SJC Outlines Damages for Independent Contractor Misclassification

In Somers v. Converged Access, Inc., the SJC held that an employee misclassified as an independent contractor may sue for nonpayment of wages even if the employee earned more as an independent contractor than he or she would have earned as an employee. The Court ruled that any such misclassified individual is entitled to overtime and other benefits at the rate he or she was paid as an independent contractor rather than the rate the individual would have been paid as an employee.

Robert Somers twice applied for employment with Converged Access, Inc. (CAI), but neither application resulted in a job offer. He later agreed to work for CAI as an independent contractor. CAI paid Somers at a higher rate as an independent contractor than he would have earned as an employee, but did not pay him overtime or provide him with any of the other benefits CAI’s employees receive.

After CAI terminated his contract and failed to respond to a third application for employment, Somers filed suit against the company in Superior Court, asserting a claim for nonpayment of wages based on his misclassification as an independent contractor. CAI moved for summary judgment, arguing that even if it misclassified Somers, he was not harmed by the misclassification because he earned more as an independent contractor than he would have earned as an employee. The Superior Court agreed and dismissed the claim.

Somers appealed, and the SJC reversed. The Court found that Somers had in fact suffered damages because he was entitled to overtime, vacation and holiday pay, and other benefits received by CAI’s employees based upon the hourly rate he received as an independent contractor rather than the hourly rate he would have received had he been hired as an employee. The Court also noted indicta that if Somers prevailed at trial, he could be entitled to treble damages under Massachusetts General Laws ch. 149, § 150 (Payment of Wages Act).

This decision highlights the importance of properly classifying workers as “employees” or “independent contractors.” It is no defense to a nonpayment of wages claim that a worker earned more as an independent contractor than the worker would have earned as an employee.

The Court’s liberal view of what damages are available for violations of state wage and hour laws is disquieting. In Massachusetts, entitlement to vacation depends upon whether a contract provides for vacation. But notwithstanding the fact that Somers’s contract did not provide for vacation, the SJC held that he would be entitled to vacation pay if he prevailed. The Court’s decision also holds that Somers would be entitled to benefits, even though federal benefits law, not state wage and hour law, governs most entitlement to employee benefits. Litigation over these issues is likely in the wake of the SJC’s decision.