Client Refuses to Pay

[navguy]

My question involves independent contractors in the state of: Massachusetts

Last November I answered an ad on Craigslist about HVAC work which I perform.

I met with this man who said he didn't want to hire me but he would take me on as a contractor. He mentioned insurance but never said it was absolutely necessary upfront. I started work for him without it being mentioned again. At the time I had all I could do to keep the gas gauge above E. We agreed on a rate of $35 an hour but he said on prevailing wage jobs he would have to pay me $59/hour which I had no issue with. I worked for 17 and a half hours on a prevailing wage job and the rest were not.

First he tells me he cannot pay me the $59 for the prevailing wage hours for that job. I said okay what else could I say.

I worked for him for 6 days and made an invoice out for the first day (one week behind)- then he tells me he cannot pay me without my having liability insurance. I set up the insurance and never get it because of a fire in my vehicle which also toasted my laptop with the invoices on it. I wasn't able to work for him after that because his work was 80 miles away - no work vehicle - couldn't do it. I went to work for a local company as an employee and I'm still there.

I just recovered the invoices with the hours and locations. I printed them out and mailed them and he calls me and says he cannot pay me for work already performed (without complaint as to quality) because I have no insurance. He keeps saying his insurance man won't allow it. I checked with my auto insurance guy who also sells liability and he said no workmans comp is necessary for me that he must mean liability.

He owes me $1,300 and I could really use it.

[jk]

First he tells me he cannot pay me the $59 for the prevailing wage hours for that job. I said okay what else could I say.

well, you have a problem. Either you were a contractor or you were an employee. Without knowing more about the situation I cannot say which it actually was.

If you were a contractor, you have the right to sue him for any money he failed to pay you including the $59/hour for the prevailing wage jobs (although he would not actually be required to pay you $59/hour as an employee which is what the law controls but if he contracted you for $59/hour, that is what he owes you)

If you were an employee, you can contact your department of labor and file a wage complaint. If you were an employee, not only will he be required to pay what you were supposed to get paid but in the prevailing wage job, his entire accounting may be audited. The state could add fines on top of requiring him to pay the proper wages.


I have to say that $35/hour for a contractor is you cutting your throat. As an independant contractor, you are required to provide your own tools, your own liability insurance, workers comp insurance (if required), and pay both employer and employer shares of SS and any other tax that a typical employer pays into.

[navguy]

I was as a subcontractor and you have to remember the part about me having trouble filling the gas tank. I was also counting on the fact that he said the installs were all prevailing wage jobs at $59 an hour.

He had a couple of other people doing the same thing although I do not know what they were paid. They were not on the books though and neither was I as far as I know.

[jk]

he can argue you were a contractor all he wants to but if you meet the definition of an employee, you are an employee regardless of what he calls you.

read here and let me know if you were a contractor or an employee by the IRS definition:

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

http://www.comptroller.ilstu.edu/downloads/20-factor-test-for-independent-contractors.pdf



so, this is "off the books" so I would guess there is no written contract for you to throw on the desk and say "hey, I want my money"?

so, what do you have to prove your side of the story? Remember, if you sue somebody, you have the duty of proving your case.

[navguy]

I have the detailed invoices with times, dates and locations and the worker who was with me the whole time. They did pay me one check at $35 an hour and that was off an invoice. I also have all my email correspondence with them which details their claim that they cannot pay me for the hours worked unless I get liability insurance.

I sent them the invoices by email & mail which I still have that are dated also.

This is their response initially when I wanted to get paid. At this point I had already worked the 6 days.

I can't understand why I need to have liability insurance for work that has already been done satisfactorily.

Hi Jim,
I will need the following before I can issue a check;
Certificate of Insurance
W-9 (attached)
Invoice for work completed

I also declared the $260 that they did pay me on my income tax and attributed that to them.

[Michael44]

You could sue under the idea of "quantum meruit" if nothing else. You did work that benefited him, which he accepted, and he has got to compensate you for that.

The IRS definition of employee or contractor has nothing to do with your suit with him - it has to do with taxes and the IRS. "jk" is just off-base with that. Tax liability is a separate issue.

[jk]

The IRS definition of employee or contractor has nothing to do with your suit with him - it has to do with taxes and the IRS. "jk" is just off-base with that. Tax liability is a separate issue.

yes, it does have a great deal to do with this. If OP was an employee, he can file a wage claim and let the state fight for his money. If he is an IC, he has to go to the trouble of suing and then collecting on any judgment awarded. I will tell you; if I had a choice, I would much rather be where the state is doing the suing and fighting for my money.

I give the IRS definition of an employee or contractor because the department of labor accepts the IRS determination.

here is Mass statute on the situation:

Section 148B. (a) For the purpose of this chapter and chapter 151, an individual performing any service, except as authorized under this chapter, shall be considered to be an employee under those chapters 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.
(b) The failure to withhold federal or state income taxes or to pay unemployment compensation contributions or workers compensation premiums with respect to an individual’s wages shall not be considered in making a determination under this section.
(c) An individual’s exercise of the option to secure workers’ compensation insurance with a carrier as a sole proprietor or partnership pursuant to subsection (4) of section 1 of chapter 152 shall not be considered in making a determination under this section.

that #1 is what gets a lot of employers in trouble. What the client can direct you to do is limited. If he expresses control over you as the person, he has just made you an employee. He is a client and can only demand you comply with your contract.

If the client (the company that hired you) does HVAC work as a business, it brings #2 into play.

I have the detailed invoices with times, dates and locations and the worker who was with me the whole time.

a worker? Is this somebody you hired?

so, let's go with the argument you are a contractor. I do not know what work you actually performed so I am going to toss out a few licences that might be required for your work:

sheet metal license; required if you install over 3 feet of air duct

refrigeration tech license; required if the unit(s) are over 10 tons each

depending on what you did, maybe a gas fitters license

do you have all the licenses to do the work you did?


and a question I could not find the answer to:

is a contractor required to have liability insurance in Mass?

[navguy]

They agreed to pay me as an employee after I sent an email to them outlining my next steps if payment is not made. They called my email 'threats'. If wanting to be paid for work carried out and accepted is a threat then I am guilty.

The employee thing is pertinent because all the contractors that work for him are really employees and I gleamed that they have been called to the carpet before on this also.