No. SJC-11661 - The Massachusetts Association of REALTORS

•COMMONWEALTH OF MASSACHUSETTS
SUPREME JUDICIAL COURT
No. SJC-11661
NESTO MONELL, JONATHAN GIBSON, RACHAEL BUTCHER,
BENJAMIN SMITH, LINDSEY BURNES, & ANN MCGOVERN, on
bel-~alf of themselves and others similarly situated,
Plaintiffs-Appellants,
v.
BOSTON PADS, LLC; JACOB REALTY LLC, NEXTGEN REALTY,
INC., RENTMYUNIT.COM, INC., DEMETRIOS SALPOGLOU, &
YUAN HUANG,
Defendants-Appellees.
DIRECT APPELLATE REVIEW OF
SUPERIOR COURT CASE N0. SUCV2011-03756
BRIEF OF THE _MASSACHUSETTS ASSOCIATION OF REALTORS &
THE GREATER 'BOSTON REAL ESTATE BOARD,
AMICUS CURIAE
Philip S. Lapatin (BBO #286320)
Nathaniel F. Hulme (BBO #678447)
HOLLAND.& KNIGHT LLP
10 St. James Avenue
Boston, MA 02116
Tel: 617-523-2700
philip.lapatinC~hklaw.com
[email protected]
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ................................ii
I.
STATEMENT OF ISSUE TO BE CONSIDERED .............1
II.
INTEREST OF AMICI CURIAE ........................1
III. SUMMARY OF THE ARGUMENT .........................2
IV.
ARGUMENT ........................................4
A.
Real Estate Industry Professionals
Occupy a Unique Sphere of the
Workforce . .................................4
B.
Notwithstanding the Broad Leeway
Granted to Them, Independent Contractor
Sales Associates are not Engaged in a
Separate Business. .........................6
C.
Changes to the Expectations of Real
Estate Professionals Would Profoundly
Affect the Industry. ......................13
D.
V.
1.
Chapter 149 ..........................14
2.
Chapter 151 ..........................16
3.
Chapter 62B ..........................18
4.
Chapter 152 ..........................18
5.
Statutory Exemptions .................19
The Legislature Never Intended and
Should Not Be Deemed to Have Caused
Such Effects. .............................20
CONCLUSION .....................................28
i
ADDENDUM
Page
TABLE OF AUTHORITIES
s)
CASES
kin v. Treasurer & Receiver Gen.,
401 Mass. 427 (1988) ..............................26
Awuah v. Coverall N. Am., Inc.,
460 Mass. 484 (2011) ...........................15-16
Commonwealth v. Cousin,
449 Mass. 809 (2007) ..............................25
Commonwealth v. Savage,
31 Mass. App. Ct. 714 (1991).........4-5, 16, 21, 24
Commonwealth v. Wotan,
422 Mass. 740 (1996) ...........................27-28
Depianti v. Jan-Pro Franchising Int 1, Tnc.,
465 Mass. 607 (2013) ....................... 24-25, 27
DeWolfe v. Hingham Centre Ltd.,
464 Mass. 795 (2013) ..............................11
Dimmitt-Rickhotf-Bayer Real Estate Co. v.
Finnegan,
179 F.2d 882 (8th Cir. 1950) .......................5
Doody v. John Sexton & Co.,
411 F.2d 1119 (1st Cir. 1969) ......................9
EMC Corp. v. Commiss'r of Revenue,
433 Mass. 568 (2001) ..............................25
Fernandes v. Rodrigue,
38 Mass. App. Ct. 926 (1995) ......................11
Franklin Office Park Realty Corp. v. Commiss'r of
Dep t of Envtl. Prot.,
466 Mass. 454 (2013) ..............................25
Ferullo's Case,
331 Mass. 635, 637 (1954) ......................... 26
Grand Pac. Fin. Corp. v. Brauer,
57 Mass. App. Ct. 407 (2003) ......................10
ii
Greenstein v. Flatley,
19 Mass. App. Ct. 351 (1985) ...................10-11
Meyer v. Ho11ey,
537 U.S. 280 (2003) ...............................11
inion of the Justices to the Governor,
372 Mass. 874, 876 (1977) ......................... 28
Robichaud v. Athol Credit Union,
352 Mass. 351 (1967) ...............................9
Rome v. Transit Express,
19 MDLR 159 (1977) .............................11-12
Sheehy v. Lipton Indus., Inc.,
24 Mass. App. Ct. 188 (1987) ......................11
Smith v. Dorchester Real Estate, Inc.,
732 F.3d 51 (1st Cir. 2013) .....................9-10
Smith v. Jenkins,
718 F. Supp. 2d 155 (D. Mass. 2010) ...............10
Somers v. Converged Acces, Inc.,
454 Mass. 582 (2009) ..............................24
Turnpike Motors, Inc, v. Newberry Group, Inc.,
403 Mass. 291 (1988) ...........................12-13
Whelihan v. Markowski,
37 Mass. App. Ct. 209 (1994 ......................10
Wolfe v. Gormally,
440 Mass. 699 (2004) ...........................25-26
Hole v. Town of Falmouth,
74 Mass. App. Ct. 444,448 (2009) ..................26
WOOdS
STATUTES & REGULATIONS
G. L. c. 62B
.......................................18
G. L. c. 111, § 197A
...............................12
G. L. c. 112, ~ 87RR ...................3, 7, 14, 26-27
G. L. C. 112, ~ 87W ................................14
iii
G. L. c. 112, § 87AA.A
...............................7
G. L. c. 112, ~ 87AAA3/a ..............................8
G. L. c. 149
...................................passim
G. L. c. 151
................................16-17, 19
G. L. c. 152
....................................18-19
An Act Further Regulating Public Construction in
the Commonwealth, ch. 193, 2004 Mass. Legis.
