Page 4 - White Paper-Independent Contractor Laws

assignment. Ancillary support services (IT consultants, payroll or accounting

services) are generally permissible to engage on a contracted services basis,

assuming the other tests are met (actual independence and provision of similar

services to others), and assuming those are not your core business activities. Gray

areas abound. If you operate a restaurant, it is likely that you can hire a webmaster

as an independent contractor, but if you operate an online store, an argument could

be made that the website is part of your usual course of business, and therefore

should be managed and staffed by employees under the law.

It is truly surprising how many businesses in Massachusetts get this wrong,

so you should not assume a practice of using independent contractors instead of

employees is lawful, even if it is common in your industry.

Further, it is important to understand the potential consequences under

Massachusetts law of incorrectly classifying workers, even if your classification

passes muster under the federal tax rules.

First, a violation of the Independent Contractor Law is a violation of the

Wage Act, which means that if an employee wins a lawsuit and proves damages,

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