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Massachusetts Exempt vs Non-Exempt Employees

Both federal and state labor laws divide workers into two categories: exempt and non-exempt employees. Exempt employees are not entitled to some labor law protections, including the right to receive overtime pay for working over 40 hours in a week.

Unfortunately, many employers try to incorrectly categorize non-exempt employees as exempt employees for purposes of not paying overtime wages. If this happens to you and your rights are violated by your employer classifying you as an exempt employee, you may be able to take legal action.

The workers’ compensation lawyers at the Law Offices of Jeffrey S. Glassman can help you pursue a claim for compensation. Give us a call or contact us online today to learn more.

Exempt Employees vs. Non-Exempt Employees

Under Massachusetts laws, only certain employees can be considered exempt. For example:

  • Bonafide executives and professionals may be considered exempt. The term "bonafide" means that these workers must legitimately be executives or professionals and not merely defined to avoid overtime pay.
  • Bonafide administrative employees. Typically, the employee must have a salary of at least $455 weekly and must be engaged in non-manual work directly related to managing the company or interacting with customers.
  • Some computer and creative professionals are considered exempt employees.
  • Outsides salespeople can be considered exempt.
  • Some mechanics at auto dealers may be considered exempt.
  • Fishermen and seamen are generally exempt.
  • Seasonal farmworkers can be considered exempt.
  • Truck drivers may be exempt in certain situations.

One key factor used to assess whether an employee is exempt is the amount of independent judgment that the employee can exercise about matters of significance. Exempt employees are employees who have the freedom to make important decisions rather than just performing a narrow range of tasks according to explicit instructions and policies.

Violations of Labor Law Related to Exempt/Non-Exempt Employees

The most common violation of labor laws that employers commit is the incorrect classification of workers as exempt to avoid the obligation to pay overtime wages. However, employers can also violate other employment requirements such as furloughing an exempt employee and reduce their pay for time off. This is not permitted as a salaried worker must be paid his full salary unless the worker does not work at all during the week.

Misclassifying Employees as Independent Contractors

Sometimes employers will classify a worker as an independent contractor in an attempt to reduce labor costs. Misclassification isn't a minor problem. A recent study by the U.S. Bureau of Labor Statistics estimated that 7% to 10% of all workers in the country are independent contractors. Employers have misclassified millions of employees as independent contractors, according to estimates by the Internal Revenue Service.

Misclassification doesn’t come without risk. Companies that misclassify workers are subject to civil penalties or criminal enforcement.

Massachusetts’ Independent Contractor Law, also known as the Massachusetts Misclassification

Law, can be found at G.L. c. 149, § 148B.

Massachusetts workers who believe that they have been improperly classified as independent contractors can file a wage complaint with the Attorney General’s Office.

The Attorney General's Office has issued an advisory that explains the law and its enforcement.

A three-part test is used to determine whether a worker is an employee or an independent contractor. To qualify as an independent contractor, the employer must show:

1. Freedom from Control: The work is performed without the employer’s direction and control.

An employment contract or job description specifying that the individual is free from any supervisory direction isn't enough to classify an individual as an independent contractor. Instead, a worker’s activities must be performed with minimal instruction. Independent contractors perform job tasks using an individual approach with minimal direction and decide the hours that they will work.

2. Outside the Normal Course of Employer’s Business: The work is performed “outside the usual course” of the employer’s business. G.L. c. 149, § 148B.

In Athol Daily News v. Division of Employment and Training, 439 Mass. 171 (2003), the Massachusetts Supreme Court ruled that newspaper carriers weren't independent contractors because they performed the "usual course of business" of a local newspaper.

3. Independent Trade: The work is performed by a person who has an independent business completing that type of work.

Court look at whether the worker can perform the work or service for multiple parties or whether the worker's business depends on a single employer.

"In this regard, we determine whether the worker is wearing the hat of the employee of the employing company, or is wearing the hat of his independent enterprise," Massachusetts' highest court explained in Coverall v. Division of Unemployment Assistance, 447 Mass. 852 (2006). In that case, the court determined that a person who performed work for a commercial janitorial cleaning franchisor was an employee and not a general contractor.

Issues deemed irrelevant in determining whether a worker is an employee or independent contractor include an employer's failure to withhold taxes, contribute to unemployment compensation, or provide worker's compensation insurance.

The Attorney General’s Office has identified certain factors that strongly suggest misclassification:

  • Services provided by a worker that aren’t recorded in the employer’s business records.
  • Payments made to workers that are “off the books,” “under the table” or in cash.
  • Insufficient workers’ compensation coverage or no workers’ compensation coverage
  • Workers providing services aren’t issued 1099 or W-2 forms.
  • The contracting entity provides equipment, tools, or supplies or requires that such materials be purchased directly from the contracting entity.
Getting Legal Help

When your employer has deprived you of wages in violation of the labor laws, you’re entitled to seek a financial recovery and, in many cases, triple damages under Massachusetts' worker protection laws. Our legal team at the Law Offices of Jeffrey S. Glassman can help. Give us a call today at (617) 367-2900 or contact us online today to learn more about how we can assist you.

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