From Tim Kenneally, who heads up our Litigation Department, comes the following update:
“The aim of philosophy is the logical clarification of thought.” —Ludwig Wittgenstein
The aim of the courts—at least in Massachusetts—is confusion when it comes to independent contractors. We recently received another court decision “clarifying” independent contractor status under the law. The case involved Tiger Home Inspection (“Tiger”) and the Department of Unemployment Assistance. Unfortunately, the decision only adds more debate to an already complicated issue.
In Massachusetts, all services performed by an individual for an “employing unit” are presumed to be employment unless the “ABC test” is satisfied. The three-part ABC test requires the “employer” to rebut the presumption by proving: (a) the worker can complete the work free from control and direction by the “employer;” (b) the work is performed either outside the usual course of the business of the “employer” or is performed outside of all the places of business of “the employer;” and (c) the worker is customarily engaged in an independently established trade.
In the Tiger case, an inspector sought to collect unemployment benefits from Tiger after they stopped using his services. The inspector claimed he was an employee under the law and Tiger claimed he was an independent contractor. What followed was decade long legal battle during which at least seven (7) decision makers reviewed the facts and ruled on the issue. Five of the seven deemed the inspectors working for Tiger to be employees, and two ruled them to be independent contractors. Talk about a murky issue! Fortunately for Tiger, on July 13, 2022, the most recent decision maker (the Massachusetts Appeals Court) held that the inspectors were independent contractors. The Appeals Court found (1) the inspectors performed their services free from Tiger’s direction and control; (2) the inspectors are capable of performing the services for anyone (independent trade); and (3) the inspectors performed their services at customer locations and entirely outside of Tiger’s place of business.
While those three factors sound clear and easy to understand, remember that five other experienced decision makers, including a District Court judge, saw the facts differently under the law. This case therefore illustrates the importance of employers assessing their relationships and worker classifications to avoid expensive legal disputes and financial liabilities. Tiger continued to fight this issue for a decade because the cost of losing the fight would have been astronomical
If your business utilizes “independent contractors”, and you want to ensure proper classification, we can help. Through our Independent Contractor Classification Service, our experienced attorneys will review your company’s contractor relationships and provide a detailed assessment and recommendations to minimize the risk of misclassification.