Recent Decision Confirms that Chapter 93A Claims May Not be Brought for Pre-Employment Misconduct.

Massachusetts General Laws Chapter 93A creates a cause of action for unfair and deceptive business acts or practices. The statute is intended to cover commercial transactions between independent third parties and is frequently used in litigation because of its punitive aspects (i.e., multiple damages and attorneys’ fees). However, the Massachusetts courts have long held that relationships between employers and employees are private in nature and therefore outside the scope of the statute. This begs the question: Can conduct that occurs prior to the formation of the employment relationship be covered by 93A?

In a recent decision of the United States District Court for the District of Massachusetts, Smith v. Zipcar, Inc., the court held that a Chapter 93A cause of action could not be brought for conduct occurring during the hiring process. In this case, a former executive alleged that Zipcar made misrepresentations about stock options which were being offered to him as part of his executive employment package. The executive argued that these representations were made in a commercial context because the executive had not yet been employed by Zipcar at the time. However, the court disagreed and broadly stated that any dispute arising out of the “hiring or firing” of an employee falls outside the scope of Chapter 93A.

This case sends a strong message that any attempt to apply the provisions of Chapter 93A, including its punitive aspects, will be very difficult, if not impossible, in any dispute involving an employment relationship.