Massachusetts Court Gives Strict Interpretation to Independent Contractor Law

The Massachusetts Supreme Judicial Court has eliminated one of the few remaining defenses available to employers for violations of the Commonwealth’s strict liability law governing independent contractors.  In Somers v. Converged Access, Inc., (August 21, 2009 SJC Docket-10347), the court found that the employer has misclassified the plaintiff as an independent contractor. The court rejected the employer’s defense that the plaintiff suffered no damages because the employer paid the plaintiff more as independent contractor than it would have paid him, had it hired him as an employee.
 
The plaintiff twice filed an application for employment with CAI, neither of which resulted in employment. CAI did, however, offer him a temporary position, testing CAI’s software products first for a sixty day period and then for a 90 day extension, as an independent contractor.  As an independent contractor, Somers was not entitled to any benefits the company offered to its employees, including vacation pay, participation in insurance plans, or retirement benefits.  When the company informed him that it would not renew his contract again and then did not consider his application for an open position, Somers filed suit, alleging, among other claims, misclassification as an independent contractor in violation of the Massachusetts wage and hour and independent contractor laws.
 
In its defense, the company argued, and the lower court agreed, that because the $65 per hour wage it paid Somers was substantially more than it would have paid him as an employee, he did not suffer any damages.  The SJC, however, made it quite clear that this position offered no defense to Somers’ claims.  In essence, the SJC reason that, because CAI misclassified him as an independent contractor, the money it paid to him for that period was his salary.  It rejected CAI’s claims that it should be allowed an “offset” for the salary it would have paid had it hired him as an employee against the larger sum it paid him as an independent contractor. The court reasoned that there are no offset provisions in  Mass Gen. L ch 149, section 148 (the Wage and Hour Act) of Mass. Gen. l Ch. 149, section 148B (the Independent Contractor Law).
 
Under Massachusetts’ Wage and Hours laws, a successful plaintiff may recover an award of treble damages, plus costs and reasonable attorney’s fees from the employer. The court remanded the case to the trial court for determination the extent of the damages due to the plaintiff.
 
This case serves as yet another reminder to employers of the facts that they must properly classify their employees and that an independent contractor is a rarity in Massachusetts employment relationships. Mistakes of this type are extremely costly to employers who do not follow the law.

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