Massachusetts Employee – or Independent Contractor?

If you are working for a company in Massachusetts,  it is more likely than not that you should be treated  as an employee with benefits, rather than an independent contractor without benefits and with lower pay.   Why should you care if you are given a 1099 and your employer classifies you as an independent contractor?  Workers who are treated as independent contractors often don’t have the same benefits as employees and they can be left without worker’s compensation insurance if they are injured on the job, and without unemployment benefits if they are laid off.

The Massachusetts Independent Contractor law was amended in 2004 and since that date, there have been a number of court opinions and an advisory from the Massachusetts Attorney General that make it very clear that it is the unusual case where a company can legally classify a worker as an independent contractor.  Despite the rulings, companies still try to save money and increase the profitability of the company  by hiring workers as independent contractors.

How do you know if the company paying you for your services can call you an independent contractor?  The law has a three part test, and the burden of proof is on the company to show that the worker meets all three parts of the test.  The first part of the test provides that in order to be an independent contractor in Massachusetts, the worker must be free from control and direction in performing the service.  In other words, if the company tells you when to work, how to work and where to work, you are likely an employee.

The second part of the test is that in order to be an independent contractor, the service you are performing must be outside of the usual course of the employer’s business.  This can be more difficult for a company to prove than you might think.   A Massachusetts court recently found that exotic dancers who worked at a strip club were integral to the business of the club – the dancers’ services were not outside the usual course of the employer’s business.   The company violated the law by treating them as independent contractors and not as employees.

The third part of the test is that in order to be an independent contractor, the worker must be in an independent trade, occupation, profession or business.   There are certain instances where a company can hire a consultant to perform services where that consultant is in an independent occupation.  However, Massachusetts courts are increasingly finding that workers such as truck drivers who deliver products or packages for the company are employees.

It doesn’t matter if the company wants to call the worker an independent contractor, or doesn’t withhold taxes, or contribute to unemployment compensation.   These factors do not determine whether or not the worker is an employee or an independent contractor.

If a company has violated Massachusetts law by treating a worker as an independent contractor, the worker may be owed money damages as a result.   The worker may be owed overtime pay if the company failed to pay time and a half after forty hours in a week.  The worker may not have been paid the state minimum wage.   Once the company has violated the independent contractor law, it is likely that the company is in violation of multiple other laws, such as the law requiring that the company withhold taxes on employee wages and keep true and accurate payroll records.

If you have any questions about the Massachusetts independent contractor law, contact employment attorney Maura Greene at 617-936-1580.  In 2012, the Boston Globe named Maura Greene as one of Boston’s top-rated employment lawyers.