The Supreme Judicial Court has ruled in a high-profile Wage Act suit that a cleaning services company that claimed it was merely in the business of selling franchises misclassified its franchisees as independent contractors.

The defendant company, Coverall North America Inc., argued in part that it had a shared economic interest with the third-party franchisees and therefore did not violate G.L.c. 149, §148B.

But Justice Margot G. Botsford, writing for the court, disagreed.

“[W]e address ‘franchise fees,’ i.e., the initial and additional fees that [plaintiff Anthony] Graffeo agreed to pay Coverall in order to enter into what the judge has determined to be a direct employment relationship with Coverall,” she wrote. “In substance, they operate to require employees to buy their jobs from employers, and in that respect we think they violate public policy.”

The SJC was also asked to rule on whether, under the Wage Act, an employer and an employee can agree that the employee will pay the cost of workers’ compensation and other work-related insurance coverage.

“We conclude that … an employer may not deduct

More at source: Mass Lawyers Weekly