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.
While many service recipients can prove one or even two of these criteria, very few can satisfy all three. The second of them is particularly onerous, and precludes businesses from hiring contractors even to handle excess work that may arise during busy seasons but be too fleeting to justify the expense of hring employees. Most contractors, after all, perform precisely the work that the company they provide services to performs — delivery drivers for a courier company, for example, or real estate agents who work under the supervision of brokers. Applied literally, the requirement that contractors not be used to perform the work that a business normally performs effectly bars their use state-wide. While exceptions to this rule may exist, they are few and, unless clear and unequivocal, should be embraced very carefully.
The penalty for violating the independent contractor law can, after all, be steep. At issue may be the tax withholdings and contributions employers are required to me, the injury and unemployment benefits they are required to provide, the Massachusetts requirement that health insurance benefits be offered to workers, and even contractors’ wages. Because s. 148B is part of the state’s Wage Act, all these issues can be in play when a worker is misclassified, and damages can be tripled as a matter of law. Legal fees are also mandatory, leaving potential exposure for employers so high that the risk may not be work taking at all.