On August 21, 2009, the Massachusetts Supreme Judicial Court unanimously ruled that a worker who has been misclassified as an independent contractor may seek damages from his former employer even if the employer establishes that the worker would have been paid less had he been classified as an employee.

The plaintiff in Somers v. Converged Access , 454 Mass. 582 (2009) worked for a software company as a quality assurance engineer. He was classified as an independent contractor and, as a result, did not receive overtime, vacation pay, or benefits. The company paid him at a rate of $65 per hour. The plaintiff initially agreed to work for a sixty-day term. He later agreed to a ninety-day extension of that term.

The plaintiff subsequently applied for a permanent quality assurance engineer position. After the company did not select him for the position, the plaintiff brought suit claiming, among other things, that he had been misclassified as an independent contractor.

The trial court granted the employer’s motion for summary judgment on all counts. On the misclassification claim, the trial court judge found that there was a genuine issue of material fact as to whether the plaintiff had been classified properly as an independent contractor. The employer argued however, that the plaintiff had not suffered any damages because if it had hired the plaintiff as an employee, he would have received a far lower hourly rate of pay than the $65 per hour that he received as a contractor. The employer argued that unless the court subtracted the compensation the plaintiff had received as an independent contractor from the compensation he would have received had he been hired as an employee, the plaintiff would receive a “windfall.” The trial court agreed with the employer’s argument and concluded that the plaintiff had not suffered any damages. Accordingly, the court entered summary judgment for the employer.

On appeal, the question before the Massachusetts Supreme Judicial Court was how to measure the damages available to an employee who has been misclassified as an independent contractor. In a unanimous opinion written by Judge Gants, the court’s newest member, the court held that the trial court erred when it concluded that the plaintiff had not suffered any damages. Indeed, the court specifically rejected the employer’s argument that the damages incurred by an individual who has been misclassified as an independent contractor should be measured by subtracting the compensation the individual received as an independent contractor from the compensation the individual would have received had he been hired as an employee. In rejecting this argument, the court noted that the independent contractor law is a “strict liability statute” and, therefore, the employer’s intent in classifying a worker is irrelevant.

Instead, according to the court, the damages incurred by the plaintiff “equal the value of wages and benefits he should have received as an employee, but did not.” As a result, the plaintiff can recover the value of the holiday pay, vacation pay, and other benefits that he would have been entitled to as an employee. Further, unless the employer can establish that the plaintiff was exempt from the overtime requirements of state and federal law, the plaintiff is entitled to recover overtime “based on his hourly wage of sixty-five dollars.” Thus, the decision effectively expands the scope of damages available to those who have been misclassified as independent contractors under Massachusetts law.

For an in-depth discussion and guidance on this development, see Littler ASAP, Massachusetts Court Ruling Expands the Scope of Damages Available to Employees Misclassified as Independent Contractors.

This blog entry was authored by Christopher Kaczmarek.