IT Workers, Others, Often Lose Benefits by Being Misclassified as Independent Contractors Rather than Employees
Massachusetts has been described as the “techiest labor force in the nation.” Nearly 1 in 10 Massachusetts workers are employed in the software, technology, or telecommunications field.
But there is a dark side to this growth. Many IT workers (and others) are misclassified as independent contractors, when under the law virtually all workers in Massachusetts must be treated as employees. This happens to computer programmers, graphic designers, web developers, and numerous other type of IT workers.
What is the difference between an independent contractor and an employee? An independent contractor has no payroll taxes, such as Social Security or income taxes, deducted from his or her paycheck. An employee does.
By being treated as an employee, a worker has a number of benefits. He or she will be entitled to unemployment if laid off, to workers’ compensation if injured on the job, and to Social Security benefits if he or she retires or becomes disabled. The worker may also be hit with a hefty tax bill at the end of the year.
There is a strict test that determines when a worker can be an independent contractor. Almost no workers in Massachusetts meet this test, and as a result they should be treated as employees. The test looks a three issues. All of these requirements must be met before a worker can be treated as an independent contractor. These apply to all workers, not just those in the IT field.
- Freedom from Control. The worker must be free from control of how he or she performs his job. For instance, the worker should be able to set their own hours, and do their work without instruction from a manager or supervisor.
- Outside the Usual Course of the Employer’s Business. The work cannot be within the employer’s line of business. For example, if the employee is a computer programmer working for a software company, computer programming is within the course of the company’s business. The worker must be treated as an employee.
- Independent Trade or Occupation. Some type of work is customarily done by independent contractors. For example, a painter who is repainting the walls at an IT firm probably does not need to be treated as an employee.
An employer who misclassifies workers as independent contractors may be subject to a civil lawsuit for damages, as well as fines and penalties by the Massachusetts Attorney General.
Culik Law is a Massachusetts Law Firm. The posts on Culik Law’s blog are not intended as legal advice. If you have questions about your particular situation, CONTACT CULIK LAW for a Free Consultation.