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Member, Beacon International Group, Ltd.
BOSTON—Employers cannot pass their workers compensation premium expenses on to employees, Massachusetts' Supreme Court ruled Wednesday in a worker misclassification case.
The ruling in Pius Awuah et al. vs. Coverall North America Inc. followed a federal judge's finding that Coverall misclassified actual employees as independent contractors.
The judge then posed several questions to Massachusetts' Supreme Court. Among other matters, he asked the state high court to determine whether state law allows an employer and an employee to agree that the employee will pay workers comp insurance costs.
According to court records, Coverall entered into franchise agreements with individuals to provide commercial janitorial services to third-party customers. The company maintained that while it may be required to provide workers comp insurance for employees, nothing in Massachusetts' Workers Compensation Act prevents employers and employees from agreeing that the employee is to pay the insurance premiums.
However, the Massachusetts high court found Wednesday that there is no merit to that assertion and said the law is clear.
“In sum, to permit an employer to transfer to its employees the cost of workers' compensation insurance premiums would be inconsistent with both the general intent and the specific language of the Workers' Compensation Act,” the court ruled. “We therefore conclude that an employee…may recover, as ‘damages incurred’ any such insurance premiums that he was obliged to pay to Coverall under the terms of his contract.”
The high court also found that employers cannot deduct franchise fees from an employee’s wages.