The failure to properly classify workers as employees in Massachusetts can cause employers to incur tax penalties, increase their insurance liability, receive civil and criminal fines and become subject to litigation.
One potential area of liability for misclassification is of wages. Classification as an employee affords a worker various protections including minimum wage and overtime pay. Massachusetts courts have awarded a misclassified worker the wages he would have earned as an employee regardless of the fact that he was actually paid more as an independent contractor than as an employee.
Massachusetts General Law c. 149 § 148B explicitly sets forth the three criteria for classification as an independent contractor. Each of these criteria must be satisfied when classifying workers under chapter 149 (“Labor and Industries”), 62B (“Minors under Eighteen”) and sections of chapter 151 (“Minimum Wages”). The criteria are:
(1) the individual is free from control and direction in connection with the performance of the service;
(2) the service is performed outside the usual course of the business of the employer; and
(3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.
The Massachusetts Attorney General’s Office enforces this law and published this advisory regarding its interpretation of the statute.
The Massachusetts three prong test provides a broad definition of employee. Indeed, workers in certain industries have objected to the burdens the test places on the companies. This article discusses the troubles faced by freelance artists and writers. A second article shows how the transportation industry is fighting the classification for truck drivers and a perspective defending the protections afforded to the drivers.
In spite of these objections, the three prong test is the law of Massachusetts and employers must comply or risk investigation and fines.
If you have any questions regarding the above, or any other Massachusetts employment law or business law matter, please contact one of the employment or business attorneys at Doherty, Ciechanowski, Dugan & Cannon, P.C.