Our AMTA-MA Chapter Attorney, Scott Dunlap, presents at each of our Annual Chapter Meetings to discuss timely legal matters and share stories of how your chapter dollars are put to work. At the 2015 May Annual Chapter Meeting, Scott advised those in attendance that a new case had been decided by the Supreme Judicial Court of Massachusetts called Sebago v. Boston Cab Dispatch, Inc., et. al., 471 Mass. 321 (2015), which interpreted a Massachusetts law known as the "Independent Contractor" ("IC") law. There were various questions raised at the meeting and in subsequent emails to us, your AMTA-MA Chapter. Since, we, as your Board of Directors, Program Directors and volunteers, are not equipped to field these types of questions, we are going to continuously relay information directly from our Attorney to you as any laws or legal matters arise, create opportunities for you to hear directly from our attorney, and provide resources for you to access.
The following is a question from an AMTA-MA member who is a sole practitioner out of his/her home who also is involved in additional mobile seated chair massage with other practitioners. You will find Scott Dunlap's answer below.
Q. "So I am a sole practitioner of a licensed massage establishment out of my home. However I do a bulk of mobile corporate onsite seated-chair massage for various companies on a monthly basis and one company in particular on a weekly basis during their open enrollment benefits fairs. These are subcontracted to me from the company and when I am unable to do them myself, I contract them out to a handful of colleagues depending on who is available and where the location of the gig is. There are a few other situations where I am contacted by a company that I have provided onsite seated chair massage in the past but, again, due to a scheduling conflict I am unable to provide service that day and will find another therapist who is able to do so. The therapists are paid an hourly commission and are fully compensated for other expenses such as the federal mileage allowance, parking fees, tolls, and travel time (when over an hour) which is invoiced to the client and of which none of these additional costs are income to my company, only passed on to the therapist doing the job. How does this new law impact my practice?"
A. Prior to Sebago, there were very few cases that commented on, or interpreted, the IC law. The law, Massachusetts General Law ch. 149, § 148B, provides that a person who performs services shall be considered an employee (not an independent contractor) unless:-
(1) the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and
(2) the service is performed outside the usual course of the business of the employer; and,
(3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.
The Sebago Court discussed at length prong #2 above. The result, as it applies to members of the ATMA-MA, is that an owner of a licensed massage therapy facility, may run afoul of the IC statute if s/he misclassifies someone working at the facility as an independent contractor, rather than an employee. The principles behind the IC statute are clear; the Commonwealth seeks to ensure that payroll taxes are applied, employee taxes are withheld, and that worker’s compensation coverage is afforded employees.
Interpreting the statute, the Sebago Court gave great weight to a 2008 Attorney General’s memorandum that ostensibly provides guidance to employers when deciding whether to classify someone as an employee or an independent contractor. The opinion notes the need, and significance, of business to business relationships, similar to that described in your question. Note the following illustration from the Memorandum:
“If painting company X cannot finish a painting job and hires painting company Y as a subcontractor to finish the painting job, provided that all of the individuals performing the painting are employees of company Y, then the law does not apply. However, if painting company X hires individuals as independent contractors to finish the painting job, then this would be a violation of prong two and a misclassification under the Law.”
Therefore, under the scenario of the above question, if you have subcontracted work to other LMTs who operate businesses, you are likely not running afoul of the IC law. If you subcontract to individuals as “Independent Contractors”, you are likely in violation. Finally, you should consult your accounting professional to ensure that form 1099s are sent to companies you subcontract work to where appropriate.
I have attached links to the documents referenced herein.