If You Reclassify Contractors as Employees, Do You Have to Pay Benefits and Offer Vacation?
Benefits and Vacation for W2 Employees
Often when we talk to small businesses about the Massachusetts Independent Contractor Law, they tell us they can't afford to make everyone a W2 because of benefits like health insurance and vacation.
This is a common misconception. At the present time, unless you have 50 or more employees, you are not required to provide health insurance. There is also no legal requirement to offer vacation or other paid time off, beyond the five days sick time required by the Earned Sick Time Law (and even then if you have fewer than 11 employees, you do not need to pay for that time).
There are additional expenses, like unemployment, workers compensation, and the employer's share of FICA taxes, to consider. However, the cost may not be as great as you think, especially compared to the cost of facing a misclassification lawsuit.
Learn more here about the Massachusetts Independent Contractor Law.
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