A Massachusetts case highlights the potential consequences of misclassifying an employee as an independent contractor.  In the case, the plaintiff had applied for a quality assurance engineer position several times.  His applications were rejected but he accepted a chance to work as an independent contractor for 60 days, which was then extended for another 90 days.  He was paid $65/hour (much higher than comparable employees were paid) but did not receive paid leave, overtime, or any other company benefits.

When the plaintiff’s subsequent employment application was rejected, he sued, alleging that he had been misclassified.

The company argued that the plaintiff hadn’t been damaged, as he was paid at a much higher level than “regular employees” and that the compensation he had received as an independent contractor should be subtracted from what he would have received as an employee.

The Massachusetts Supreme Judicial Court did not agree.

The court applied Massachusetts very narrow independent contractor definition and found for the plaintiff.

Consequently, the plaintiff could keeps the fees he’d already received as an independent contractor and also receive holiday and vacation pay, overtime (if required), and any other benefits he would have received as an employee.  [Somers v. Converged Access]

Your state may not have such a strict liability statute (although an increasing number of states are cracking down on organizations that misclassify employees).

However, if you use independent contractors, now may be a good time to review their status.