Page 2 - White Paper-Independent Contractor Laws
P. 2
Most surveys of small business owners will tell you that the thing they
worry about most is money and cashflow (and you probably didn’t even need a
survey to tell you that). And, since payroll is usually the single largest expense in
a business, it is often the place people look to control costs. One strategy we have
seen frequently is to classify people providing services as independent contractors
(or “1099” workers) rather than as employees, in order to avoid additional costs
such as payroll taxes, unemployment, and/or workers compensation insurance.
What you need to know is that this is a very risky proposition under
Massachusetts law. Unlike the federal IRS test that you or your accountant may be
familiar with, the Massachusetts Independent Contractor Law sets a very strict test
for treating a worker as anything other than an “employee” under the law. Any
individual performing any services for a business will be considered to be an
"employee" for purposes of Massachusetts labor and Wage and Hour laws unless
the business can prove all three of the following:
• the individual is free from control and direction of the business he or she is
providing services for;
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