Archives for March 2013

When Can Employers Use Independent Contractors to Perform Work in Massachusetts?

The conservative answer to this question is “never.” Under Massachusetts law, the use of independent contractors is severely restricted. In a classic example of what many consider legislative overkill, the law assumes all workers are employees, not contractors, regardless what the parties may have agreed to, until and unless employers prove otherwise. The criteria for doing so are so restrictive, taken together, that virtually no business in Massachusetts can satisfy them.

Under Mass. Gen. L. ch. 149, s. 148B, individuals who provide services to another are employees unless the recipient of those servies — that is, in normal circumstances, the supposed employer — prove the following:

1.  That the worker is free from control in the performance of the services, both under any contractual agreement and in practice;

2.  That the work being performed is something different from that normally performed by the recipient — that is, it is outside the usual course of its business dealings; and

3.  That the provider of the services is engaged in an independent business enterprise, something that is akin to true self-employment. [Read more…]

Late Wage Payment Means Mandatory Punitive Damages and Legal Fees Against Employers

Employers who aim to avoid multiple damages and legal fee awards in wage cases — as all should, of course — today have even greater reason to carefully assess what’s owed to workers on their ways out the employment door. In a decision issued on March 4, the SJC held that post-employment payments to a worker who was owed for accrued but unused vacation time meant nothing under the Massachusetts Wage Act. Despite having paid the terminted work more money in continued wages than he was owed for unused vacation time, the court held, the employer did not satisfy the requirements of the Wage Act and is liable for punitive damages and legal fees.

The case is Dixon v. City of Malden and involves the termination of the director of a city-owned nursing home. Under City policy, Dixon had accrued 50 days worth of vacation time on the day his was fired, a value of about $13,600. The City continued to pay his salary for more than three months, and he received more than $19,000 during that period. The payments, however, were not characterized as wages in lieu of unused vacation time and, when the salary continuation ended, City records still reflected that the worker had 50 accrued days. After Superior Court Justice Thomas Billings dismissed the plaintiff’s suit for unpaid wages, writing that he’d suffered no damages, the SJC transferred the case on its own initiative and reversed.

Citing to the statutory requirement that all wages due be paid on the day a worker is fired, the court held, “We conclude that the failure to pay unpaid wages, as defined by G.L. c. 149, § 148, cannot be mitigated by gratuitous, after-the-fact payments … Employers must ‘suffer the consequences’ of violating the statute regardless of intent. In these circumstances, the plaintiff has incurred damages under the terms of the statute because the city did not pay his earned, unused vacation time, a definitive amount of $13,615.54, when he was terminated from the city’s employment.” In the particular case at issue, Plaintiff Dixon will not be eligible for the now mandatory triple damages provided by the Wage Act. That’s because his suit began prior to the Massachusetts Legislature’s amendment of the Wage Act to clarify that such punitive awards are required in all cases where earned wages are unpaid.

Holliston Company Pays $169K for Overtime Law Violations

A local company is learnign the hard way that skirting overtime laws is risky business. In a recent settlement with the Massachusetts Attorney General’s office, the Holliston firm agreed to pay more than $169,000 in overtime wages and penalties for its trangressions of the state law that, generally speaking, requires employers to pay time-and-a-half to all employees who work beyond 40 hours in a work week.

The Attorney General’s enforcement of the overtime law is not unusual. In fact, at both the state and federal levels, labor officials have been actively pursuing wage law violators in recent years. In some cases, investigations are triggered by a specific complaint from a worker. In others, they are the product of audits that may be targed at particular business types and seem to materialize out of thin air. In all cases, employers are required to open their books to state and federal investigators, who may search for violations of overtime pay requirements, record-keeping rules, and other labor laws. What’s more, agents can refer their findings to each other and to other arms of government, such as workers compensation and unemployment enforcement agencies. It can all add up to substantial damages, as the case of the Holliston company illustrates. [Read more…]