Massachusetts Lawyer Blog

Massachusetts Independent Contractor Law: Attorney General Guidelines and Three Prong Test for Independent Contractors

The Massachusetts Office of the Attorney General has issued an Advisory regarding M.G.L. c. 149, s. 148B, to provide “guidance” on the Massachusetts Independent Contractor Law or the Massachusetts Misclassification Law.

Under M.G.L. c. 149, s. 148B(d), an employer violates the law when two acts occur.

1. An employer classifies or treats an individual other than as an employee and the worker fails to meet the following three prong test (each is required for an individual or independent contractor to be classified other than as an employee): a. Is the individual free from control and direction in connection with the performance and service, both under his contract for the performance of service and in fact?

b. Are the services the individual performs outside the usual course of business of the employer?

c. Is the individual customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed?

2. In receiving services from the individual, the employer violates one or more of the following:

a. The wage and hour laws set forth in M.G.L. c. 149.

b. The minimum wage law set out in M.G.L. c. 151, s. 1A, 1B, and 19; 455 CMR 2.01, et seq.

c. The overtime law set forth in M.G.L. c. 151, s. 1, 1A, 1B, and 19.

d. The law requiring employers to keep true and accurate employee payroll records, and to furnish the records to the Attorney General upon request as required by M.G.L. c. 151, s. 15.

e. Provisions requiring employers to take and pay over withholding taxes on employee wages. M.G.L. c. 62B. (purposes of income tax withholding, M.G.L. c. 62B provides a definition of employee that differs from the three prong test in M.G.L. c. 149, s. 148B.)

f. The worker’s compensation provisions punishing knowing misclassification of an employee. M.G.L. c. 152, s. 14.

The advisory arrives at a time when employer liability concerns in Massachusetts' employment matters are growing. See my prior post, New Massachusetts Wage and Employment Law: Tougher on Employers, Better for Employees and Unions, on this topic and a May 6, 2008 email/MCLE Press Release stating,

Just two weeks ago, legislation mandating treble damages for prevailing wage-and-hour plaintiffs was passed, considerably raising the stakes for independent contractor classification and other wage and hour issues. See 2008 Mass. Acts c. 80 (formerly Mass. Senate Bill No. 1059). The new law will be effective July 13, 2008.

With the potential for treble (triple) damages around the corner, now is a good time for all businesses to review both their employment and independent contractor agreements and practices.