Massachusetts has very strict laws governing employment and wages. A violation, even if unintentional, will land an employer in hot water. One of the most rigid laws governing the employer-worker relationship in Massachusetts is that which covers the classification of a worker as an employee or an independent contractor. Many employers prefer to hire workers as independent contractors rather than employees, mainly because it is simpler and cheaper to do so. However, classification as an independent contractor in Massachusetts must satisfy a three-part test:
1. The worker must be “free from control and direction in connection with the performance of the services, both under his contract for the service and in fact.”
This first step actually requires two things. First, there must be a contract for the service. The contract should be written, signed and dated. It is helpful to include language that the independent contractor will use his/her own skills and expertise to achieve the task for which they were hired. The second requirement of this prong is that the worker must be free to use his or her discretion in completing the task. Simply put, the employer should not “micromanage” how the task is to be completed.
2. The service being performed must be “outside the usual course of the business of the employer.”
If a business offers a service – even if it is seldom performed – an independent contractor cannot be hired to perform that service on behalf of the employer. A CPA firm cannot hire an accountant as an independent contractor during tax season. A snow plowing company cannot hire a snow plow driver as an independent contractor for the winter. A plumber cannot hire another plumber as an independent contractor to assist with a large job. These would all be disqualified under the independent contractor statute.
3. The individual hired must be “customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.”
To determine whether this third prong is satisfied, an easy test is to look at whether the worker is available to provide the same or similar service to others and holds him/herself out as available to do so. The worker does not need to work for more than one employer, but s/he should be able and willing to provide his/her services to others.
It is easy for employers to misclassify employees as independent contractors, and doing so may subject the employer to stiff fines and penalties. Given the strict requirements of the Massachusetts Independent Contractor law, it is always better to err on the side of caution when hiring an individual. If hiring someone for a short duration as an employee is too costly or burdensome, it may be worthwhile for an employer to use the services of a “temp agency” – so long as the worker is an employee of the temp agency. This way the burden of taxes, unemployment, insurance, etc. is on the temp agency and not the employer.
If you are an employer who is uncertain about whether you can hire an individual as an independent contractor, or if you feel that you have been misclassified as an independent contractor, please contact the attorneys at Broadbent & Taylor for a free consultation!