Serv. 919 .......................................21
An Act Making Appropriations for Fiscal Year 2003
to Provide for Supplementing Certain Existing
Appropriations and for Certain Other Activities
and Projects, ch. 55, ~ 12, 2003 Mass. Legis.
Serv. 807, 812 .................................21-22
St. 1889, ch. 153 ....................................1
Internal Revenue Code ~ 3508 ........................18
105 C.M.R. 460.720 ..................................12
254 C.M.R. 2.00 (11) ... ............................8-9
SECONDARY SOURCES
AFL-CIO Legislative Issue Brief,
Misclassification of Employees as Independent
Contractors (2013) ............................23-24
Gilleran, The Law of Chapter 93A, 52 Mass. Prac.
Series ~ 6:10 .....................................10
Mass. Executive Office of Admin & Fin.,
Construction Reform Program,
ht~p://www.mass.gov/anf/budget-taxes-an.dprocurement/procurement-info-andres/procurement-prog-and-sery/sdo/construc~ionreform-prog/ ......................................22
iv
Testimony of Tim Sullivan, Legis. & Commc'ns
Director, Mass. AFL-CIO, to the Joint Standing
Committee of Labor & Workforce Development
(Jan. 27, 2010), available at
http://www.massaflcio.org/massachusetts-aflcio-testifies-against-two-bills-weakenindependent-contractor-laws ....................22-23
William D. North, The Straight and Narrow Path to
Independent Contractor Status, in The Law: A
Collection of Talks by William D. North, at 36
(National Association of Realtors, 1974).........5-6
v
STATEMENT OF ISSUE TO BE CONSIDERED
I.
In this brief, the amid urge the Court to affirm
the Superior Court's decision and rule that G. L. c.
149, § 148B ("§ 148B~~) has no applicability to a real
estate
salesperson
affiliated
with
broker
a
as
an
independent contractor.
IT.
INTEREST OF AMTCT CURIAE
The Massachusetts Association of Realtors ("MAR")
a
is
association
trade
comprised
of
approximately
estate brokers
and salespersons
in the Commonwealth of Massachusetts.
MAR serves as a
22,000 licensed real
parent
organization
including
("GBREB")
the
Greater
local
1.6
to
Boston
Real
associations,
Estate
Members of MAR are authorized
Board
to use the
trademarked term "Realtor."
GBREB was established pursuant to an 1889 act of
the Massachusetts legislature to "prepare and
statistics and other records relating to real
.
estate
and subjects
connected therewith;
perform such other matters
set
include
torah
in
its
providing "a
and do and
as relate to real estate
interests and dealings therein."
As
C01.lECt
by-laws,
St. 1889, ch. 153.
the
unified medium
objects
for
of
GBREB
real estate
gwners and those engaged in the real estate profession
1
whereby
their
interests
may
be
safeguarded
and
advanced," as we11 as "to unite those engaged in the
recognized branches of the real estate profession in
this
community
for
the
beneficial influence
upon
purpose
of
exerting
a
the profession and related
interests."
Among the divisions included within GBREB is the
Greater Boston Association of Realtors ("GBAR"), which
is
dedicated
real
primarily
estate brokers
8,000
persons
are
serving
to
the
interests
and salespersons.
members
of
GBREB,
of
Approximately
while
GBAR
has
approximately 6,500 members.
TII. SUMMARY OF THE ARGUMENT
In
its
Partial
decision
Motion
for
on
the
Summary
Plaintiffs-Appellants'
Judgment,
the
Superior
Court correctly held that ~ 148B has no applicability
to a real estate salesperson, affiliated with a broker
as an independent contractor.
The amid
do
this
not
wish
rationale
to
replicate
adopted
persuasively
by
advanced
in
the
by
the
brief
Superior
endorse but
the
Court
basic
and
Defendants-Appellees,
namely that ~ 1488 was not intended to govern the real
estate
brokerage
business
Pa
and
conflicts
with
the
controlling
provisions
of
G.L,
c.
112,
§
87RR
("~87RR").
Instead, the amici focus
(1)
the
reconcile
their attention on how
Plaintiffs-Appellants,
in
~
misunderstand
148B
with
~87RR,
straining
to
the
workings of the typical real estate brokerage firm and
(2) reversal
of
the
Superior
Court's
decision
would
drastically upset the settled expectations of the real
estate brokerage community in a way never contemplated
by the legislature or the proponents of § 148B.
To that end, the amici first explain the unique
nature of the real estate brokerage industry and the
independence which its practitioners have historically
exercised.
amici
See Section TV.A, pp. 4-6.
address
engaged
in
how
real
estate
businesses
Second, the
are
salespersons
separate
from
the
not
licensed
brokexs with whom they associate given the multitude
of laws and regulations which compel those brokers to
oversee
the
conduct
Section IV.B, pp. 6-13.
the
of
their
salespersons.
