~tior~s, Add. 15
  53. 53. imprc~ver~ents,asset managementand demolition,dispasition and ~eme~iation ofstate-owned and former cauntyfacilities end grounds and forcosts associated with repair and maintenance of buildings anc~ building systems and equipmentatvariousfacilities cifthe commonwealth;provided, thafiai3 maintenance and repair workfunded irr this item shalt be listed in t~,e capita[asst managementinformation system administered bythe divisian cifcapital asset managementand mainter~anc~;, provided further;that,where appropriate,the coraimissioner ofcapital asset managementand rr►aintenance maytransferfunds in acc~rdar~ce with the delegation Qf project cnntr~l and supervision process undersectia 40B ofchapter7oftha General Laws;provided further,that~'~ands sa transferred shelf be distrEbuted based gn the severity cifthe need thatthe repair will address end c~fh~rcriteria developed bythe divisian,ire consultatian with the secretaryof ~dministratic~n end fnance;prnvided further,thatoasts p~y~ble from this item shall inc3ude, butnot b~ limited ta,fihe casts ~fengineering and other services essenfiia(fio these projects rendered by division t~fcapifi~!asset managementand maintenance employees or byconsu4tants; 9 7 prr~vided further,thatamounts emended for division empEayees mayinclude the salaryand s~9ary~re[~ted eayaenses flfthese employees to the extentghatthey work on or in supportofthese projects; pravided furtherthat, upan certification bythe cammissic~ner c~fieducation pursuantto sec~ian4ofchapter463ofthe acts cif 2004,$60,QOO,OOQ sh~l( be expended for costs associated with the construction ofthe Essex Narth Shore Agricultural and T~chnic~E Schaal in thefawn cif Danvers;provided further,that notless than $24,00~,OOQ sha[9 be expended Fc~rthe constr~ctian ofthe Massachusetts Psyci~iatric Respite!in fih~ cityofWarcester;and provided furtE~~r,thafi ~1,~0O,OOQ shall b~ expended far infrastructure improvements end maintenance equipmentatfihe MurphySkating Rink in the South_ Bostan section ofthe cityofBoston...............................................~ $460,000,000 The governor d~sappraved c~rEain language and reduced following ifiem 11fl0-3001..Fara grant program to cities and townsforfihe purpose of providing funding fcarthe repair,renovation or canstructian of municipalf~ci6ities ar €nfrastructure or ofanycul~ura(,saciaf, recr~atior~al ter otherfacilities serving ~ municipal purpn~e,including these owned or operated by nc~nprofi'rt orgni~tions,fiechnc~logY upgrades ar~d purcl~~se ofequipment,under rules adopted by the executive c~fFce far administration and finance based upon the following criteria:an assesst~ner~t offiscal and budgetary canstraintsfacing the rnur~icipality; an analysis ofthe municip~li~y's proposed budgetand ~n~ncing ofthe repair,re ov~tian,or cc~r~struction project;the municipalifiy's need farfihe prc~~ect;the b n fifis try the municipalitythat will resui~from fihe project;and an overall evaluation ofthe merits ofthe grant propc~saE; provided,thatthe execufiive mice ofadminisfiratian and finance mayexpend not more than 1 per centcifthe total amountavailablefarthe castof administering phis program;provided further,fh~t notfess than $~OO,OOQ shall be expended farthe consfiruction Qfa concrete ~o~anda~€onfor refrigerant pipes afifihe Bourne Ice Rink; provided further, that notless than 1,0O ,OQO shall be expended farthe lVlunicipal Stadium safiety p~-c~j~ct; provided further,that natless than ~1,200,OOC~ shall bee ended fc~r improvements to the Nevvburyport Add. 16
