130 | Massachusetts Wage & Hour Peculiarities, 2025 ed. © 2025 Seyfarth Shaw LLP Recently, the SJC reaffirmed that the performance of services though a legitimate business relationship does not trigger an analysis under the Independent Contractor Statute. In Patel v. 7Eleven, the plaintiffs, several convenience store franchisees, contended that their performance of services rendered them employees of the franchisor by virtue of the Independent Contractor Statute.752 The SJC rejected their construction of the statute as unreasonable, as it would render all typical franchise relationships as presumptive employment relationships.753 B. The Massachusetts ABC Test for Independent Contractors If the threshold question is met, an individual is presumed to be an employee unless the alleged employer establishes otherwise. The test for independent contractor status under the Massachusetts Independent Contractor Statute, commonly referred to as the “ABC test,” has three prongs, and the company has the burden of proving that all three are met.754 To overcome the presumption that an individual providing service is an employee for purposes of state wage laws, the party receiving the service must establish that: The worker is free from its control and direction in performing the service, both under the contract and in fact. The service provided by the worker is outside the employer’s usual course of business. The worker is customarily engaged in an independent trade, occupation, profession, or business of the same nature as that involved in the service performed.755 Failing to establish even one prong may be fatal to independent contractor status. Each prong is discussed in detail below. 752 494 Mass. 562 (2024) (Patel II). 753 Id. at 576. 754 See Sebago, 471 Mass. at 327; Scalli v. Citizens Fin. Group, Inc., Civ. No. 03-12413-DPW, 2006 WL 1581625, *14 (D. Mass. Feb. 28, 2006) (citing Silva v. Dir. of Div. Emp’t Sec., 398 Mass. 609, 611 (1986)); see also Athol Daily News v. Bd. of Review of Div. of Emp’t & Training, 439 Mass. 171, 175 (2003) (finding that employer bears burden of establishing all three prongs of ABC test for purposes of Massachusetts Unemployment Insurance Statute, M.G.L. ch. 151A, § 2, which applies a similar but not identical ABC test). In determining whether an employee is an independent contractor, the Independent Contractor Statute explicitly excludes certain factors from consideration, including an employer’s failure to withhold federal or state taxes, to pay unemployment contributions, or to purchase workers’ compensation coverage. M.G.L. ch. 149, § 148B(b). Likewise, whether or not individuals purchased workers’ compensation coverage for themselves is irrelevant. M.G.L. ch. 149, § 148B(c). 755 M.G.L. ch. 149, § 148B(a)(1)-(3). In contrast, whether an individual is an independent contractor versus an employee under the FLSA depends on the “economic reality” of the relationship, which is based on the following factors: (1) the extent to which the services rendered are an integral part of the principal’s business; (2) the permanency of the relationship; (3) the amount of the alleged contractor’s investment in facilities and equipment; (4) the nature and degree of control by the principal; (5) the alleged contractor’s opportunity for profit and loss; (6) the amount of initiative, judgment or foresight in open market competition with others required for the success of the claimed independent contractor; and (7) the degree of independent business organization and operation. See DOL Wage & Hour Fact Sheet #13 (July 2008). Unlike the rigid ABC test, the test under the FLSA looks at the total activity or situation and no single factor is controlling. Id.; see also WHD Field Assistance Bureau No. 2018-4. Thus, depending on the circumstances, an individual could be an employee under Massachusetts law but an independent contractor under the FLSA.
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