See
Third, the amici identify how
plaintiffs-appellants'
reading
of
§
148B
would
result in profound and unintended consequences in the
real
estate
settled
brokerage
expectations.
business,
severely
See Section IV.C,
3
altering
pp.
13-20.
contend, based on well understood
Finally, the amid
principles
statutory
of
construction,
that
the
legislature never intended ~ 148B to apply to the real
estate brokerage industry, where it would have such a
See Section IV.D, pp. 20-28.
radical impact.
Accordingly,
the
reach
of
§
148B
should
be
limited as the amid suggest.
ARGUMENT
IV.
Real Estate Industry Professionals
Unique Sphere of the Workforce.
A.
Occupy a
Contrary to the majority of individuals composing
the American workforce, professionals within the real
estate
industry
have
independence-based
approach
recognized
the
Appeals
in
purchase
those
estate
by
engaged
brokers
individuals
who
are
earn
been
long
not
to
their
Court
in
their
associated
and
in
pay
caxeers.1
the
sale
[the
on
with
deals,
same
a
context
As
of
"[r]eal
category
weekly
an
as
basis].
The transactions [they solicit] are not regular, but
episodic;
the
commissions
are
often
substantial."
1
Superior
While
the
Court's
decision
focused
on
exclusively
on
the
the
impact
PlaintiffsAppellants, all of whom were or are real estate
salespersons, the application of ~ 148B would also
affect licensed brokers affiliated with a particular
firm.
As such, the amid will often refer generally
to "real estate professionals," as opposed to the more
limited class of "real estate salespersons."
ri
Commonwealth
v.
Savage,
31
Mass.
App.
Ct.
714,
716
(1991), overruled in part on other grounds, Wiedmann
v.
The
Bradford
(2005).
as
Inc.,
444
698,
Mass.
703-04
Real estate professionals who have qualified
independent
make
Group,
their
contractors
own. hours,
as
traditionally
determine
their
own
defined
business
productivity, are responsible for their own expenses,
are paid on commission rather
than receiving a base
salary, and are responsible for thezr own taxes.
See
id. at 717; Dimmitt-Rickhoff-Bayer Real Estate Co, v.
Finnegan, 179 F.2d 882, 886-87 (8th Cir. 195Q) (cited
with approval by Savage).
As one industry commentator has explained, "[b]y
its very nature, the real estate business is a highly
individualistic and innovative business.
It is
a free-enterprise business which rewards success but
does nod countenance failure."
Straight
and
Narrow
Path
to
William D. North, The
Independent
Contractor
Status, in The Law: A Collection of Talks by William
D.
North,
1974).
at
36
(National
Association
of
Realtors,
To that end, independent contractor status is
embraced because
[i]t is a relationship which can only exist
among
who
are
self-reliant,
individuals
confident,
competitive,
aggressive
and
5
enterprising.
It is a relationship which
measures productivity in absolute terms.
No
credit is given for hours spent; no merit
seen
in
unsuccessful
effort;
no
virtue
recognized
in
futile
activity.
The
relationship offers no built-in security,
but neither does it stifle enterprise nor
limit the rewards of success.
It looks to results and makes
every man his own master.
Id.
unrelenting
This
on
focus
productivity
and
success, reflected in a commission-based compensation
system,
has
in
resulted
greater
efficiency
and
enhanced consumer service.
B.
Notwithstanding the Broad Leeway Granted to
Them,
Contractor
Independent
Sales
Associates are not Engaged in a Separate
Business.
The
Plaintiffs-Appellants,
attempt
to
show
that
§87RR,
have
little
involvement
sales
asserted
associates,
§
148B
that
with
who
as
part
can be
brokers
their
simply
reconciled
should
independent
can
their
of
be
with
very
have
contractor
left
free
to
harvest their own contacts and connections as part of
some
the
loose
broker.
surprise
to
affiliation
That
the
understatement.
phis
without
"wearing the
proposition
members
of
MAR
Notwithstanding
hat"
would come
and
the
GBREB
latitude
as
is
of
a
an
which
these associates enjoy in terms of setting their own
schedules and developing their own personal style and
marketing
on
law
techniques,
the
responsibility
and
the
attendant
brokers
imposed
risk
of
by
legal
liability compel principals to oversee the activities
of
anyone
working
on
their
behalf
--
coincidentally
providing a valuable service to consumers who benefit
from the involvement of a seasoned professional.
In
connection,
this
~87RR
makes
clear
that
whether salespersons are associated with a broker as
employees or as independent contractors they "shall be
under
such
supervision
of
said
broker
as
to
ensure
compliance with this section and said broker sha11 be
responsible
with
the
salesman
for
any
violation
of
section eighty-seven AAA committed by said salesman."
Section
87AA.A
in
turn
lists
no
fewer
khan
twelve
specific bases on which the Board of Registration of
Real Estate Brokers and Salesmen can suspend, revoke
or refuse to renew any license.
knowingly
making
any
The grounds include:
substantial
misrepresentation;
improperly acting for more than one party to the same
transaction;
failing
to
properly
remit
any
escrow
funds; accepting any rebate or profit on expenditures
made for
and
the
the
client; failing
seller
copies
of
to give both the buyer
a
purchase
and
sale
agreement; soliciting listings on the basis of ethnic
7
changes
as
in a particular neighborhood (commonly known
"blockbusting");
and committing any act
expressly
prohibited in ~~87RR through 87CCC of Chapter 112.
