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Employee / Independent Contractor Misclassification

Many companies today have a legitimate need for highly specialized or experienced consultants and contractors to give their businesses a competitive edge without incurring the expenses of hiring those workers as employees. Massachusetts and the federal government recognize this need and allow companies to hire consultants and contractors as such. However, some companies have attempted to use the tax and contribution savings associated with hiring independent contractors by misclassifying regular employees as independent contractors. This misclassification is illegal under both state and federal law, and it unfairly shifts the tax and contributions costs to the misclassified employee.

Massachusetts and federal lawmakers have imposed strict penalties to be imposed when violations of the independent contractor / employee misclassification statutes are discovered. These violations are treated similarly to wage and hour violations, because misclassification effectively deprives affected workers of a significant portion of their wages. The Massachusetts and federal governments have also recognized that there are often ambiguities and legitimate disputes about whether a particular worker is an employee or an independent contractor, and there are safe harbor provisions to protect those businesses that make innocent mistakes in worker classification. Agreements or contracts declaring the worker to be an independent contractor are typically not controlling. Some of the major factors used to determine whether a particular worker is an employee or an independent contractor include the degree of discretion and of freedom from control the worker has, whether the service performed by the worker was a service outside of the usual course of the employer's business, and whether the worker engaged in an independent trade, occupation or business separate from the employer. Many other factors are also considered.

If you or your business require legal advice or representation in the context of an employee / independent contractor misclassification dispute, call Toomey Legal.