Federal Court Holds Company Misclassified Franchisees As Independent Contractors

Foley Hoag LLP

As we have previously reported, Massachusetts wage and hour laws strongly disfavor the classification of individuals as independent contractors rather than employees. Massachusetts General Laws chapter 149, § 148B presumes that workers are employees, unless the alleged employer satisfies a strict, three-pronged test: (1) the individual is free from control and direction in connection with the performance of a service; (2) the individual performs a service that is outside the usual course of the employer’s business; and (3) the individual is customarily engaged in an independently established trade or profession. A recent decision by the U.S. District Court for the District of Massachusetts is a reminder that Massachusetts courts will scrutinize the classification of individuals as independent contractors. In Awuah v. Coverall North America, Inc., the federal court held that a group of franchisees were misclassified as independent contractors under Massachusetts law.

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