If it looks like a duck and quacks like a duck, guess what – it is a duck. This means that you can’t try to call it a fish, because it just isn’t. This old adage so aptly describes situations where workers are misclassified as independent contractors when they really are employees. No matter how much an employer wants to call them an independent contractor, if they do not meet the independent contractor test, they are just not one, period.
Misclassification, even when unintentional, leads to violations of several different laws and exposes employers to massive liability. In fact, one of those laws – the Massachusetts Wage Act – provides for triple damages regardless of whether the violation was deliberate or accidental. The Massachusetts Supreme Judicial Court’s (“SJC”) recent decision in Somers v. Converged Access, Inc. serves as an important reminder that the independent contractor statute is meant to be a strict liability statute.
In this case, Somers, who had unsuccessfully applied for employment with Converged Access, Inc. (“CAI”) on two occasions, was ultimately hired as an independent contractor, doing work similar to that of CAI employees. As an independent contractor, Somers did not receive employee benefits, such as time off from work, health insurance or retirement benefits, and Somers did not receive overtime pay when he worked more than 40 hours per week. CAI did not withhold taxes from Somers’ pay or pay workers’ compensation and unemployment insurance on behalf of Somers. CAI did, however, pay Somers significantly more money as an “independent contractor” than it ever would have as an employee.
When CAI chose not to renew Somers’ contract, Somers filed suit under the Massachusetts Wage Act, claiming that, as an independent contractor, he did not receive the wages and benefits that CAI employees had, such as overtime pay and vacation time. In response, although CAI did not dispute that Somers was incorrectly classified, it argued that because Somers was earning substantially more money than its employees and was, in fact, paid more money than any overtime he would have earned, Somers did not suffer any damages. Further, CAI claimed that it would have paid Somers far less if he had been an employee. Accordingly, CAI argued that it should be allowed an “off-set” for the salary it would have paid Somers if he was an employee against the much larger amount it paid him as an independent contractor.
Although the trial court agreed with CAI’s argument, the SJC did not. In fact, the SJC noted that the legislative intent behind the independent contractor statute would be contravened by allowing such an off-set and reasoned that “[w]ere employers who violated the statute permitted a ‘safe harbor’ that allowed them to demonstrate that they would have paid the employee less had they known he or she was not an independent contractor, there would be no financial incentive to ensure employer compliance and employees would be left with no meaningful protection from misclassification.” Thus, the SJC determined that it was clear that the independent contractor statute was written to impose strict liability on employers.
The case was remanded to the trial court for a determination on damages. Because the SJC found that CAI had misclassified Somers, Somers will be able to recover triple the damages. It will be the trial court’s job to determine exactly what damages were incurred by the misclassification, which will include any wages, overtime pay and benefits that Somers was denied because of his misclassification.
Showing independent contractor status is very difficult and entails overcoming Massachusetts law’s presumption of employment. This case serves as a very important reminder to Massachusetts employers that there are extremely tough penalties for misclassifying workers as independent contractors.
To read the SJC’s full decision, click on the following link: http://www.sociallaw.com/slip.htm?cid=19358&sid=120