Those sections in part prohibit salespersons form
conducting their own real estate business, affiliating
with more than one broker at the same time, failing to
prescribed
complete
neglecting
consumers
to
about
continuing
distribute
the
home
a
education.
brochure
inspection
courses,
educating
and
process
failing to obtain informed consent before acting as a
dual or designated agent.
in
scenario
which
an
The latter term describes a
individual
salesperson
is
appointed to satisfy agency duties owed by the firm to
a particular client, but the statute makes clear that
such
an appointment does not limit the liability or
responsibility of the appointing broker for the breach
of any duty by the designated agent.
G. L. c. 112, §
87.A.AA3/4(C) .
In its regulations, the Board of Registration of
Real
Estate
statutory
broker
company,
Brokers
provisions
creates
a
partnership,
and
by
Salesmen
declaring
corporation,
limited
buttresses
that,
whenever
limited
liability
these
a
liability
partnership,
association or society as the vehicle for transacting
business,
"broker
the
responsible
of
of
charge
record
the
shall
business
in
be
and
entity
personally responsible for the acts of the entity and
254 CMR 2.00(11).
its employees and agents."
Leaving
licensing
aside
it
considerations,
has
been "common experience" for a principal to be held
accountable
for
of
acts
an
agent
which
are
either
authorized or "not too far removed from the scope of
his
strictly,
they were not
Doody v. John Sexton &
Co., 411 F.2d
even
authority,
authorized."
1122
1119,
though,
Cir.
(1st
1969);
see
also
Robichaud
Athol Credit Union, 352 Mass. 351, 355 (1967).
last
year,
of
breach
in
the
context
fiduciary
of
duty
claims
leveled
of
at
fraud
Century
v.
Just
and
21
Dorchester Real Estate because of misconduct by one of
its agents, the United States Court of Appeals held,
"[a]s
the
the district court correctly discerned, [that]
jury
could
have
attributed
[the
agent's]
misrepresentations to Century 21 because he worked as
a
sales
agent
for
Century
21
at
the
time
represented himself as an agent of Century 21.
[T]he
mere
fact
that
there
was
no
evidence
and
.
that
Century 21 received a commission from the sale of the
.
property does not preclude a finding that [the
D
agent] was acting on Century 21's behalf."
Smith v.
Dorchester Real Estate, Inc. 732 F.3d 51, 62 (1st Cir.
2013).
The lower court had emphatically rejected the
argument that a principal should be "completely exempt
from
liability
for
the
actions
of
independent
Smith v. Jenkins, 718 F. Supp. 2d 155,
contractors."
164 (D. Mass. 2010).
Damages in Smith were awarded in accordance with
the provisions of G. L. c. 93A.
likewise
recognized
Other decisions have
notion
the
that
vicarious
liability can be imposed in Chapter 93A actions.
Grand
Pac.
407,
419-20
App.
Ct.
Fin.
2Q9,
210
v.
Brauer,
Whelihan
(2003);
that
posited
Corp.
n.4
Chapter
v.
(1994).
93A
was
57
Mass.
Markowski,
Indeed,
intended
See
App.
37
Mass.
it has
to
expand
traditional bounds of vicarious liability.
Ct.
been
the
Gilleran,
The Law of Chapter 93A, 52 Mass. Prac. Series ~ 6:10,
at 240.
In Greenstein v. Flatley, 19 Mass. App. Ct.
351 (1985), the Appeals Court held that even where a
rental agent had been cloaked with neither actual nor
apparent
authority
to
sign
leases,
both
he
and
his
principal, the landlord, were liable under Chapter 93A
where
the
agent
led
an
accounting
firm
urgently
needing office space into believing that a new lease
10
had been finalized, only to disavow the existence of
such
a
month
one
lease
before
its
scheduled
The landlord was "responsible for his
commencement.
failure to keep himself informed of the conduct of his
agent." Id.
cases
where
liability
at 358.
a
real
There have been any number of
Chapter
under
firm
estate brokerage
93A
based
on
has
unfair
deceptive practices by one of its agents.
faced
and/or
DeWolfe v.
Hingham Centre Ltd., 464 Mass. 795 (2013); Fernandes
v. Rodrigue, 38 Mass. App. Ct. 926 (1995); Sheehy v.
Lipton Indus., Inc., 24 Mass. App. Ct. 188 (1987).
Federal and state fair housing laws are likewise
a minefield for brokers who do not adequately monitor
In
their associates.
Meyer v. Holley, 537 U.S. 280
(2003), the United States Supreme Court believed it to
be "well established" that the federal version of the
statute
"provides
for
vicarious
liability"
and
that
"traditional vicarious liability rules ordinarily make
principals or employers vicariously liable far acts of
their
agents
or
employees
in
the
scope
authority or employment." Id. at 285.
vein,
the
Discrimination
Massachusetts
has
subscribed
the
their
In a similar
Commission
to
of
Against
view
that
principals may be held liable far the discriminatory
11
actions of their agents committed within the agent's
scope of authority.
160
159,
(1977)
Rome v. Transit Express, 19 MDLR
(citing
O'Leary
v.
Fash,
2'45
Mass.
123, 124 (1923)).
Another regulatory scheme with which brokers must
concern
themselves
to
relates
warning
prospective
that a house may contain dangerous
buyers
levels
lead paint which might be ingested by a child.
estate
agents
mandatory
are
expected
form
disclosure
to
is
make
sure
supplied
of
Real
that
prior
a
to
execution of a purchase and sale agreement or a lease
with an option to purchase.