  54. 54. senior centerin Newburyport,provided further,that notless than $7,000,000sha[( be expended far improvements to the Haverhill Stadium in Haverhill; provided fiurther,that notlessthan X100,000 shall be expended far renovations ofLakevillefawn hall; provided further,That notless than $~X0,400 steal! be expended fior renov~fiions ofiFreetcawn town half; provided further,that nc~tless than $fiOO,OOQ shall be expended for renovations of Middleborough tcswn teal[; pr~avided further,that notless thin $75, 00sh~l1 be expended for canstructic~n of~ parking lotatthe Cauncil on Aging in Middl~barough provided further,thaf notless than $3,50(3,000 shall be expended for wafi~rfront develcapm~ntin Beverly, provided further,that nc~tlessthan 10,fl00,000 sell ~e expended for clean up ofthef~rrr~er Belchertown state schaal property; provided further,that natless than $4,0OO,OUQ shall k~e expended for restoration ofthe Loew's Pali PaEace Theatre; pravided further, that nc~t less than$5 0,000 shall be expended far repairs tQ the H~mi(ton Centerin Newton Lower Falls; provided further,that nc~t 3ess than$30,000,000 shall be expended for repair Qr replacement ofv~ater pipes faceted understate highwayroutes 1 ar~d 39 in Saugus and thatsaid appropriation sha11 ~Iso be used for reimbursementto the town ofSaugusforfhe costo~ breaks to said pies located undersaid sfiate highways; provided further,that notless than$2,00 ,000 shall be expended firthe Hope House in the cityofBastan; provided further,that net[essthan $2,C?Q0,000 shal6 be expended fortyre Watertown Boys'and Gir€s' Club,(nc.; prQVided furtherthat netless than $'1,500,OOfl shall be expended for repairing the irrigation system atthe Leo J. Martin golfcourse in the city ofEaston; provided further,that ratless than$250,000 shelf be expended forthe Amesbury Carriage Museum in the cityofAmesbury;provided further,that notlessfih~n$1,00 ,000 in matching funds steal! be expended forthe construction ofa new seniorcitizen center in the tawn of Ca~fon;pravided further,that net[ess than$250,000 shah[ be spentan renovations and imprr~vemer~ts to the Qalton Town H~if; provided further,that nofiless than$2,50 ,000 shall be expended fc~rfihe renovafiion and restorafiion ofthe Everett Nall Theatre in fihe Hyde Park secfiion csf Briton; provided further,that notless than $40,000shall be expended forthe construe#ion and maint~~ance oftrails in the Tawn of Hearne;provided further,fhat raof{ess than$250,OU0 steal[ be expended fc~r rehabil~fiation and renovafiions to the Gardner Seniar Center; prr~vided fiur~h~r,that neat less than$5Q0,00 steal! be expended forthe Tawn ofAshland,to create a quietzone a~the grade level crossing on CherryStrutin Ashland,to improve economic devefapmer~tand public safetyin the Town ofAshland; pravided further,thaf netless than $800,000 shall be expended forthe reconstruction ofRa to 133from ChestnutStreetfio Carlfion Drive and Routs 97from the Grovelan~ line t~ Moulton Streetinfhe Tawn ofGeorgetown;provided further,that notless thae~ $3QO,OOC~ shall be expended for BaiBey Lane Bridge Replacementand Road 9rs~provements ire the Town of Gearge~ow~;provided further,thafi notless than X3,000,000 shall be expended to the te~wn of Burlingtonfarfihe design,construction,and impl ~ner~t tio~ cifa capital infrastructure improvement projectadj~cen~to Route 3and MiddlesexTum ike in the town o~ Burlington; pravided fiurt er,thafi netless fihan $~C~0,000 shalt be expended far infrastructure improvements related to pedestrian safety,vehicle access and parking fnr the proposed Andover Youth Centerin the Town ofAndover; prc~~i ed furkher,that netleis than 100,QOQ sh~11 be expended fr~r renovations ofCharlton Town Hall; provided further,that notless than $50,000 shall be expended for renovations offast Braokfie(d Tawn Hall; pravided further,that notless th~r~ $250,0 0 steal[ be emended to estabEish a Add. 17
