The Department of Family and Medical Leave (DFML) issued new guidance regarding when 1099-MISC workers should be included in a business’s workforce count and whether the business needs to report them for the purposes of the Paid Family and Medical Leave program. Over the course of the summer, DFML staff met with representatives from hundreds of businesses across the Commonwealth. During these discussions, employers consistently asked for clarification on the contribution requirements for 1099-MISC workers – specifically:
In what cases must an employer count 1099-MISC workers as part of its workforce? and
Must an employer report on 1099-MISC workers if 1099-MISC workers make up less than 50% of the business’s workforce?
In order for a 1099-MISC worker to be considered a part of your Massachusetts workforce count –
The 1099-MISC contractor MUST:
Perform services as an individual entity;
Live in Massachusetts;
Perform services in Massachusetts; and
The 1099-MISC worker MUST NOT:
Be an independent contractor as defined by the Massachusetts unemployment statute, (M.G.L. c.151A), which is a guiding authority for the PFML program in many respects.
This says the DFML has clarified that properly classified independent contractors do not fall within an employer’s workforce count for PFML purposes.The Massachusetts unemployment statute excludes from “employment” services that meet this three part test. If a worker meets the criteria provided above and you have determined that the individual entity is not an independent contractor under the three-part test, then you should count them as a member of your Massachusetts workforce.
Three point test: An employer who wants to treat someone as an independent contractor rather than an employee has to show that the work:
is done without the direction and control of the employer; and
is performed outside the usual course of the employer's business; and
is done by someone who has their own, independent business or trade doing that kind of work.
Massachusetts 1099-MISC workers count toward your total number of covered individuals for purposes of contributions and reporting only if 1099-MISC workers make up more than 50% of your total Massachusetts workforce (MA W-2 employees and MA 1099-MISC workers combined). Otherwise, an employer is not required to contribute or report on 1099-MISC workers.
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