Additionally, the agent
must mention the applicable deleading requirements and
either
obtain
prepare
a
a
signed,
statement
to
written
the
acknowledgement
effect
reused to sign the prescribed form.
that
the
or
buyer
G.L, c. 111, ~
197A; 105 CMR 460.720.
These are intended only as examples of the many
ways
their
in
which
offices
brokers
as
the
would
be
ill-advised
Plaintiffs-Appellants
to
run
envision.
Moreover, strictly from a remunerative perspective and
given
that
~87RR
entitles
only
licensed
brokers
to
recover commissions on the sale of real estate in the
courts of the Commonwealth, Turnpike Motors, In.c.
12
v.
Newberry
incumbent
Group,
on
403
Inc.,
brokers
to
Mass.
make
291
sure
(1988),
that
a
it
is
client's
obligation to pay a fee has been properly documented
by any agent involved in a particular transaction.
C.
Changes to the Expectations of Real Estate
Professionals Would Profoundly Affect the
Industry.
Against
seek
to
backdrop,
this
redefine
the
we11
the
plaintiffs-appellees
established
independent
contractor status of real estate professionals through
application of ~
demonstrates
that
its
would
professionals
expectations
148B.
of
those
A thorough review of § 148B
application
to
fundamentally
working
in
the
real
estate
alter
real
the
estate
industry.
Specifically, ~ 148B(d) provides that:
properly
classify
an
t~boever
to
fails
individual as an employee according to this
section and in so doing fails to comply, in
any respect, with chapter 149, or section 1,
1A, 1B, 2B, 15 or 19 of chapter 151, or
chapter 62B, sha11 be punished and shall be
subject to all of the criminal and civil
remedies
as provided in section 27C of
Whoever fails to properly
this chapter.
individual
an
employee
an
as
classify
according to this section and in so doing
violations chapter 152 sha11 be punished as
provided in section 14 of said chapter 152
and shall be subject to all of the civil
provided in. section 27C of
remedies
this chapter.
13
The
under
penalties
§
27C
include,
for
a
first
offense, up to $10,000 in fines or up to six months
imprisonment, and for a subsequent offense, fines up
to $25,000 or up to one year imprisonment.
As the statute makes clear, a finding of employee
status
a
implicates
of
application
disruptive
which
impact
on
number
of
would
have
the
Statutes,
a
of
lives
the
profoundly
real
estate
professionals and those through whom they associate in
order to conduct their business.
87RR,
87W
See,G. L. c. 112, ~~
real
(requiring
estate
salesman
to
associate with a licensed broker).
1.
Chapter 149
Chapter 149 governs a wide variety of practises
with respect to labor and industry.
relate to
provisions
labor
industry
and
significant
effect
professionals.
the work
of "employees" in
fields.
if
A number of the
Some
applied
would
to
have
real
the
a
estate
G. L, c. 149, §~ 52 requires employers
to keep a time book showing names and addresses of all
employees
and
the
hours
worked
by
each,
a
truly
painstaking task in a field whose practitioners spend
the
better
part
of
their
office.
14
time
working
outside
the
The life of a real estate broker is invariably if
not constantly punctuated with telephone calls, e-mail
messages
other
and
communications
at
all
hours
of
every day, but § 47 of Chapter 149 prohibits employers
from
requiring
days
without
meal
twenty-four
a
work
hour
seven
break.
It could
consecutive
.Similarly,
break.
that all employees
~ 100 requires
minute
to
employees
be given a
conceivably
thirty
be
argued
that brokers who encourage and expect their associates
to
work
created
long
a
associates
in
hours
entitlement
pressured
rest
to
of
environment
business
feel
pursuit
and
to
commissions
in
forgo
relaxation.
which
their
have
these
statutory
Whether
buyers,
sellers, landlords and tenants would be well-served by
constricting
the
daily
activities
of
real
estate
professionals is questionable.
Section
of
148
Chapter
149
permits
only
"allowable or authorized deductions" to be made by an
employer when commissions are paid.
Courts could be
asked to rule that certain such deductions customary
in
the
real
apportionment
estate
of
brokerage
business
(for
example,
office expenses and franchise fees)
somehow violate public policy or otherwise run afoul
of the statute.
See Awuah v. Coverall N. Am., Inc.,
X84 (2011).
460 Mass.
that
notify
employers
wages
their
compensation
In addition,
for
social
benefits,
of
employees
~
150A requires
security,
pension
funds,
from
deductions
unemployment
vacation
time,
health and welfare funds, and taxes, matters for which
real estate professionals are generally responsible on
their own.
2.
Chapter 151
Chapter 151 principally deals
with
wages that must be paid to employees.
minimum fair
In general, the
concept of paying real estate professionals a minimum
wage for each hour worked bluntly contradicts the fact
that
`
real
estate
professionals
typically
their
earn
compensation in the dorm of commissions which have no
relationship to regular weekly, monthly or other pay
periods.
Specifically,
~
1 establishes
a minimum wage of
$8 per hour (or n.at less than $0.10 higher than the
These wages would have to be
effective minimum wage).
paid
on
Section
weekly
a
148
recognized
of
in
episodically
commission
or
by-weekly
Chapter
Savage)
for
basis,
149.
they
are
completed
real
estate
16
basis
However,
used
to
pursuant
because
being
transactions
professionals
on
do
to
(as
paid
a
not
expect a minimum wage during a particular pay period.