  55. 55. pifat pragr~m forimplementing automatic meter-reading technc~[ogy,to be administered jointly by the Braintree ~le~tric Light Departmentand the Braintree Waterand Sewer Department; provided further,fhafi notless than $500,OOQ shat€ be expended forimprovementsfio the Water and Sewer building in fibs fiovvn of~rainfir~e; provided further,that notI~ss than $20x,000 shall be expended fio the ~anie(s ~armste~d Faundation; provided further,teat notless than ~150,0~0shat{ be e~aended forthe construction ofa new S~[tShed in the city of Fitchburg; provided further,that notless than $250,000 ~ha91 be ~xpend~d for upgrades tca the el~;vator atthe Council on Aging Center ~n BiRlerica; provided f~~rfiher,that notless than 25C1,Q00 shill be expended oi~ rer~ov~tions fc~rthe A#hoi Senir~r Center;provided further,that not €ess than $1,000,004 be expended forthe resto~atiar~ ofthe Lynch Park Carriage House in the city cif Bev~r6y; provided further,that notless than $25x,000 shat[ be expended for ADA compli~t~ce atthe tovun hal[ in Egremont;provided fur~h~r,that notless thin $X}0,000 shall ~e expended on the Beebe WoodslNighfield Qrive Walking Path ~~d parking facility in the Town of~almc~uth; provided further,that notlessthan $20C3,OOQ shall be expended of~ the design,ren~vatio~ and rec~nstrt~ction ofthe SurfDrive Bath House and the t~€d Silver Beach Bath House ire fibs Tawn ofFalrncstath; provided ~ur~her,that nc~tless fihar~$Z,O~lO,QOQ shill be expe€~ded forthe Town ofrramingh~m to construct~ C3owntown Parking Garage in close pra~t~ityto Framingham Memorial Bu6lding,serving TQV~n Uovernrnent,commercial,and related regian~l Public Service and PublicSafetyopeeatians;provided furkher,fh~t notless than $1,Q00,000 shall be expended for capital impravernents to the Bridgewatersenior center in the town afiBridgewater; provided further,thafi$75 ,{300 shall be expended fiorthe Loring Skating Arena in the tawn 4fFramingham;provided further,that notleis than $1,000,000shall be expended forthe Presentation School in Brighton; provided further,that notlessthan $2,00O,OOU shall be expended o~°a Fenvvay Community Health Center; provided further,t~a~ nQt €ess than$60 ,000 shall be expended for Prc~jecfi PEace in Boston; provided further,that notless than $250,000 shill be e~rended farc~mmunicat€ons cansolesforthe Braintree palice c~eparfinent; provided further,that notless than $250,000 Shall be expended fiatcreation and deve[c~pmentofa seniar center in Canfian; provided fuck er,that nofiless than $~,OOO,QQO shalt be expended for design end consfiruction pfa performing arts centerin Milton; provided further,that nofilessthan $1,St?O,OOQ shall be emended for design and constructian ofa senior center in East Bridgewater; provided further,that notless th~rr $5,000,000 shall be expended for design and canstructian ofa department of public works aper~fiions cenfier ire East Bric~gew ter; provided further,fihat nofiless than $'~O,OOQ,000 shall b~ expended far a municipal maintenance facilityin Canton;provided further,that natless than $100,000 shall be expended for repairs to the Chesterfawn hale; provided further,that notless than 5U0,000shall be expended forrenc~vati~ns to the nld tQUVr~ half in Easthampt~r~, provided further,that natless than $24,000,000 shill b expended fc~r the Westfield i termc~da[ar~d downtown revitalization inifi[ative; provided further,that natless than $SQO,Q00 shall be expe~cied for c~tC CQtIC~I~ltJC11ClC~ ~t CITY ~6c'~II f~l LyCiCI; provided further,that nc~~ less fi an$4,917,000 shall be e~aended fnr waterfrc~n~ developmentin Lynn; provided further,that nitless than $2,253,395 shall be expended for reconstruction cifthe Ward bath ~c~use in Lynn;provided further,that notless than $1,QOO,fl00 shall be expended forimprovements tt~ the Grand Array ofthe Republic build`€rig in Lynn; provided further,that no less thin $350;000 shall e e;.~ended for design end renovation of Add. 18
