Employers Phone Home – Out of State Employer Sued in Massachusetts

by Adam J. Shafran

In a recent decision out of the U.S. District Court for the District of Massachusetts, a New York-based employer was held subject to suit for unpaid wages in Massachusetts because it allowed an employee to work from home in Massachusetts. The facts of the case serve as an important reminder to employers that they may be subject to suit in any state where they allow their employees to work from home remotely.

In this case, the employee worked out of the employer’s New York office for more than 10 years. In 2015 the employee’s husband was transferred to Massachusetts for work. As a result the employee asked, and was granted permission by her employer, to work remotely from home in Massachusetts. A little over a year later, the employee made the decision to leave the company and take many of her clients with her. The employer responded by withholding commissions, which the employee alleged were due. Thereafter, the employee filed suit in Massachusetts and the employer moved to dismiss, arguing there was no jurisdiction over the employer in Massachusetts.

The District Court rejected the employer’s argument and held in relevant part, “[the employer] continued [the employee’s] employment with the Agency ‘with full knowledge that [the employee] would perform [her] duties from Massachusetts.’ And ‘when [the Agency] refused to pay the commission that was allegedly due,’ [the employee] was based in the Commonwealth and was working from the Commonwealth.” Based on these minimal facts, the Court nonetheless held that the employer was subject to suit in Massachusetts. Moreover, it also rejected the employer’s request to have the case transferred to New York. As to the employer’s transfer request, the Court specifically noted:

Here, though an adequate alternative forum exists, considerations of convenience and judicial efficiency do not sufficiently favor litigating the claim elsewhere. Discovery has proceeded in this matter in both Massachusetts and New York since this motion was filed. History has proven that the distance between New York and Massachusetts is not so large as to pose any meaningful inconvenience in this matter. Moreover, it appears that there are potentially third party witnesses who reside neither in Massachusetts nor in New York. The defendants have not identified any evidence that they will be precluded from presenting, either live, or through a video deposition or otherwise, if the matter remains in Massachusetts.

With the ever-changing labor market, and more and more employees requesting to work from home, employers should be cognizant of the potential risks that such arrangements can create.

Rudolph Friedmann attorneys are experienced in assessing employment and workplace practices and procedures. Contact the firm if you have any questions regarding your company’s employment practices or the arrangements it has with its employees.