Massachusetts court rejects forum clause in misclassification caseJanuary 28, 2017
A misclassification case out of Massachusetts is gaining attention for a holding on a forum dispute.
A group of chauffeurs in Massachusetts is filing suit against LimoLink, a chauffeur broker service. The chauffeurs argue that they were misclassified as independent contractors when, in actuality, they were working as employees. Employees are generally entitled to more protections, rights and potential benefits then independent contractors. The case is gaining attention not for the misclassification issue, but instead for a dispute over which venue is appropriate.
Details of the case
The case, Vladimir Chebotnikov, Eugene Pantyukhin, and Yousef Sharma v. Limolink, Inc.,involves LimoLink, an Iowa corporation that brokers chauffeur services by individuals classified by the corporation as independent contractors. The plaintiffs argue that they are actually employees and, as such, LimoLink failed to provide overtime payment, gratuities, and reimbursement for driver expenses. These allegations are made under the Fair Labor Standards Act (FLSA).
LimoLink is fighting the allegations. The business recently moved to dismiss the case and transfer it to Iowa based on a provision within the employment contract signed by the Parties. The provision at issue states:
If a dispute arises under the terms of this Agreement, such disputes shall be submitted to arbitration in Cedar Rapids, Iowa… In the event that the parties agree, in writing, to forego arbitration and to litigate any disputes arising under this Agreement, the Parties hereby agree to the sole and exclusive jurisdiction of the state and federal courts of Iowa for resolution of any dispute arising from this Agreement…
The Defendant, LimoLink, argues that this provision should govern the forum used to resolve the issue of misclassification. As such, the case should not be tried in Massachusetts. The Plaintiffs counter that the claim does not "arise from" the agreement. Since it is a separate issue not covered in the agreement, they contend that the agreement does not control the forum for this lawsuit. The court agrees with the plaintiffs and further clarifies that precedent cases have found "suits to recover payments due under FLSA, such as overtime payments, are not dependent on the plaintiff’s employment agreement."
Impact of the holding
A recent article in Massachusetts Lawyers Weekly discussed the case, noting that the holding provides clarification in wage and misclassification claims. More specifically, it confirms that these cases do not "arise under" independent contractor agreements, allowing future potential plaintiffs to bring the lawsuit in their chosen forum. The holding will also likely lead prudent businesses to craft their employment and independent contractor contracts more carefully.
This case also brings attention to the intricate nature of employment law disputes. As a result, independent contractors who are facing misclassification or other employment law issues as well as businesses that are interested in tailoring independent contractor contracts to meet their needs are wise to seek the counsel of an experienced employment law attorney.