Employee vs. Subcontractor: Resources and Links
For more information about IRS guidelines, see the brochure Independent Contractor or Employee? - note: this may be out of date. For the most current IRS information or if you have more questions, visit the IRS web site.
For Massachusetts law, visit the Labor and Workforce Development website or review their booklet Simplifying the Unemployment Insurance Law - A Guide for Employers (revised 9/06 - page 9 talks about who could be classified as an independent contractor).
The full text of the The Independent Contractor Law (M.G.L. c. 149, sec. 148B) can be read here.
If your business hires a lot of independent contractors, schedule a meeting with your insurance agent to discuss how it impacts the cost of your worker's compensation and liability policies and what coverage you should have. You can also look up Massachusetts worker's compensation rates yourself to ballpark expenses. Note that their 'search by business description' is a little fussy; for example, 'roofing' returns results but 'roofer' does not. You can also download the class codes and business descriptions below, find the appropropriate class code, then look up the current rate on their website.
If you want to see what an employee really costs you, including taxes and benefits, check out What's the Real Cost of an Employee? (online calculator) or purchase and download the excel version.
Forms and publications on this website:
IRS Forms & Publications
Massachusetts Forms & Publications
Download the Excel version of the Employee Cost Calculator (cost: $10.00)
The Excel spreadsheet calculator includes several more options than the online version.
- Include bonuses and taxable benefits in addition to wages.
- Include retirement and other pre-tax benefits in addition to health and dental insurance.
- Include indirect or overhead expenses.
- Calculate an employee’s fringe benefits as well as the total cost to the company.
- Save a copy of the spreadsheet for each employee.
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