Following is information provided by Flanders Law Offices.

For Federal and MA Tax Withholding Purposes
The IRS’s (and MA Department of Revenue’s) twenty factors considered in determining
employee status:
Workers are generally employees if they:
● must comply with employer’s instructions about the work;
● receive training from or at the direction of the employer;
● provide services that are integrated into the business;
● provide services that must be rendered personally;
● the employer hires, supervises, and/or pays assistants;
● have a continuing working relationship with the employer;
● must follow set hours of work;
● work full time for an employer;
● do their work on the employer’s premises;
● must do their work in a sequence set by the employer;
● must submit regular reports to the employer;
● receive payments of regular amounts at set intervals;
● receive payments for business and/ or traveling expenses;
● rely on the employer to furnish tools and materials;
● lack a major investment in facilities used to perform the service;
● cannot make a profit or suffer a loss from their services;
● work for one employer at a time;
● do not offer their services to the general public;
● can be fired at any time by the employer; and
● may quit work at any time without incurring liability.
No one factor is decisive and the degree of importance of each depends on the occupation and factual context in which services are being performed. In addition, if an employer treats a person
as an employee under some laws, it can add more weight to a determination to treat the person as an employee for IRS and DOR purposes.

For Federal Fair Labor Standards (federal minimum wage and overtime requirements)
Purposes: The “economic reality” of the relationship, including the following factors determines whether a person will be considered an employee:
● the extent to which the services rendered are an integral part of the employer’s business;
● the permanency of the relationship;
● the amount of the worker’s investment in facilities and equipment;
● the nature and degree of control by the employer;
● the worker’s opportunities for profit and loss;
● the amount of initiative, judgment, or foresight in open market competition with others
required for the success of the claimed independent contractor; and
● the degree of independent business organization and operation.
Employee Status in MA for Unemployment Compensation, Workers’ Compensation, and Wage and Hour Law Purposes
There is a presumption that a person performing any service is an employee under these laws. A person may be considered an independent contractor if and only if all three of these tests are met:
● the person is free from its control and direction in performing the service, both under a contract and in fact;
● the service provided by the person is outside the employer’s usual course of business; and
● the person is customarily engaged in an independent trade, occupation, profession, or business of the same type.

See the Massachusetts Office of the Attorney General’s Fair Labor Division Advisory Opinion (2008) and Massachusetts General Laws Chapter 149, Section 148B. Also an article about the challenges here.

In addition to the above test, a written contract indicating that a worker is free from supervisory direction or control is required. Note that: A party’s (employer or other person) subjective belief, desire, or contract agreement that a person is an independent contractor has no bearing on whether the law requires that the person be treated as an employee.

The law creates broad liability for both business entities and individuals, including corporate officers and those with management responsibility over affected workers. The Attorney General can issue civil citations and institute criminal prosecution for both intentional and unintentional violations of the law. Willful violations can result in fines up to $25,000 or imprisonment for up to one year for a first offense, and fines up to $50,000 or imprisonment for up to two years for
subsequent violations. Non-willful violations can result in fines up to $10,000 or imprisonment for up to six months for a first offense, and fines up to $25,000 or imprisonment for up to one year for subsequent violations. Employees also may file civil actions for themselves and others similarly situated seeking treble damages, attorneys’ fees and costs. This is a fertile area for claims, and recoverable money damages can be substantial. For example, if a group of workers treated as independent contractors worked over forty hours per week without receiving one and one-half times their
regular rate of pay, damages may include three times the owed overtime pay for a period going back as far as three years. In addition, if a person files an unemployment, workers compensation, or wage and hour claim, the involved agencies will impose penalties and interest and sometimes a “stop work” order.

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