By: Michelle De Oliveira, Esq., Rohit K. Sinha, Esq.
A recent federal court decision, Serebrennikov v. Proxet Group, LLC, held that a Ukraine-based employee could move forward with a Massachusetts Wage Act claim against a Massachusetts employer because Massachusetts had the most significant relationship to the employment relationship. This case serves as a reminder that hiring individuals who reside abroad or out of state will not necessarily shield a Massachusetts-based employer from Wage Act liability.
Overview of Relevant Facts
The plaintiff, George Serebrennikov, was a Florida resident who worked extensively overseas while providing services to Proxet Group (“Proxet”), a Massachusetts-based software and technology company. During the relevant period, Serebrennikov lived in Ukraine for approximately eight months and also worked from Poland, Turkey, and the United States. He performed services both for Proxet and for its Ukrainian subsidiary, Proxet Ukraine.
The parties’ relationship was governed by two agreements. First, a 2016 Consulting Agreement, entered into through Serebrennikov’s Florida company, classified him as an independent contractor and included a Massachusetts choice-of-law provision. Second, in 2018, Serebrennikov entered into an Employment Agreement with Proxet Ukraine that established an employer-employee relationship and was governed by Ukrainian labor law.
On paper, Proxet positioned Serebrennikov as a consultant to the Massachusetts entity and an employee only of the Ukrainian subsidiary.
In practice, however, Serebrennikov held the title of Chief Operating Officer at Proxet and performed core, senior-level functions for the Massachusetts company. Among other responsibilities, he regularly reported to Proxet’s Massachusetts-based CEO and leadership team, managed major projects, prepared marketing materials, assisted in product development, worked directly with Proxet clients, and coordinated with Proxet’s U.S. legal and operations teams. Proxet’s tax documents also listed a Massachusetts address, and key business and compensation decisions were directed from Massachusetts.
After the relationship ended, Serebrennikov alleged that he was owed unpaid salary, vacation pay, and business expenses, and asserted that—regardless of how the parties labeled the relationship in their contracts—the Massachusetts Wage Act applied.
Factors the Court Considered
The court agreed, holding that where Massachusetts has the most significant relationship to the underlying employment relationship, the Massachusetts Wage Act has an extraterritorial reach and may apply even if the individual resides or works primarily outside the state.
In concluding that Massachusetts had the most significant relationship to the employment relationship, the court emphasized several key factors:
- Proxet is organized as a Massachusetts limited liability company and is headquartered in Massachusetts.
- Proxet administered and directed Serebrennikov’s compensation from Massachusetts-based accounts.
- Proxet’s CEO and other senior managers who directed and evaluated Serebrennikov’s work were based in Massachusetts, and Serebrennikov regularly reported to and collaborated with the Massachusetts-based leadership team.
- Proxet issued U.S. tax forms to Serebrennikov that listed a Massachusetts address for Proxet.
- Serebrennikov’s work was performed for the benefit of Proxet’s U.S. business and Massachusetts operations.
The court looked at where the “center” of the work relationship was, despite Serebrennikov’s physical address or location being outside of Massachusetts. The court rejected Proxet’s reliance on the Ukrainian employment contract and its Ukraine choice-of-law provision, emphasizing that Serebrennikov’s claims were not brought under that contract but instead targeted his relationship with the Massachusetts entity, Proxet Group LLC.
Based on these facts, the court concluded that Massachusetts law—specifically, the Massachusetts Wage Act—governed the dispute. The court further held that Proxet misclassified Serebrennikov as an independent contractor, in violation of M.G.L. c. 149, § 148B, when he was, in fact, an employee. Indeed:
- The work Serebrennikov performed was not done without Proxet’s direction and control given, among other things, his regular reporting to Massachusetts-based leadership and Proxet’s oversight of his work.
- The work Serebrennikov performed was within Proxet’s usual course of business.
- There was no evidence that Serebrennikov had his own, independent business or trade doing the kind of work that he performed for Proxet.
In reaching this conclusion, the court looked beyond job titles and contractual labels and instead examined the practical realities of Serebrennikov’s day-to-day work. Based on the extent to which his role was integrated into Proxet’s core operations, the court determined that he had been misclassified as an independent contractor and should have been treated as an employee.
What this Means for Employers
For Massachusetts employers, this case underscores that the Massachusetts Wage Act can apply beyond state and national borders when the work performed is anchored in Massachusetts, regardless of where the individual resides or performs the work physically. The key question is whether Massachusetts has the most significant relationship to the employment—a fact-specific inquiry that considers, among other factors, the individual’s day-to-day duties, how the work is performed, where the business is based, and where the management team is located.
Employers should carefully review all consulting and independent contractor agreements to ensure proper classification and make informed business and legal decisions regarding the application of the Massachusetts Wage Act, taking proactive steps to prevent—or minimize—potential legal exposure.
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