This morning the Supreme Judicial Court (SJC) released its decision in the closely-watched case of Monell v. Boston Pads, LLC.  The main issue on appeal – one of critical importance to the real estate brokerage industry – was whether the state’s 2004 independent contractor statute, M.G.L. c. 149, § 148B (part of the Wage Act), applies to real estate salespersons who work for brokerage firms under M.G.L. c. 112, § 87RR, which governs the licensing of real estate brokers and salespersons.  As the SJC observed, these two statutes conflict:  under the independent contractor statute, the plaintiff salespersons would be deemed employees, while under the real estate licensing statute they could be either employees or independent contractors, depending on the nature of their relationship with the broker they work for.  Under the independent contractor statute, if the defendant brokerage firms had misclassified the plaintiffs as independent contractors when they were actually employees, the brokers would be subject to substantial civil and even criminal penalties.

The SJC affirmed the lower court’s ruling that the independent contractor statute does not apply to real estate salespersons.  The court cited the familiar canon of construction that, where two statutes are in conflict, the more specific law (the real estate licensing statute) controls over the more general law (the independent contractor statute).  However, the SJC noted that its decision does not resolve the entire dispute:  because even under the real estate licensing statute, salespersons may be either employees or independent contractors, and because the parties did not litigate the issue of how real estate salespersons should be classified outside the framework of the independent contractor statute, the court stated, “we think it prudent to leave that issue’s resolution to another day, when it has been fully briefed and argued.”  The court added, hopefully, “Should the Legislature be so inclined, it may wish to clarify how a real estate salesperson may gain employee status under the real estate licensing statute.”

It will be interesting to see how the real estate brokerage industry responds to Monell, and whether the Legislature takes up the SJC’s invitation to resolve this important open issue by amending the real estate licensing statute.