  56. 56. Topsfield town hail; provided #urther,that$500,OQ0 shalE be expended forcapital impravements to the Trailside museum;provided further,that notless than $200,000shall be emended for Watertown Landing; provided further,thatthe sum of$2£~f~,000 sha16 be made available on a matching basis wifih the townforthe e~ter~sion and repair ofsidewalks on Rote#1 ~3in the fawn of West Newbury;pr~u~ded farther,that nc~tless thin$100,000 be expended fc~rirr~pravernents to the Cie ar~mentofPubl€c W~arks Maintenance Facilities i~ the cityofUVestSpring~ieid; provided further, ~h~t gotlessthin $~,Q00,000 sha€I be expended for the consfructic~n ofa seniar cenfierin the TQwr~ ofVOfestmir~stee; pr€~vi ed f~€r~h~r,that notless than $1,QOO,OflO be expended fio the Departmentof Public Works located ire the Tov~n cifWeymouth;provided further,that$5Q0,000 sha[I b~ expended fQr repairs anei renavationsto the ~anbc~rn House Culfiura!Facilityin the Town of Winchester; provided further,thatX100,000 shall be expended forthe Veterans memorial Hc~r~or Roll in the Town ofWincFtester, ravided further,that$3,0OO,OQ4 shall ~e expended farfibs design and consfirucfiion c~~a parking ~ar~ge in the Town refiNinchester; provided further,that nc~tless than $1,000,000 shall be ex ors ed for capital improvements to the V~ir~throp senior centerin the town cfWinthrop; p~c~~ided further,that nofi less than $176,OC}0 shall be expended fc~r developmentgrants to the 1Naters Farm living Nistc~ry IV9useu~r~; prouided furkher,that notless than $240,000 shat!be ~xpe~ded ficar rer~ovat~ons ~t.the town ha(!in the town ofSpencer; pravided further,that nc~tless than $30,Q00sha{I ~e exp~r~ded forthe resfaration ofthe ~istaric North Purchase streetschool hose; provided further ghat n€~filess than ~25,OOQ shall be expended ft~r ~ comprehensive studyto develop sign end gr~p~icstandardsfic~rthe Plymouth Historic District; provided further,that notlessthan $~S,G~~O sha61 be expended forlandscape design and permi#ting for r~E~abif€cation cifthe Training Green in Plymouth; provided further,that notless th~r~$3,500,000 shat!be e~~nded for design and consfirucfiian proJect~ recommended bythe Plymouth Public space Action Plan(2007);provided fu~k~~r,that n~filess than $250,000 shall be expended fior dag recreation space atRonan park in the ~archestersectian ~fthe cityofBoston;provided further,that notless thin $~OO,OQO shall be expended for nevvfacilities and improvemenfis atAlmont park in the Matt~pan ~ecfiian cifthe cityof Bas~~an; provided further,that nc~t1~ss than$104,Q00 shall be expended for newfacilities and improvements atWalker Pfaygral~nd afi Norfi~~k Park.in the Mattapan secfiion ofthe cityof Bostcar~; provided further,that notless than $4,OU0,~(l0 shall be emended fordesign and constructian projects an VI/ terStrutas recommended bythe Plymouth Public Space Action Plan(2007); provided further,fihat notless than X155,000 sl~al9 be expended ficar streetlighfis in the firawn of ~oume;provided ft~rkher,that notless than X3,200,000 shall be expended for renc~vatians atthe Falmouth Town Library; provided farther,that notless than$300,000shall be expended fortie historic restoraiian offihe Roc(~land Memarial Library; prouicied further,that rentless than $15,000 shall be expended fortechnology upgrades ~tthe P[yme~uth Pubic Library; provided farther,thafi n~fi less than$80,000 shalt be ~xper~ded fc~rthe ~vlodernizafiion ofthe Plymouth Fire Prever~tian Bureau; provided further,that nc~t less than $100,000 shalt be axpended fiarfibs establishmentofthe Plymc~ufh Historical Records ManagementProgram; provided further,that notless than$500,0 0 shalt e expended fc~rthe restoration ofthe histt~ric Blanchard streetschov~ house,ar~d for ACtA improvements atthe town hall,senior center,and libraryin the town of Uxbridge;- ,~~^°'{_,°~"-, r Add. 19
