Independent Contractor Classification
Employers often attempt to hire workers as independent contractors rather than employees to that they can avoid having to:
- Pay withholding
- Pay overtime
- Provide vacation and other benefits
- Pay bonuses
- Give stock and options
- Be Responsible for retirement benefits
- Comply with Fair Labor Standards Act (FLSA) requirements and similar state wage requirements.
What You Should Know About Independent Contractor Misclassification
In Massachusetts, it is extremely difficult for an employer to legally classify its workers as independent contractors. An employer who wants to classify and treat an individual worker as an independent contractor must show that the work being done by the individual:
- is done without the direction and control of the employer; and
- is performed outside the usual course of the employer’s business; and
- is done by someone who has their own, independent business or trade doing that kind of work.
Critically, all three parts of the test must be satisfied. It is not an either/or test. This is why Courts have dubbed this test the ABC test, because all three parts – A, B, and C – must be satisfied together. What makes the ABC test particularly hard is that the employer has the burden of proof. In other words, workers in Massachusetts are presumed to be employees unless employers can prove that they are independent contractors by establishing all three parts of the ABC test.
I Have an Independent Contractor Agreement – Is this Agreement Binding Regarding Whether I Will be Classified as an Employee or Independent Contractor?
Many employers try to avoid their legal obligations by seeking to enter into a written “Independent Contractor Agreement”, wherein the employer and the person who will be performing the work agree that the person will be considered an “independent contractor” with respect to all work to be performed. Such agreements are often designed to make the person performing the work do so without questioning their rights or entitlement to benefits and overtime pay.
Whether the person will ultimately be deemed to be an independent contractor or statutory employee will depend upon the factors in the ABC test outlined above, not a private agreement. In fact, the law expressly says that private agreements cannot override the obligations under the wage and hour laws, in which the ABC test is found. As a result, the provisions in an independent contractor agreement may be disregarded by courts.
How We Help
If you are being improperly being treated as an independent contractor so that an employer can purportedly avoid minimum wage, overtime, and other legal responsibilities, please contact us and learn how we can help you.