From HR.BLR.com — David W. McBride discusses a recent case where a taxicab driver [Sagar] claimed that he was incorrectly classified by the company [Ambassador] as an independent contractor and should have been treated as an employee. In addition, David explains how Massachusetts law makes it difficult to classify a worker as an independent contractor. He writes:
Independent contractor standard nearly impossible to meet
In Massachusetts, the law presumes that a worker who provides services to a company is an employee unless the company can show he meets the test for independent contractor status under the state statute. This is an important distinction because a business entity is obligated to follow state and federal wage and hour laws for its employees, including minimum wage and overtime pay, but state and federal wage and hour laws don’t apply to independent contractors.
If an employer violates the wage and hour laws by misclassifying its workers as independent contractors rather than employees, it will be subject to monetary penalties in the form of fines to the government, and any lost wages or other damages owed to the misclassified employee are tripled under state law. So companies need to be very careful when they classify a worker as an independent contractor.
The Massachusetts independent contractor statute states that to prove a worker is an independent contractor and not an employee, the company must prove that:
- The worker is free from the company’s control and direction in connection with the performance of the service;
- The service performed by the worker is outside the usual course of the company’s business; and
- The worker is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.
[T]he case would be determined based on whether the facts showed that Ambassador provided taxi services most of the time or regularly in the course of its business. The court ruled that was a question of fact that had to be decided by a jury. Sagar v. Fiorenza, et al. (Mass. Sup. Ct., 2014).
Massachusetts law creates the strong presumption that every worker providing any service for anyone is an employee. That incredibly broad presumption makes it very difficult for an employer to properly classify its workers as independent contractors.
The presumption also makes it difficult for employers to have misclassification lawsuits dismissed early in the legal process—any dispute over any of the three statutory factors will likely prevent the courts from dismissing the case in favor of the employer.
Any employer that is using or thinking of using independent contractors should consult with its labor and employment counsel to ensure it’s in compliance with the law and evaluate the risks of taking on new workers as independent contractors.
Read the full story at Call me a taxi! Were Massachusetts cab drivers employees?.