How the IRS Independent Contractor Test is Different From Massachusetts Law
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Sometimes we hear from business owners that their accountant has told them their workers can be paid as independent contractors, even though it does not appear that they meet the Massachusetts three part test.
This does not mean your accountant is wrong or incompetent- it is just that the standard for tax purposes is different from Massachusetts law that governs the employment relationship. You may meet federal tax requirements under the more fluid, multi-factor test used by the IRS, but still have potential liability for misclassification under Massachusetts employment law. For a violation of the Massachusetts Independent Contractor Law, a misclassified contractor can bring a private lawsuit, often for substantial damages. If you cannot meet the three part test, they will recover even if your classification is 100% compliant with federal tax law. Learn more here about the Massachusetts Independent Contractor Law. |
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