Employer BEWARE: Employee or Contractor? Avoid Making a Costly Decision

for many employers, the choice to hire an independent contractor rather than an employee has become one of convenience. It's cheaper and easier to hire independent contractors; they don't get medical or other employee benefits; they don't get overtime and aren't subject to minimum wage restrictions. The employer doesn't withhold taxes, provide worker's compensation orcontribute to unemploymentcompensation and they help moderate the impact of peaks in workflow. Perhaps most significantly, they can be fired with few repercussions if things don't work out or the business takes a downturn.

While there have long been IRS and Department of Labor regulations that set forth the requirements for determining the appropriate categorization for an employee and an independent contractor, with possible penalties assessed for those incorrectly categorized, Massachusetts has raised the bar on responsibility when MA Senate Bill No. 1059 (S. 1059) became law on April 14, 2008.

Effective July 13, 2008, the Massachusetts legislature sent a clear message to employers and companies with Massachusettsbased employees that they are required to pay their employees what they are entitled to when they are entitled to it, or run the risk of harsh penalties.