Large Jury Verdict Highlights Risks Tied to Misclassification of Workers

One commonly overlooked risk to misclassifying workers as independent contractors rather than employees was recently highlighted when a jury awarded more than $500,000 to a painter who was hurt when he fell from a ladder while working at an apartment building. The problem: the putative employer and owner of the building did not have workers’ compensation insurance because, he claimed, he did not have any employees. The jury’s disagreement led to the large damages award, which exceeded $700,000 with interest and costs.

Under Massachusetts law, all employers are required to provide workers’ compensation insurance to their employees. Most do so through insurance policies while some choose to be self-insured. Employers who fail to provide coverage can face penalties and, as here, lawsuits from injured workers. While many companies who use independent contractors deal with these risks by requiring them to obtain their own accident policies or providing coverage for workplace injuries to them, the defendant here apparently failed to do so.

The Massachusetts independent contractor statute requires all workers to be treated as employees unless they are free from control in the performance of their duties; perform work that is outside the scope of a company’s normal course of work; and operate their own independent businesses. Penalties for violations of the law can be severe. In addition to the lawsuit successfully pursued here, workers can seek back wages, tax liabilities, and other damages. State agencies can perform audits, assess back wages and other expenses, and impose penalties. Offending employers can be forced to pay a worker’s legal fees, and triple damage awards are mandatory in private cases.