Beware of Illegally Hiring Independent Contractors


As a business owner, you may be considering hiring independent contractors.  It is an enticing concept.  Independent contractors are not employees and aren’t on your payroll, so you think you may be able to save money that would be spent on employment taxes and benefits and minimize legal liability for their actions.  Beware!  The risk is not worth the reward.

Massachusetts Has Rules on Employer Relations with Independent Contractors

Very few proposed independent contractor relationships are legal in Massachusetts.  Under Massachusetts General Laws, Chapter 149, Section 148B, the government will presume that the would-be independent contractor is an employee, unless you can meet the following three requirements – all three – which I explain below each quoted line.

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

This means that you can’t tell the individual how to perform his/her work.  You can’t require that the individual be on your worksite at certain times.  With a legal independent contractor, you are paying for a result – just as you would in any arm’s length business-to-business transaction – not the right to dictate how the individual achieves that result.

the service is performed outside the usual course of the business of the employer”

This requirement tends to be more of a problem than the first requirement.  It means that you can’t hire an “independent contractor” who does the same type of work you do.  For example, if you own a bakery, you can’t hire independent contractor bakers.  If you own an accounting firm, you can’t hire independent contractor accountants.  However, either of these types of businesses might be able to hire a cleaning service as an independent contractor, assuming the statute’s other two requirements are met.

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”

This means that the would-be independent contractor must work for businesses other than your own.  Put another way, he/she must be set up as a business, with multiple clients, including your business.

What are the Dangers of Inappropriately Classifying a Worker in Massachusetts?

If your proposed independent contractor doesn’t meet these requirements, and you proceed anyway, you are illegally misclassifying an employee – and a team of state agencies known as the Massachusetts Joint Task Force on the Underground Economy and Employee Misclassification (JTF) wants to find you.  The JTF includes 17 agencies, such as the Office of the Attorney General, Department of Revenue, Department of Unemployment Assistance, Department of Industrial Accidents, and Department of Labor Standards, to name a few.  The JTF takes this law seriously, as is evident in the millions it has recovered – yes, millions – in unpaid employment taxes.  The Massachusetts Attorney General has published an independent contractor law advisory that should be required reading for any business owner.

Lallier Munroe Can Help You Appropriately Classify Your Workers

Don’t go it alone when deciding if you can legally bring on an independent contractor.  If you want to properly classify your workforce, avoid paying penalties to the government, and protect the goodwill you have worked so hard to build, then contact a Massachusetts employment lawyer who can assist you in this analysis.

Call Us Today at (978)388-1100 for Answers Now!

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