Rather, what they earn is governed (and limited only)
by
their
own
and
efforts
success
in
closing
real
estate transactions.
Similarly,
exempt
~
employee
1A
to
Chapter
of
hour
forty
a
151
limits
week
a
non-
unless
the
employee receives time and half pay for hours worked
in
excess
of
forty
Again,
hours.
a
real
estate
professional's work week is limited only by his or her
desire
to
work,
and
there
no
is
expectation
of
receiving time and a half if working over forty hours.
true, in part,
This is
for
longer
working
hopefully
because
hours
commensurate
the
potential
given
greater
is
increase
in
reward
the
commissions.
Conversely, there may be times when shorter hours can
be worked given the ebb and flow of the market.
Sections
subjecting
penalties
fees,
and
minimum
1B
the
and
19
augment
employer
§§
civil
to
1
and
and
1A
by
criminal
(and potentially treble damages, attorneys'
costs)
wage
or
for
failing
overtime
and
151.
~~
to
pay their
otherwise
employees
violating
c.
3.
Chapter 62B
Chapter 62B governs tax withholding on wages and
declarations of estimated income tax.
§ 2 requires the withholding of
In particular,
taxes,
~
4 requires
employees to submit forms setting forth the dependency
exemptions
provide
requires
being claimed,
documentation
~
of
the employer
5
requires
taxes
employers
withheld,
and
§
to
6
to pay the amount that should
have been withheld if the employer fails to withhold.
All of these provisions, however, run counter to the
settled expectations of real estate professionals, who
historically and typically handle their own taxes and
are
not
Revenue
subject
Code
salespersons
long
as
~
are
to
withholding.
3508
not
provides
to
be
Indeed,
Internal
real
that
considered
estate
employees
so
they meet only three requirements: they are
duly licensed, compensated substantially in the form
of
commissions,
contract
which
and
makes
have
entered
clear
that
into
a
wi11
they
written
not
be
treaded as employees for federal tax purposes.
4.
Finally,
claims.
other
The
things,
Chapter 152
c.
152
statute
notify
governs
workers'
requires
various
2
compensation
employers
entities
of
to,
among
any injury
within
occurs
that
the scope
of
employment;
provide
the employee with an informational brochure regarding
rights,
benefits,
of
obligations
and
the
injured
employee; pay benefits within a certain period of time
of
been
having
notified
of
an
injury;
6A,
25A.
7,
are
professionals
Leaving
aside
likely
to
provide
See G. L. c. 152, §§
workers' compensation insurance.
6,
and
real
whether
injured
be
estate
during
the
course of their work, application of c. 152 would for
the
time
first
subject
and
brokers
to
salespersons
this comprehensive regulatory scheme.
Statutory Exemptions
5.
It is worth noting that a number of the foregoing
statutes
have
exempt real
specific
exemptions
that
estate professionals from
may
are
ambiguous
For example,
for
exemptions
~o
application of
these provisions notwithstanding ~ 148B.
there
serve
"outside"
salespersons with respect to overtime laws and minimum
wage
laws,
salespersons
case
of
see
G.
L.
c.
compensated
workers'
151,
only
compensation,
§~
by
1A(4)
and
2,
and
commissions
in
the
see
G.
L.
c.
152,
~
1(4)(c) - an exemption which would arguably be lost if
such salespersons were entitled to receive a minimum
wage and/or
overtime.
Any change in
19
overall status
contractor
from independent
open
door
the
to
employee would likely
to
multitude
a
litigation
of
with
respect to those exemptions, creating further tension
and contradiction within the statutes as to how real
estate
professionals
should
be
In
treated.
fact,
these exemptions provide even further support for the
proposition
real
that
traditionally
and
than
differently
estate
historically
other
have
professionals
been
of
members
the
treated
American
workforce.
D.
The Legislature Never Intended and Should
Not Be Deemed to Have Caused Such Effects.
Given these potential trans~ormative impacts, the
legislature's intent ought to be carefully considered.
purpose
The
intended
of
to
~
148B
address
demonstrates
issues
Moreover,
professionals.
that it was
affecting
given
that
real
not
estate
purpose,
the
Court should not presume that the legislature intended
to
disrupt the settled expectations
real
estate
industry.
Finally,
of
the
those in the
inclusion
of
criminal penalties in the applicable statutes further
emphasizes
that
~
148B should not be interpreted
apply to real estate professionals.
20
to
First, § 148B in its present form was adopted as
part of Chapter 193 of the Acts of 2004, entitled "An
Further
Act
Regulating
Public
Construction
in
the
See An Act Further Regulating Public
Commonwealth."
Construction in the Commonwealth, ch. 193, 2004 Mass.
Serv.
Legis.
919.
This
that
suggests
the
law
was
geared principally towards issues affecting the public
construction industry.
See Savage, 31 Mass. App. Ct.
at 716 n.4 ("The title of an act is part of it and is
relevant
as
guide
a
intent." (citing
legislative
to
Am. Family Life Assur. Co. v. Commiss'r of Ins., 388
Mass.
468,
474
(1983);
Mass.
491,
495
n.5
Commonwealth
(1971);
Henman
v.
v.
Jarrett,
Harvard
359
Cmty.
Health Plan, Inc., 18 Mass. App. Ct. 70, 74 (1984))).
