Reviewed June 1, 2016, Summary, An independent contractor is generally an individual who is in an independent trade, business, or profession in which he or she offers services to the general public. Independent contractors are not employees, not paid through the payroll system, not covered by the University’s workers’ compensation program, and not eligible for unemployment benefits following the contract performance period.…, Note: An individual who performs a service for an employer (the University) is presumed to be an employee, unless all the factors (described below) are present to establish an independent contractor relationship., The University deems individuals performing services for the University to be employees unless all of the legal criteria for classification as an Independent Contractor are present., Procedure to Evaluate Individual as Employee or Independent Contractor, A. Legal Criteria, The Massachusetts Independent Contractor Law, M.G.L. c.149 §148B, is generally considered more rigid than the Federal law [1] and requires three factors to be present. The factors are sometimes referred to as the ABC test (referring to the sub-paragraphs in the Law). The burden of proof is on the employer to establish that all three of the factors are present., Factor 1:, The individual must be free from control and direction in connection with the performance of the service, both under his/her contract for the performance of the service and in fact. This factor focuses on the relationship between the individual and the employer, and specifically, the degree to which the employer controls the individual in the performance of the service. Although the individual…, Factor 2:, The service performed must be outside the usual course of the business of the University. (Services provided at all campuses must be considered) This factor focuses on the ordinary services that the employer provides. Generally, an employer cannot hire independent contractors to perform services within its normal business operation. Two examples are illustrative:, Example #1., An accounting firm brings in a painter to repaint their offices. Assuming the individual meets the tests in Factors 1 and 3, the individual can be classified as an independent contractor., Example #2, ., An accounting firm brings in an accountant to assist during the busy season. Even if the individual meets the tests in Factors 1 and 3, the individual cannot be classified as an independent contractor. In Athol Daily News v. Division of Employment and Training , 439 Mass. 171 (2003), the court held that newspaper carriers were performing the “usual course of business” of the newspaper because…, Note: This question covers the entire University, not a particular department or location. Departments may seek information and guidance on this issue from the appropriate Campus or University Human Resources Department, Factor 3:, The individual must be customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. This factor focuses on the individual and his/her business. Generally, an individual who has a relationship with an employer such that the future of the individual’s business depends on the continuation of that…, B. Special Circumstances, Former employees will generally be regarded as employees, regardless of retirement status. For current employees receiving either royalties, prizes, awards, cash gifts or honoraria these payments are generally considered compensation and reportable on the W-2. The following fees paid to non-employees are not for services rendered on behalf of the University; individuals receiving such fees are…, C. Procedure, Hiring managers who wish to engage an individual as an independent contractor must complete a Determination of Independent Contractor Status form for review and approval by the chief human resources official at the applicable location prior to any services being performed by the individual. Approved Determination of Independent Contractor Status forms are filed with the competed Contract for…
Type: Guidelines
Scope, This guideline is designed to answer questions about the University’s tax status., Tax-Exempt Status, The University is tax-exempt under the doctrine of intergovernmental tax immunity. Governmental Tax Status Memo, Contributions to the University, For income tax purposes, section 170 provides that donations made for exclusively public purposes, to or for the use of a state or political subdivision, are deductible against the taxable income of individuals, corporations, and other taxpayers, subject to various limitations. For estate tax purposes, section 2055(a) provides that bequests, legacies, devises, or transfers made by an estate for…, Federal Tax Identification Numbers, The University’s federal tax identification number is 04-3167352. The Commonwealth of Massachusetts’ tax identification number is 04-6002284. The Commonwealth’s number is used for payroll tax purposes.
Type: Guidelines
