‘Right of Control’ Test Determines Employee Status and Eligibility for Workers’ Compensation Benefits under Massachusetts Law

Employers may try to save money on their insurance premiums by classifying their workers as independent contractors, not eligible for workers’ compensation benefits. If a worker is injured or sickened at work and files a claim for workers’ compensation benefits, the employer’s attempt to economize may backfire when the insurance company pays the benefits to the employee and pursues the employer for the added expense.

In a decision (Case No. 13-P-1677, entered June 18, 2014), involving a drywall contractor, Universal Drywall, LLC, the Appeals Court of Massachusetts affirmed an award of damages to Travelers Property Casualty Company of America, the company’s workers’ compensation insurance carrier, since Universal had improperly classified its workers as independent contractors when they were actually employees within the meaning of the Workers’ Compensation Act, Mass. G.L. ch. 152.

The insurance premium Travelers charged to Universal was based on the number of Universal’s workers who were eligible for workers’ compensation benefits. Since Universal classified most of its employees as independent contractors, not eligible for benefits, the premium it paid to Travelers was reduced because most of Universal’s workers were not covered.

The simplest definition of an employee is whether a worker is subject to supervision and direction as to the details of his or her work. If so, then he or she is an employee. If he or she is only responsible to provide an agreed-upon result, he or she is an independent contractor.

Over the years, courts have elaborated on this simple test and have derived a series of 10 factors to be considered, collectively known as the ‘right of control’ test:

1. The extent of control the employer has over the employee’s work;
2. Whether the employee is in a specific occupation or business;
3. Whether in the geographic area the work is usually supervised;
4. The skill necessary to perform the job;
5. Who provides the tools and the workplace;
6. How long the worker is employed;
7. The method of payment: hourly or piecework;
8. Whether the work is part of the employer’s usual business;
9. What the parties believe about their working relationship; and
10. Whether the principal is a business or not.

A court is not required to apply these factors rigidly. The court may consider all the circumstances of the workplace before rendering a decision as to the employee’s status. The employer may or may not choose to exert ‘actual direction and control,’ and its workers may still be employees rather than independent contractors.

In the Universal Drywall case, the Appeals Court affirmed the ruling of the administrative law judge (ALJ) finding that the ALJ had properly considered the 10 relevant factors before concluding that Universal Drywall’s workers were employees rather than independent contractors.

The ALJ made factual findings that Universal’s foremen were present during work hours, directing workers, and that workers were required to sign in and out of the job sites. Although workers provided their own tools, Universal paid for materials. Universal was in the business of providing drywall services as a subcontractor, supervising its own workers, and in fact its contracts with its general contractors prohibited it from using independent contractors.

The court found the workers to be employees despite the fact that the employer had required them to sign ‘independent contractor agreements.’

The judge did not give a great deal of weight to this factor, finding that Universal had ‘nearly complete control’ over its workers, and it exercised that control in a way that was consistent with an employment relationship, including the ability to terminate a worker without liability.

The Appeals Court affirmed the ALJ’s award of damages to Travelers for Universal’s misclassification of its employees and payment of reduced premiums, leaving Universal’s employees unprotected.

If you are hurt at work, even if your employer classifies you as an independent contractor, you may be entitled to workers’ compensation benefits. An experienced Massachusetts workers’ compensation attorney can evaluate whether you have a sound claim and fight to make sure that your employer and its insurer follow the rules or give you guidance if there is no insurance available. Contact us by calling 800-367-0871 or using our online contact form.