labor lawAdivision of labor law center

 Massachusetts recently increased the penalties for employers who misclassify employees as independent contractors.

 

Many states are imposing stricter penalties for employers who illegally avoid paying unemployment insurance and workers’ comp by misclassifying workers as independent contractors.

 

In Somers v. Converged Access, the Massachusetts Supreme Judicial Court ruled that the independent contractor law is a strict liability  statute. This means that the employer’s intent in misclassifying a worker is irrelevant. Therefore, the worker was entitled to compensation for wages, overtime and benefits that he would have received, if he had been correctly classified as an employee. In addition, the employee was permitted to keep the $65 per hour that the company paid him as an independent contractor – an amount far in excess of an employee’s wage in the same job.

 

The Massachusetts company was required to pay the employee for benefits including vacation and holiday pay. In addition, the company was ordered to pay the employee overtime at a rate of $97.50 per hour – 1.5 times the worker’s $65-per-hour wage.  

 

The Massachusetts definition of independent contractor is even more strict than federal independent contractor regulations. A worker is an employee unless he or she is:

 

Free of any control and direction in connection with work performance, both in fact and under the contract

 

Performs a service outside the usual course of business of the employer

 

Is customarily engaged in an independently established trade, occupation, profession or business (the same as the services performed.)

 

In addition, the burden of proof to show that these conditions have been met, falls on the employer. If  the worker does not meet all these conditions, he or she is an employee, not an independent contractor.

 

This means that in Massachusetts, any independent contractor hired must be outside of the employer’s usual business. A plumbing company could hire an accountant as an independent contractor – but not a plumber. An accounting firm could hire a plumber as an independent contractor – but not an accountant. California has a similar rule, but there is no such limitation on independent contractors under federal law.

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