Mass-Peculiarities: An Employers Guide to Wage & Hour Law in the Bay State 2022 Edition

© 2022 Seyfarth Shaw LLP Massachusetts Wage & Hour Peculiarities, 2022 ed. | 147 Massachusetts are well advised to undertake a careful legal analysis before classifying any worker as an independent contractor. 862 A. The Massachusetts ABC Test for Independent Contractors The test for independent contractor status under the Massachusetts Independent Contractor Statute, commonly referred to as the “ABC test,” has three prongs, and the company has the burden of proving that all three are met. 863 To overcome the presumption that a worker is an employee, the party receiving services must establish that: • The worker is free from its control and direction in performing the service, both under the contract and in fact • The service provided by the worker is outside the employer’s usual course of business • The worker is customarily engaged in an independent trade, occupation, profession, or business of the same nature as that involved in the service performe d 864 Failing to establish even one prong may be fatal to independent contractor status. Each prong is discussed in detail below. 1. Level of Control Exercised by Employer The first prong of the ABC test scrutinizes the control that a company has and exercises over an individual, with higher levels of control making it more likely that the individual is an employee. Specifically, in order to meet the requirements of the first prong, the company must show that the 862 In prior decades, there was lit t le case law interpret ing the Independent Contractor Statute. In recent years, however, plaint iffs’ at torneys have filed large numbers of cases under the statute, creat ing the opportunity for court s to clarify the scope of the law. 863 See Sebago , 471 Mass. at 327; Scalli v. Citizens Fin. Group, Inc. , 2006 WL 1581625, at *14 (D. Mass. Feb. 28, 2006) (cit ing Silva v. Dir. of Div. Emp’t Sec. , 398 Mass. 609, 611 (1986)); see also Athol Daily News v. Bd. of Review of Div. of Emp’t & Training , 439 Mass. 171, 175 (2003) (finding that employer bears burden of establishing all three prongs of ABC test for purposes of Massachuset t s Unemployment Insurance Statute, M.G.L. ch. 151A, § 2, which applies a similar but not ident ical ABC test ). In determiningwhether an employee is an independent cont ractor, the Independent Cont ractor Statute explicit ly excludes certain factors from considerat ion, including an employer’s failure to withhold federal or state taxes, to pay unemployment contribut ions, or to purchase workers’ compensat ion coverage. M.G.L. ch. 149, § 148B(b). Likewise, whether or not individuals purchased workers’ compensat ion coverage for themselves is irrelevant . M.G.L. ch. 149, § 148B(c). 864 M.G.L. ch. 149, § 148B(a)(1)-(3). In contrast, whether an individual is an independent cont ractor versus an employee under the FLSA depends on the “economic reality” of the relat ionship, which is based on the following factors: (1) the extent to which the services rendered are an integral part of the principal’s business; (2) the permanency of the relat ionship; (3) the amount of the alleged cont ractor’s investment in facilit ies and equipment ; (4) the nature and degree of cont rol by the principal; (5) the alleged cont ractor’s opportunity for profit and loss; (6) the amount of init iat ive, judgment or foresight in open market compet itionwith others required for the success of the claimed independent cont ractor; and (7) the degree of independent business organizat ion and operat ion. See DOL Fact Sheet #13 (July 2008). Unlike the rigid ABC test , the test under the FLSA looks at the total act ivity or situat ion and no single factor is cont rolling. Id.; see also WHD Field Assistance Bureau No. 2018-4. Thus, depending on the circumstances, an individual could be an employee under Massachuset t s law but an independent cont ractor under the FLSA.