As a worker it is important to know how you are classified – are you an employee, if so, are you exempt or nonexempt? If you are not an employee, are you an independent contractor? Being properly identified can make a significant difference to the bottom line for employers and to your pocket as a worker. So let’s review:

Nonexempt -- employee entitled to overtime pay for all hours over 40 per week;
Exempt -- employee not entitled to overtime pay, based on the nature of their job description; often working in management, professional, administrative and outside sales roles; 
Independent Contractor -- not an employee at all, but an independent "business" not entitled to overtime or benefits and subject to paying its own taxes, business expenses and insurance.

When workers are improperly classified as independent contractors rather than an employees, they miss out on health insurance, federal and state employment tax payments, protections of the Massachusetts Wage Act and pay all their own expenses, such as gas, worker's compensation and liability insurance, along with all other business related expenses. 

The motive for employers to improperly classify workers as independent contractors for employers is obvious -- they save a tremendous amount of money and pass the costs of running their business onto the backs of the so-called "independent contractor."  

In recent news, a staffing and referral agency that placed education sector workers in temporary positions was cited fr misclassifying workers. The national staffing agency, Delta-T Group Massachusetts Inc., was recently cited by the Attorney General’s office for misclassifying workers as independent contractors. The Attorney General’s office rejected Delta-T’s claim that it was merely connecting workers to jobs as part of the gig economy. While the gig economy can offer workers more flexibility, it also presents real risks when workers are misclassified and are denied very important job protections.

Unfortunately, Delta-T’s misclassification is not a unique issue – it happens more often than you think. For businesses like hair salons, cleaning companies, delivery companies, some contracting businesses and home healthcare businesses misclassify employees as independent contractors is all too common.  Misclassification is not a harmless error. Misclassifying employees as independent contractors is an age-old wage trick where an employer claims you are an “independent contractor,” despite the fact that you are treated just like an employee.

Massachusetts law presumes that a worker is an employee and not an independent contractor, therefore the onus is on the employer to prove otherwise.

Being mislcassified as an independent contractor has a drastic impact on your family's financial situation.  Independent contractors are considered self-employed business owners.  Independent contractors a different tax obligations and legal liabilities, are generally not entitled to unemployment benefits and they do not get assistance with health insurance, paid time off, 401Ks or any other benefits an employee might enjoy.   

If you are unsure if you are an independent contractor or employee, take the below test (also called the "ABC" test)!

1. Are you free from the control and direction of your employer? 

2. Do you perform work that is outside the usual course of your employer's business? 

3. Do you have your own independent business doing the same kind of work you do for your employer?

If you can say “yes” to all 3 of the above questions, then you are an independent contractor. If you say "no" to any of the above questions, then you are an employee.

If you believe you have been misclassified as independent contractor or if you are questioning if your status as a 1099 "employee" is legal and accurate, then you need to contact our office at 508-998-0800 for a free consultation.  There are no out of pocket fees or costs.