Massachusetts has one of the most employee-friendly independent contractor laws in the United States. Under the Massachusetts Independent Contractor Law, which is also stricter than federal law, Massachusetts General Laws, Chapter 149, Section 148B, a worker will be considered an employee unless the employer can show that all three prongs of the independent contractor test has been satisfied:
1. The worker is free from control and direction with the performance of the service, both under contract, and in fact;
2. The worker provides a service that is performed outside the usual course of business of the employer; and
3. The worker is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.
The Attorney General’s office has issued guidelines, including several factors considered to be strong indicators of misclassification which include, workers who provide services for an employer that are not reflected in the employer’s business records, workers paid “under the table”, insufficient or lack of workers’ compensation coverage, workers who do not receive 1099’s or W-2s, workers who do not pay income taxes and employers who fail to contribute to the Division of Unemployment Assistance.
The statute has been construed very narrowly by the courts, and most workers will not meet the test for independent-contractor status. The net result is that it is nearly impossible for Massachusetts employers to classify a worker as anything other than an employee. Why are some employers willing to take the risk to misclassify their workers? For financial gain, and an unfair competitive advantage, of course. Because when they do so, employers avoid paying holiday, vacation, and overtime pay; Social Security and Medicare contributions, unemployment insurance, workers’ compensation; and income tax withholding obligations. Employers who violate the statute are liable for damages, as well as civil and criminal penalties.
So if you have a job but you get paid without taxes being taken out of your paycheck, you probably have a claim for money damages. In fact, if you believe you have been wrongly designated as an independent contractor, you may be eligible to file a claim for treble damages for any lost wages, overtime and other benefits and attorneys’ fees under the Massachusetts Wage Act, by filing a Non-Payment of Wage and Workplace Complaint Form with the Office of the Attorney General. Employers beware: the risks and penalties for misclassifying workers are significant and far reaching.