This focus on public construction is further supported
by
emergency preamble,
the
statute
public
was
enacted
construction
the
further
as
a
whole
Commission
included
and
on
was
Public
architects,
legislators
investigating
the
and
as
work
Construction
members
making
and
of
ch.
a
Special
Reform,
which
construction
trades
was
charged
recommendations
21
See
In fact, Chapter
product
engineers,
the
regulate
commonwealth."
193, 2004 Mass. Legis. Serv. 919.
193
that
indicates
"forthwith
to
in
which
as
to
with
the
adequacy
and
governing
public
of
efficiency
laws
construction
and
regulations
See
projects.
An
Act
Making Appropriations for Fiscal Year 2003 to Provide
for Supplementing Certain Existing Appropriations and
for Certain Other Activities and Projects, ch. 55, ~
12, 2003 Mass. Legis. Serv. 807, 812; see also Mass.
Executive Office of Admin & Fin., Construction Reform
Program,
http://www.mass.gov/anf/budget-taxes-and-
procurement/procurement-info-and-res/procurement-progand-sery/sdo/construction-reform-prog/
(last
visited
Feb. 6, 2013).
As
might
prominently
be
expected,
supported
the
148B
§
labor
in
industry
order
to
has
remedy
specific ills that plagued the construction industry.
For example, in testifying against revisions to § 148B
in 2010, a representative of the Massachusetts AFL-CIO
indicated that "the biggest violators of the state's
former
1aw[,
which
predated
the
2004
revision
resulting in the current version of ~ 148B,] were in
the building and construction trade, and I would
.
urg e] this committee not to do anything to a11ow us
to
turn
back
the
clock
and
allow
cheaters
and
misclassifiers, if you wi11, to ramp up their efforts
to
defraud
the
state
and
22
exploit
workers
who
are
Commc'ns
Legis.
&
Joint
Standing
Director,
Labor
to
the
Workforce
&
available
2010),
27,
Sullivan,
Tim
AFL-CIO,
Mass,
of
Committee
(Jan.
Development
of
Testimony
employees."
actually
at
http://www.massaflcio.org/massachusetts-afl-ciotestifies-against-two-bills-weaken-independent-,
contractor-laws (last visited Jan. 31, 2014).
The amici concede, as they must, that the reach
of
§
148B has
been
extended beyond the construction
Be
that
as
industry.
real
indication
that
viewed
being
needing
regard,
as
estate
among
the protection
the
there
simply
is
of
categories
afforded by § 1488.
[of
AFL-CIO
employees
workers
In
this
that
noted
has
no
been
have
professionals
those
national
"[m]isclassification
may,
it
independent
as
contractors] is especially common in the construction
industry and is a growing problem in high-tech jobs,
communications,
janitorial
and
trucking
services,
agriculture,
child care and other industries."
Issue
Brief,
Misclassification
delivery
home
services,
health
care,
AFL-CIO Legislative
of
Employees
as
Independent Contractors (2013).
To that end, the AFL-CIO seeks to protect those
who should be classified as employees to ensure that
23
their
taxes
given
the
are properly withheld and
workplace
rights
and
that they are
protections
to
owed
employees, such as workers' compensation benefits for
that
injuries
occur
on
the
overtime pay protections,
participation,
job,
minimum
wage
and
insurance and pension plan
availability
of
medical
and
leave, and access to unemployment benefits.
family
See id.
As previously explained, and as suggested by the
perceived
problems
that
the
labor
industry seeks
to
correct, real estate professionals are not in the same
position as those whom ~ 148B was designed to protect.
The same AFL-CIO position statement proclaims the need
to
"level
employers
playing
the
field
for
the
that properly classify their
majority
of
employees and
are forced to compete against less scrupulous rivals
gain
that
an
unfair
advantage
through
misclassification," see id. -- a concern that has na
applicability
to
real
estate
brokerage
where
recognized in Savage) independent contracting is
prevailing
business
model.
See
also
Somers
(as
the
v.
Converged Access, znc., 454 Mass. 582, 593 (2009).
In
recognized
that
that
vein,
a
Massachusetts
statute
must
courts
be
have
interpreted
according to "the cause of its enactment, the mischief
24
or imperfection to be remedied and the main object to
be
Depianti
accomplished."
znt'1,
Inc.,
465
607,
Mass.
Jan-Pro
v.
620
Franchising
(internal
(2013)
omitted); see also Commonwealth v.
citations
Cousin,
449 Mass. 809, 817 (2007) (internal citation omitted);
Franklin
Dept
Park
Office
Envtl.
of
Realtor
Corp.
v.
466
Mass.
454,
Prot.,
Commiss'r
461
of
(2013)
("When called upon. to interpret statutory language, we
look
`to
the
intent
from
all
its
words
usage
approved
connection.
with
the
of
Legislature
construed
of
the
the
cause
by
of
ordinary
and
considered
in
the
language,
its
ascertained
enactment,
the
mischief or imperfection to be remedied and the main
object to be accomplished, to the end that the purpose
its
may
framers
citations
omitted)
Coznmiss'r
of
("Statutes
are
effectuated.
(emphasis
Revenue,
to
be
be
added));
Mass.
433
construed
Corp,
EMC
568,
in
(internal
"'
of
571
1,ight
v.