  57. 57. provided further,that not less than ~30Q,000 sf~a(I be e~er~ded for ADA compliance and entry wayimpravements atthe town hal!in Charlton; provided fu~her,thatgotless #han X665,735 shall be expended ~c~r° Q!d Town Hall renavations in Barre; provided further,that r~c~~fees th~t~$1,OQ0,000 shall be expended for deve(c~pmentofa seniarcenter in Rutland; provided further,that nitless thin $1,50Q,000 shat€ be expended for developmerstofa senior center in Tempfetflr~; provided further,that notless than $x,540,000 vhall e ~xpertc6~d fc~rimprovements to town hall in Framingham;provided further,that natI~~s than $8,000,000 shat!be expended for consfiruction cifa parkfnc~ g~r~ge in NafiPCk; provided furtf~e~,that n4~less ~h~n $1(}0,0 0shat{ be expended forthe 1-4~stshorne Nouse in Wakefieid; provided further,that notless than $1,300, 00shat( be eacpended forthe preservation ofthe ~~useum ~~African American History; provided further,that nc~t9es~ than $1,~0~, 00sha![ be expended for~ s~niar renter in ~llalden; provided fiurther,that notlessfhan $1,OOO,D00 shale be expended fc~r canstruc~tion ofa newfacilityforthe Lena(park Community DevelopmentCorporation; ~rgvide f~r~her,that r~c~t 4ess ti~an$~,OOq,ClO~ sha![ be expended farthQ preservation ofthe historic registry rn ~tc~n~ham;~rovid~d fL~rther,that natless than $600,000 sh~l!be expended forthe r~~ocati€~n refohs saltstorage sE~~ in Andover;pravided further,that not-less than 1,50 ,0 0shall be expended #or A.DA improvements atthe town hall in Dracut; provided #urth~r,that notices fihan $8,000,000shill be exp~nr~ed for Quabbin developrnen~ ire Bele}~erkawn;provided further,t#~a~ not less thin X1,500,000 s~~all k~~ expended far EssexTown Hall exterior; provided further,that notless than $350,x}00 shill be granted to Gloucesterfor an ec~nc~mic developmentstudyfir a pr~viou~ly- identified area ofthe city with the potentialfarjob creation; provided further,that notless than $17 ,000 sh~l( be expended for reimbursements ofreplaced cu[v~rts damaged in the May20 6 floe~ding in Rr~vvley; p~•avic~ed f~sr~her,that notless khan $25Q,OQ0 small be expended forsidewalk cor~~tructian anc~ fiatimprov~~nents atSharan Yokaifiis park along Mauna1/err~on streetin tie Dorchester~ectian ofthe city ofBastan; pravided fu~her,than nc~tless than $~00,000 shall be expended for Nark's Ni!{ Housing in t~i~ town ofV4lakefeld; provided further,that notfees thin $40,OOQ shall be expended ~~r new 1N~rld War(E IV1 marial in the town ofV1lakefie[d; provided further,that netI~ss than $45,000 shall be expended for infiormation techna{agyd~cumenfi managementsoiutians in the town ofWakefield; pravided further,thatnotlessthan $40,000 sh~Il be expended fortechnalQgy upgradesfirfire departmentvel~icfes in the town of MarbCehead; provided further,that notless than ~5,Ofl0 shat( be expended fortechnr~[ogY upgradesforfire department ~~ehic{es its the tr~vvn ofSwamps~c~tt; provided further,that notless thin $25,000 sh~l9 be expended to enhance the real-ti~aefarer~~ic abilityofthe SwampscottPolice Departmentwith the use cifLive Scanfinger print6r~g; provided fu~:her,thaf nofiie~s than $200,000 shall be expended fio fund wind or sokar~nergY generation systems afithe transferstation in fihe town e~f Marblehead and a designated buiEding in the town ofSw~~mps~afit; provided furfiher,that nofi less than ~1,OOO,C?0~ shall be e~perrded fc~rthe renovation oftl~e cc~rnmunitysafety building in Arlington; provided further,that nab less than 250,QQ0shat!b~ emended fir repairs to the Brattle Streeficulverk in Arington; provided fiurt er,that notless than $50,000 shat( be expended forthe ~tVesfi Medford community Center; provided further,thaf natless ~ha~ X30,000shall be expended on a securitysystem forthe Fart Taber Military Museum;prc~vi~ed further,thatrat(ess than $3,OOfl,000 sha(i be expended far the Add. 20

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