From JDSupra, Barry Waters discusses a recent case in which the Massachusetts Supreme Judicial Court (SJC) said that the Massachusetts independent contractor statute might apply to individuals who provide services through a corporation. Barry writes:
The Court cited the following factors from a Massachusetts Attorney General advisory to determine if the corporate form represents a legitimate business-to-business relationship or a scheme to prevent the classification of workers as employees, whether:
1. The services of the alleged independent contractor are available beyond the contracting entity;
2. The business of the contracting entity is no different from the services performed by the alleged independent contractor; and
3. The alleged independent contractor is only a business requested or required to be so by the contracting entity.
The Supreme Judicial Court observed that this is a “non-exhaustive list of factors” and held that the touchstone is whether the use of the corporate form “was at the worker’s behest or forced upon the worker by an employer in order to misclassify him or her.”
1. The corporate form does not necessarily immunize you from a misclassification claim.
2. Make a fair evaluation, with the advice of legal counsel, on independent contractor status under the statutory criteria.
3. Don’t try to be “clever” to avoid treating workers as employees; the penalties can be substantial, to say nothing of the cost of litigation.