From JDSupra, Donald Schroeder discusses a recent case in which an out of state employee was able to obtain the benefits of the Massachusetts Wage Act because Massachusetts has the most significant ties with the employee. Donald writes:
The COVID-19 pandemic’s impact upon the use of remote workforces by U.S. businesses is undisputed. In recent years, the conventional wisdom has been that remote employees living in other states throughout the United States would not be able to avail themselves of the employee-friendly employment laws found in Massachusetts (or other states where the workers don’t actually live or work).
A recent federal court decision in Massachusetts puts that premise in question. In Wilson v. Recorded Future, Inc., a former employee residing in Virginia brought claims against his former employer under Massachusetts’ anti-discrimination laws as well as the Massachusetts Wage Act (“Wage Act”). The company filed a motion to dismiss the case on the grounds that any employment claims by its former employee should be brought in Virginia where he lived and worked throughout his stint with the company. Under Massachusetts state law, in the absence of a contractual choice-of-law provision, the court will look to the laws of the state with the “most significant” relationship between the parties.
Without a choice-of-law provision in play, the former employee in this case argued that Massachusetts, rather than Virginia, had the most significant ties to the dispute based on the following: (1) the employer’s headquarters are located in Massachusetts; (2) the former employee traveled to the headquarters on an occasional basis; (3) the former employee routinely communicated with the company’s executives at the home base; and (4) decisions relating to his overall terms of compensation originated out of Massachusetts. Even though the employee’s supervisors also resided outside of Massachusetts and he did not even handle customers in Massachusetts, on April 19, 2023, the federal court ruled that the complaint contained sufficient facts to survive dismissal at this juncture.
What does this mean for employers?
At a minimum, Massachusetts-based employers that have a contingent of out-of-state employees should consider revisiting their offer letters and employment agreements to ensure they contain choice-of-law provisions that are tied to the state where the specific employee resides on a full-time basis.
In addition, such employers may also want to consider whether they should simultaneously implement a requirement that all employment disputes must proceed through arbitration. By doing so, employers will be able to shield such employment disputes from public court filings, which may alert other employees that they can potentially file claims in Massachusetts.
This lawsuit is still in its procedural infancy, so we will be on the lookout for any significant future developments.