Sager is a business attorney and partner with Sager & Shaffer LLP in Westborough. She can be reached at psager@sslegal.com.
10. Contractor v. Employee
Just calling a person an independent contractor doesn’t make them one.
9. Who Decides?
The state and federal government classify workers as independent contractors or employees.
8. Why Care?
Misclassification of workers can result in huge liabilities including civil and criminal penalties and back payments and withholdings.
7. Government’s Stake
The government loses billions annually due to worker misclassification.
6. Test Case
To determine whether you have an employee or a contractor refer to the federal government’s test (The “Common Law” Test, also known as “The 20 Questions”) and the more stringent test formulated by Massachusetts.
5. Definition
An individual is NOT an independent contractor under state law if: the employer controls the worker; the worker is not engaged in his or her own legitimate business; the worker is performing the same work that the employer typically performs.
4. Same But Different
Accountants can’t be independent contractors to accounting firms. Carpenters can’t be independent contractors to building contractors.
3. State Changes
Legislation regarding public construction (think Big Dig!) was passed in 2004 and unbeknownst to many people it contained amendments to the Independent Contractor Law that goes way beyond public construction contractors.
2. Corps and LLCs
Hiring a corporation or LLC doesn’t skirt the rules. Recent state opinions says the person behind the entity may still be considereed an employee.
1. What To Do?
The best advice is to comply with the law. Reformulate business models to account for increased costs of using employees.
