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So You’re an Independent Contractor – Now Hire Independent Counsel to Review Your Services Contract

Independent Contractors have become more and more common these days due, in part, to economic conditions and businesses’ unwillingness or inability to hire employees, an individual’s need to work multiple jobs, and/or other policy-related issues such as state or federal healthcare requirements if a business has a minimum number of full time employees. In Massachusetts, classifying a worker as an independent contractor when the worker should be classified as an employee can result in some serious penalties. In addition to the penalties imposed in terms of unemployment insurance or worker’s compensation, the Massachusetts Wage Act mandates the assessment of treble damages and attorney’s fees and costs against an employer AND personally and individually against the individual responsible for paying wages for its/his/her failure to properly classify a worker as an employee.

Anytime a worker and an employer enter into an agreement or written contract for the provision of that worker’s labor, they should each have an attorney draft or review the contractual arrangement. At The Jacobs Law, our Business Lawyers understand that having an attorney review every employer-worker relationship is cost prohibitive, so some employers need to pick and choose their battles. But keep in mind that an ounce of prevention is better than a pound of problems — a worker who worked 6 months as an independent contractor but should have received benefits as an employee valued at $200/week (health insurance, 401k matching, overtime and holiday / vacation pay) could cause an employer over $14,400 (($200 x 24) x 3) in damages plus attorney’s fees and costs (it reminds me of those anti-drinking and driving commercials that say a $9 six pack can end up costing you $10k). On Wage and hour issues, every business that hires workers can use a bit of legal advice.

As part of the review our Business Lawyers provide, we assess the applicability of the various criteria that distinguish an employee from an independent contractor and let you weigh the risk-reward. Its your business, not ours, but at least you can make informed and reasoned business decisions.

From the perspective of the individual being classified as an independent contractor this can be a difficult balancing act since the worker likely needs and wants the work and does not want to ‘rock the employer’s boat’.

However, from the employer’s perspective the assessment of the independent contractor v. employee criteria is a certain necessity given the penalties for noncompliance. And the assessment is easily done through the employer’s responses to a simple questionnaire provided by the Boston Business Lawyers at The Jacobs Law LLC. The second step is to properly draft the contract between the employer and the worker, based on the classification, to clearly set forth the terms of the arrangement and minimize the potential to fall into the independent contractor v. employee trap. As most employers know, the early stages of an employer-worker relationship are like the honeymoon period. It is once that honeymoon periods that little problems and issues mushroom into big ones–and a misclassified worker has tremendous leverage to make demands over the employer.

If you are a business owner / employer or a manager or supervisor responsible for the payment of wages, that oversees independent contractors, dont get caught in the independent contractor v. employee trap — contact one of the Boston Business Lawyers at The Jacobs Law LLC today. 800-652-4783

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