You’ve just opened a new business or maybe you have a long standing business and you’re adding on adding some extra people to your team. In this case, you’ve hired a delightful idiot by the name of Chad to help you manage your ever expanding catering business. It’s not always clear whether this person will be an employee, getting a normal paycheck, or an independent contractor, who you treat like a vendor. In the past, it might have been the case that you just cut someone a check and call it “casual labor.” Or maybe a thought like this crossed your mind “It’s just Chad, and he won’t be working many shifts.” Or someone told you that this person doesn’t fall under the employee definition. These are all traps that many business owners fall into.
All too frequently, companies try to pass off as many people as possible as independent contractors. Sure it seems like it would be beneficial to the company to put everyone on as an independent contractor - no benefits, no payroll taxes, none of the HR nightmares (what a dream, right?), but you could face some serious civil penalties for wrongly misclassing. In the state of Massachusetts, it has become VERY difficult to consider an individual an independent contractor. Massachusetts is known for taking the employees side.
It is easy to make the quick judgement and be wrong. Just about anyone working for your business should be considered an employee, not an independent contractor. Let’s take a look at the test Massachusetts has created to help determine who is or is not an independent contractor.
Beyhold, “The Three Prongs”
Massachusetts has put together a three part test to help you determine whether an individual can be considered an independent contractor.
The work the independent contractor is providing must be free from control and direction of the employer now and in the future;
The work is performed outside of the normal course of business for the employer;
The work is performed by someone who has their own, independent business or trade to provide that type of work
Here’s the kicker: YOU HAVE TO SATISFY ALL 3 PRONGS! It can’t just be that you don’t completely control what Chad does. It can’t be that Chad told you he has his own “side hustle”. (Chad probably doesn’t have his own legitimate business) Does the work Chad is performing meet one of the above “prongs”? Yes? Then you need to add him on as an employee. Good gravy Chad, why you gotta be this way?!
Are you classing your people properly? With our help and guidance we can get you in compliance ;)
Here are some examples of some frequently misclassified workers:
Catering Staff
Temporary Staff (unless using a leasing company)
Porters & Cleaners (unless they have a legitimate business)
Marketing Staff
In the end, it’s better to be staff than sorry. Take the extra five minutes, and expense to put someone on payroll if you even have the slightest doubt as to whether the potential position could be considered an employee.