Non-Compete, Independent Contractor Issues Define State Approach to New Economy

Massachusetts MapFrom the aimblog, Christopher Geehem argues for a change to the Massachusetts independent contractor statute to make it less restrictive.  Christopher writes:

The independent contractor issue revolves around an overly restrictive statute that leaves Massachusetts on the sidelines of one of the fastest developing sectors of the economy.

One out of every three American workers, from software engineers and researchers to graphic designers, freelance journalists and nannies, today works independently outside the bounds of traditional 9-to-5 employment. The trend includes the so-called sharing economy that provides apps allowing individuals to exchange goods and services ranging from rides to housecleaning.

But Massachusetts’ share of that job growth is threatened by a state law that imposes a confusing and complex three-factor test to determine whether a worker is an employee or independent contractor.

Employees must currently meet three requirements to be considered an independent contractor:

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

The service is performed outside the usual course of the business of the employer; and,

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.

An advisory from the Massachusetts attorney general in 2004 concluded that “the new law is so broad in its definition of employee that virtually every occupation, individual entrepreneur and every employer, including the public sector, have been affected, putting Massachusetts at odds with every other state in the country.”

Simply replacing the word “and” with “or” after Section 2 would bring Massachusetts into alignment with the 20-factor IRS test for determining employment versus contractor status, and validate normal and accepted employment practices in many sectors of the economy.

It’s a modest change that would help thousands of legitimate Massachusetts independent contractors who choose to manage and operate their own business and earn a living outside a traditional employer-employee relationship….

Read the full story at Non-Compete, Independent Contractor Issues Define State Approach to New Economy.

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