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Massachusetts appeals court affirms that workers’ comp exclusivity provision bars claims against entities engaged in a joint venture

8/4/21

In Dakin v. OSI Restaurant Partners, LLC, et al, the Massachusetts Appeals Court held that the workers’ compensation exclusivity provision barred an injured employee’s claims against three entities engaged in a joint venture.

In Dakin, the three related entities collectively operated a restaurant. The first entity owned, managed, and controlled the second entity, the restaurant, which in turn owned, managed, and controlled the third entity, an in-house payroll processing company.

The Court noted that under the Massachusetts Workers’ Compensation Act, M.G.L. c. 152, § 15, “employers” include individuals, corporations, or some combination of those engaged in a joint enterprise. The Court adopted the analysis set forth in Gurry v. Cumberland Farms, Inc., 406 Mass. 615 (1990) to determine when entities are engaged in a joint enterprise so as to constitute a single employer for purposes of the Workers’ Compensation Act.  The Gurry factors include:

• An agreement among participants to associate for joint profit;
• Contribution of money, property, effort, knowledge, skill, or other assets to a common undertaking;
• A joint property interest in the subject matter of the venture;
• A right to participate in the control of the venture;
• An expectation of profit;
• A right to share in the profits;
• An express or implied duty to share in the losses; and
• A limitation to a single undertaking or small number of enterprises.

Applying these factors to the three entities, the Court found that they were, in fact, engaged in a joint venture and, therefore, the injured employee’s claims against them were barred by the workers’ compensation exclusivity provision. For example, the Court noted that the three entities shared operating and service agreements, which demonstrated an intent to associate for joint profit.  The entities also shared professional services including legal, finance, tax, and treasury, and used a single contract to purchase goods for all of their restaurants, which was also evidence of an agreement to associate for joint profit. The Court further determined that the entities were financially interdependent because each shared in the ownership of the assets of each other, which established a joint property interest in the subject matter of the venture.

Dakin provides much-needed guidance to employers engaged in joint ventures with respect to determining when the workers’ compensation exclusivity provision may operate to bar an injured employee’s claims against them. That said, because the Gurry analysis adopted by the Court in Dakin includes a mix of factual and legal factors, Dakin may not provide employers with early dismissal of an injured employee’s claims as the employee may dispute the employer’s participation in the joint venture, requiring further litigation to resolve the issue. Ultimately, employers in a joint venture who have been sued by an injured employee should promptly consult with employment counsel.  

For more information, please contact Victoria Fuller at vfuller@fmglaw.com or Diandra Franks at Diandra.Franks@fmglaw.com.