Massachusetts Wage Act May Extend to Global Employees: What Employers Must Know

Plaintiff George Serebrennikov brought claims against Proxet Group LLC and its CEO, alleging that he was misclassified as an independent contractor and owed $22,500 in unpaid salary, a $100,000 bonus, $16,000 for unused vacation days, and over $450,000 in unreimbursed employment-related expenses. Serebrennikov brought claims under the Wage Act, as well as for breach of contract and breach of the implied covenant of good faith and fair dealing.

Proxet is headquartered in Massachusetts and maintains a physical presence there, but operates both in the United States and internationally, with subsidiaries in Ukraine, Poland, and Colombia. Serebrennikov worked for Proxet in Ukraine, Turkey, Poland, and the United States, reporting to management in Massachusetts.

In 2016, Serebrennikov and Proxet entered into a Consulting Agreement and a Confidentiality Agreement, both containing Massachusetts choice of law provisions. In 2018, Serebrennikov also entered into an Employment Agreement with Proxet Ukraine, which included a Ukranian choice of law provision.

Choice of Law and Applicability of the Wage Act

A central issue for the court was whether Massachusetts law, and specifically the Wage Act, applied appropriately to Serebrennikov’s claims, given his international work and the existence of a separate employment contract with Proxet’s Ukrainian subsidiary. Proxnet argued that the Wage Act did not apply because the operative contract was Serebrennikov’s Employment Agreement with Proxet Ukraine. Additionally, Proxnet argued that because Serebrennikov primarily resided in and performed his work in Ukraine, and had minimal, if any, contacts with Massachusetts, the Wage Act should not apply.

The court, however, focused on the other two agreements between the parties — the Consulting Agreement and the Confidentiality Agreement — both of which included a Massachusetts choice of law provision. The court rejected the defendants’ reliance on the Employment Contract’s choice-of-law clause, noting that Serebrennikov asserts no claims under that contract. Rather, his dispute is with Proxet and its CEO, neither of whom is a party to the Employment Contract with Proxnet Ukraine.

The Wage Act does not expressly bar extraterritorial application. Accordingly, the statute may reach out‑of‑state employees if Massachusetts has the most significant relationship to the employment relationship. In assessing Serebrennikov’s claims, Judge Talwani relied on the First Circuit’s decision in Viscito v. National Planning Corp., 34 F.4th 78, 83 (1st Cir. 2022), which assesses whether Massachusetts has the “most significant relationship” to the parties and their employment using several factors.

• The employer’s headquarters.

• Where the employee performed the work.

• The frequency and extent of the employee’s interactions with the employer in Massachusetts.

• Any valid choice‑of‑law provision in the employment contract.

• The significance of any other state’s connection to the employee and the work performed.

Applying the Viscito factors, Judge Talwani found that Massachusetts had the most significant relationship to the parties’ working relationship. The court emphasized that Proxet is headquartered in Massachusetts and has no other physical location in the United States. In addition, Proxnet issued Serebrennikov Internal Revenue Service forms over multiple years listing its Massachusetts address and reflecting payment from that location. The applicable contracts contained Massachusetts choice of law provisions. With respect to the frequency and extent of the employee’s interactions with Proxnet in Massachusetts, the court noted that although Serebrennikov worked for Proxnet primarily from Ukraine, he reported to management in Massachusetts, provided operational services to Proxet, interacted with certain Proxet clients, coordinated with Proxet’s legal counsel and head of US operations on various company matters, contributed to development of Proxet’s prototype, and prepared select marketing materials for the company. In sum, as Serebrennikov’s work was both directed by and benefitted a Massachusetts entity, Massachusetts law, including the Wage Act, should govern.

Relatedly, although Serebrennikov’s consulting agreement with Proxet labeled him an “independent contractor,” the court applied the statutory presumption under M.G.L. c. 149, § 148B that individuals providing services are employees unless the employer can establish all three indicia of independent contractor status. Accordingly, Serebrennikov was deemed an employee for purposes of the Wage Act.

Takeaways for Employers

Massachusetts‑based companies managing international teams should note that Massachusetts law can reach beyond state lines where the business nexus is anchored in the Commonwealth. The physical location of the worker is not always dispositive, particularly in light of contractual choice-of-law provisions.

For any questions about this update or drafting employment agreements generally, please contact your ArentFox Schiff Labor, Employment & OSHA attorney.