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Angiulo: When Working From Home Causes a Lawsuit

Monday, October 12, 2015

 

Many businesses operate with the best and the brightest spread out over long distances. Say, for example, a business in Kansas wants to employ a sales person in Massachusetts and agrees that the employee may reside in the Commonwealth and work from home. As you may imagine, the employer in this case may believe that they are getting the best of both worlds: top notch talent and lower overhead by saving office space.  A recent case from the Federal First Circuit Court of Appeals highlights what some employers might see as an unexpected consequence of fighting a lawsuit in their employee's home state.

 In Cossart v. United Excel Corporation a Kansas Corporation found themselves in exactly this spot when a dispute arouse with an employee. The argument revolved around money. More specifically, a salesperson believed he was owed $219,000.00 in commission and the employer set the figure at $62,000.00 which is how the fight started.

The employee filed suit and the employer, after some litigation, filed a motion to dismiss for lack of personal jurisdiction.  When this motion was filed, the question became whether, or not, the Federal Court of Massachusetts has authority over a defendant from Kansas for the purpose of the lawsuit.  In order to answer that question, the First Circuit looked to both the due process clause of the Federal Constitution and Massachusetts law for legal authority.  

While the technical legal issues could fill up pages, the factual points supporting why the lawsuit could move forward in Massachusetts are simple. The employer negotiated an employment contract with a employee who would be working from home in Massachusetts. The employer provided material support including video conference equipment, a computer, printer, and cell phone. The employer also provided a telephone number for the employee that re-routed telephone calls from Kansas to Massachusetts.  In addition, the employer company registered a general sales office here in Massachusetts the day after the employment contract was signed. The employee used this equipment in his home to solicit sales and was, at all times relevant to the dispute, residing and working from Massachusetts.

The court used these facts, as well as others, to find three major points supporting why the defendant corporation was subject to the jurisdiction of courts in Massachusetts. First, both the employer and employee knew that performance on the employement contract would occur here in the Commonwealth. In addition, by choosing a Massachusetts resident who worked from that state, the employer was choosing to receive the benefits and detriments of Massachusetts law.  Finally, the defendant did not show any exceptional burden of the case being heard in Massachusetts.    

The business world can be a tough place. While employers may see this decision as frustrating, it is also a way to forecast risk. As it stands in the First Circuit, if you reach out to find talent you may face a lawsuit far from home.  Considering this potential outcome during the formation of an employment contract may prevent bigger problems in the future.

Leonardo Angiulo is an Attorney with the firm of Glickman, Sugarman, Kneeland & Gribouski in Worcester handling legal matters across the Commonwealth. He can be reached by email at [email protected] 

 

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