An independent contractor (also known as a freelancer) is a person or entity who agrees to work for another person or entity as a nonemployee. Because of the independent contractor’s status as a nonemployee, the contractor must pay their own Social Security and Medicare (FICA) taxes. And unlike an employer, the person or entity hiring the independent contractor has no obligation to withhold income taxes from the contractor’s fees or to provide the contractor with any employee benefits. It is important for the person or entity who hires a worker to properly classify the worker as an employee or as an independent contractor based on the IRS’s right-to-control test.

In Massachusetts, the classification of a worker as an independent contractor or an employee is governed by both state and federal law. The state follows the IRS's right-to-control test to determine the correct classification, which assesses the degree of control and independence in three categories: behavioral control, financial control, and the type of relationship between the parties. Additionally, Massachusetts has its own stringent three-part test, outlined in the Massachusetts Independent Contractor Law (M.G.L. c. 149, § 148B), which must be met for a worker to be considered an independent contractor. Under this test, the individual must be free from control and direction in connection with the performance of the service, perform service outside the usual course of the business of the employer, and be customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed. Failure to properly classify a worker can result in legal and financial penalties. Independent contractors in Massachusetts are responsible for paying their own Social Security and Medicare taxes, and they are not entitled to employee benefits such as workers' compensation, unemployment insurance, or health insurance through the hiring entity.