- The individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact;
- The service is performed outside the usual course of business of the employer; and
- The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.
The Massachusetts Supreme Judicial Court recently decided a case that increased the amount of damages a worker can receive when he or she has been misclassified as an independent contractor. The court held that the damages incurred by the misclassified worker should be equal to the value of wages and benefits he should have received as an employee, but did not. As a result, the worker was able to retain the fees he received as an independent contractor and recover the value of the holiday pay, vacation pay, and other benefits he would have received as an employee. Further, the worker was entitled to recover overtime based on his hourly wage unless the employer can establish that the worker was exempt from the overtime requirements of state and federal law.
This new expansion of the scope of damages effectively increases a company’s potential liability if it misclassifies an employee as an independent contractor in Massachusetts. In light of this decision, Massachusetts employers should carefully evaluate whether they have classified their independent contractors.