Are Your Workers as Independent as You Think? - Misclassifying Construction Employees as Independents Can Lead to Serious Problems

November 14, 2007

Ajbweb
Over the course of the last several years, there has been an upward trend in the misclassification of employees as independent contractors. While such a classification may have benefits to an employer, such as reduced insurance costs and certain tax benefits, it often has adverse affects on the individual that is misclassified, such as the inability to seek unemployment compensation when needed.

Construction companies are especially vulnerable to misclassifying their employees as independent contractors, and this can lead to very serious legal and financial penalties down the road.

To determine whether or not an individual is an employee, Massachusetts General Law states that an individual performing a service shall be considered an employee unless:

  1. The individual is free from control and direction in connection with performance of the service, both under his contract for the performance of a service and in fact
  2. The service performed is outside the usual course of business of the employer; and
  3. 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

The presumption that an individual is an employee may be rebutted only if the presumed employer established that it has met each of the above three tests. The employer bears the burden of proving all three conditions.

The Massachusetts Supreme Court has held that an employer's direction and control of an employee versus an independent contractor follows the common law analysis of master and servant relationship. ...

You may read more at the link below.

by: Adam J. Basch, Esq.

BusinessWest
October 29, 2007

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