(2001)
of
the
preexisting common and statutory law with reference to
the
mischief
(internal
that
end,
probably
citations
the
intended
omitted)
court
may
to
be
(emphasis
not
"accept
remedied."
added)).
the
To
literal
meaning of the words of a statute without regard for
the
statute's
purpose
and
25
history."
Wolfe
v.
Gormally, 440 Mass. 699, 704 (2004) (quoting Sterilite
Corp,
Continental
v.
Co.,
Cas.
397
Mass.
837,
839
(1986)); see also Apkin v. Treasurer & Receiver Gen.,
427, 435 (1988) (refusing to read statute
401 Mass.
literally where consequence at issue not intended or
considered).
Here,
the
act's
title,
its
stated purpose,
and
the support of advocates like the local and national
chapters
of
the
AFL-CIO
indicate
intended
to
remedy abuses
that
perpetrated
§
in
148B
was
industries
other than real estate brokerage,
where salespersons
historically
nor
have
never
requested
expected
this
form of protection.
Additionally, "[i]t is not to be lightly supposed
that radical changes in the law were intended where
not
plainly
635,
637
expressed."
(1954)
distinguishing
contractors
in
(refusing
between
part
Ferullo's
to
employees
because
prior
331
Case,
apply
and
Mass.
statute
independent
expectations
not
plainly changed by statutory language); see also Woods
Hole v. Town of Falmouth, 74 Mass. App. Ct. 444, 448
(2009).
Here,
real
estate
professionals
have
long
been treated as independent contractors in custom and
under the law.
See supra Section IV.A; G. L. c. 112,
26
§ 87RR.
Nothing in ~ 148B suggests that real estate
settled
professionals'
should
expectations
change,
which is further supported by the underlying purpose
of the statute.
real
how
If ~ 148B were to be read to apply to
estate professionals, significant changes
estate
real
including
with
are
professionals
respect
to
to
be
to
treated,
labor,
various
as
wage
and
overtime, and taxation provisions of the Massachusetts
statutes,
could
Therefore,
result.
where
plainly
indicate
disrupt
the
See
statutory
the
that
the
traditional
professionals,
~
148B
supra
Section
language
legislature
treatment
should
not
of
be
IV.C.
does
not
intended
real
read
to
estate
to
create
such changes.
Finally, notwithstanding its remedial goals, see
Depianti, 465 Mass. at 620, the inclusion of criminal
penalties
the
for
violations
conclusion
that
of
the
~
148B
further
statute
should
supports
not
be
interpreted ~o apply to real estate professionals.
As
has
been
repeatedly
indicated,
Massachusetts
courts
to construe any criminal statute
"are required
strictly against the
Commonwealth."
Commonwealth v.
Wotan, 422 Mass. 740, 742 (1996) (internal citations
omitted).
To
that
end,
"when
27
a
statue
is
found
plausibly to be ambiguous, the defendant is given the
benefit of the ambiguity."
of
See id.; see also Opinion
the Justices to the Governor, 372 Mass. 874,
(1977)
("[A]
strictly
so
criminal
that
any
statute
ambiguity
must
will
be
be
876
construed
resolved
in
favor of the defendant.").
Here,
violations
whether
§
given
potential
criminal
of
148B,
lingering
§
148B
applies
any
to
real
for
penalties
estate
doubt
as
to
professionals
should be resolved in the negative.
V.
CONCLUSION
Real
estate professionals
in the American workforce.
occupy a
unique niche
They are independent and
self-made; they are responsible for their own success
and
their
own
failure.
Massachusetts
has
traditionally recognized the unique~:~ess of real estate
professionals,
significantly
estate
but
alter
professionals
efforts.
application
and
of
profoundly
work
and
§
148B
affect
benefit
how
from
would
real
their
The changes in payment structure, benefits,
and taxation. would upset long-established norms.
Such
a wholesale restructuring was not the purpose of the
legislature and should not be presumed absent a clear
indication
of
such
intent.
Moreover,
given
the
criminal penalties available for violations of § 148B,
the statute should be construed against application to
real
estate
respectfully
Court
and
Thus,
professionals.
urge
affirm
the
Couxt
that real
to
uphold
the
the
amici
Superior
estate professionals
are
not employees as defined by G. L. c. 149, § 148B.
Respectfully submitted,
MASSACHUSETTS ASSOCIATION OF
REALTORS & GREATER BOSTON REAL
ESTATE BOARD_
By their at~q~n~ ,
Philip S.` Lapatin (BBO #286320)
Nathaniel F. Hulme (BBO #678447)
HOLLAND & KNIGHT LLP
10 St. James Avenue
Boston, MA 02116
(617) 523-2700
June 25, 2014
Boston, Massachusetts
CERTIFICATE OF SERVICE
I hereby certify that on June 25, 2014, two true
and accurate copies of the above brief were delivered
by first class mail to:
Brent Casavant
Hillary Schwab
Fair Work, PC
192 South Street, Suite 450
Boston, MA 02111
Robert S. Kutner
Stephen M, Perry
Casner & Edwards, LLP
303 Congress Street, 2d Floor
Boston, MA 02110
Signed under the pains and penalties of perjury
this 25th day of June, 2014.
at an'el ~. Hulme
30
CERTIFICATE OF COMPLIANCE
I hereby certify that this brief complies with
the rules of the court that pertain to the filing of
briefs .
Signed undex the pains and penalties of perjury
this 25~h day of June, 2014.
N th ni
31
#27503049_vll
F. Hulme