A recent increase in the number of lawsuits brought under the Massachusetts Independent Contractor Law serves as a reminder of the strict provisions of this law and its significant penalties.

Under the law, individuals who provide service in Massachusetts for a Massachusetts employer are assumed to be employees unless the employer can establish all three of the following:

  1. the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of the service and in fact,
  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.

If a company fails to properly treat an individual as an employee, criminal and/or civil remedies may be imposed. In fact, any officer or agent with managerial responsibilities for the entity may be held personally liable depending on the circumstances. Criminal penalties may include fines and even imprisonment. Civil damages are significant and include treble damages and attorneys' fees. Even if an employer can show that it paid the individual more than it would have paid him or her as an employee, the individual may nevertheless be eligible for any wages (including overtime) and benefits he or she would have received as an employee, including holiday pay, vacation pay, and any other employee benefits.

The Bottom Line

In any state, but particularly in Massachusetts, employers must be wary of classifying individuals as independent contractors. Multistate employers should note that different states may consider different factors in determining whether an individual is an employee or an independent contractor. Employers must be sensitive to these differences – two people performing the same tasks in different states may need to be treated differently. When in doubt, the safer approach is to classify the person as an employee.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.