Tag: start-ups

Massachusetts Cracks Down on Misclassified Independent Contractors

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Economic growth and the power of the Internet have ignited rapid proliferation of startup companies across the US. Services like Uber have typically been filling their ranks with drivers who are employed as independent contractors rather than full employees. However, in Massachusetts the law regarding the classification of workers as independent contractors is relatively strict, and it seems many of these new age business moguls have been cutting corners in the hiring process, which raises some interesting questions about the legality of their employment models.

What Separates an Employee from an Independent Contractor?

proceed with cautionBusiness of all sizes tend to prefer independent contractors for several reasons. Workers hired as IC are not entitled to benefits like health insurance, overtime, and paid sick time or vacation; which saves the employing company a significant amount of money year over year. On the other hand, workers are willing to forego the usual employee benefits and sign on as independent contractors because their paychecks will not have taxes withheld by employers. The lack of immediate taxation has motivated the US Department of Labor, the IRS, and the state of Massachusetts to begin investigating misclassified workers with more zeal.

Massachusetts requires independent contractors to fulfill three conditions in order to be classified as such:

(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

(2) the service is performed outside the usual course of the business of the employer

(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.

To qualify as an independent contractor, all three conditions of the law must be met. The problem is that many companies are hiring “independent contractors” who do not meet one or any of these criteria. This might save money at first, but could also incur heavy financial penalties. For instance, a cable company recently had to pay $1.075 Million for misclassifying cable installers, while a texting service had to hand over $1.3 Million for misclassifying “special agents” who answer text messages from web users.  Misclassifying independent contractors also leaves the business at the mercy of their workers who may be legally savvy enough to pursue a claim in the event of a disagreement.

Businesses Are Getting Busted

pinocchioIn fact, thousands of charges have been brought up against companies for misclassifying employees in response to complaints filed by workers who were seeking to collect unpaid overtime. The US Department of Labor has created a Misclassification Initiative website where workers can file a complaint. Several industries are squarely in the crosshairs as the most notorious misclassification culprits, including construction, nursing, internet services, transportation, cable, security, landscaping, and car services such as valets or limousines.

Several growing companies have begun to alter their hiring model, converting independent contractors into full or part-time employees. Luxe Valet, an on-demand parking service, recently re-classified their workers as employees, though the decision was apparently not motivated by the flood of lawsuits that many employers are facing. There are also a few recent exceptions to the classification rules.

In June, the Supreme Court ruled that the provisions of the real estate licensing and registration scheme outweighs the state law regarding independent contractors. Massachusetts state law was once again overruled in July when a court decided that delivery services are entitled to hire independent contractors as drivers, despite the fact that delivery would fall under “the usual course of business of the employer.”
While Massachusetts law may be stricter than any other state requirements, it does not mean there is no place for independent contractors in the Massachusetts economy. The goal is not to eradicate this type of hiring, but to ensure that it is not being abused. Workers should be wary before signing a contract that would label them as an independent contractor, while companies would do well to remember how much it would cost if their “frugal hiring” strategy were ever discovered by the state.

Piranha Pond Investing Opportunity—Entrepreneurs Latch On

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Hopeful entrepreneurs and established businesses are always looking for more money to develop and expand. Finding investors through pitching to “angels” has become a popular way to make the connections necessary to learn the ropes and get the money necessary to make it big with a great idea.

When it comes to finding investors, television has brought the idea of sharks to the forefront of the entrepreneurial mind, but it can be very hard to find the people in everyday life that have that kind of influence and backing. That is where the Piranha Pond investing opportunity comes in. It is a program developed to encourage new entrepreneurs and help them meet with the movers and shakers who have the power to make their dreams come true.

Bringing Entrepreneurs and Sharks Together with a “Pitch Party”

For the third time, the annual “Pitch Party” gives hopeful entrepreneurs the ability to talk with investors. For a $50 application fee, worthy business owners can submit a resume for their business online for the chance to connect with venture capitalists with the money to finance start ups and business expansions.

The TechSandBox CEO, Barb Finer, worked with her team to create the Piranha Pond. Every year the program gets up to 40 applications from a nationwide pool of entrepreneurs. They are filtered through an approval process that determines eight finalists who will then have the opportunity to face a panel of five angel investors who, if their interest is peaked, compete to finance the business.  This year, the numbers were strong enough that there were nine companies chosen: Femme Forte, Enflux, SmartDiet, Intagora, Innoblative Technologies, ThinkInsite, Fremont Scientific, Rumi Spice and Ridgewing.

How the Piranha Pond Works

Applications are submitted via an online application form that allows entrepreneurs only a  one paragraph description of their idea to grab the interests of the investors reviewing the applications. The finalists are chosen from that pool of applicants. Prior to the entrepreneur’s official pitch to the Piranha Pond’s panel of investors, there is a Pitch Practice Session. This allows the presenters to practice their full presentation and receive feedback from a panel of experts about how to make their pitch more effective and successful. Though participating in the practice session is not a requirement for the process, it is highly recommended that applicants take the opportunity to fine tune their presentations.

The next step is just like the famous television show “Shark Tank.” The finalists from the TechSandBox applicants face the panel of investors, the entrepreneur has five minutes to pitch their idea or developing business. After which, the investors let the presenters know if they are interested in backing the idea or not. If the investors chose to back an idea, then the presenters are given the opportunity to meet with potential stakeholders at the end of the pitch session.

Learning Business Methods

One of the most difficult parts of getting funding can be gathering the courage to approach investors. Piranha Pond investing helps by providing feedback and experience. The Piranha Pond pitch meeting is open to the public with tickets ranging from $28 for TechSandbox members and $35 for the general public.

Massachusetts Contract Manufacturer Helps Urban Garden Get Off the Ground

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At the heart of every great business, from two-man start-ups in the garage to Fortune 500 giants, is one common factor: a great idea. But for many start-ups, that great idea may be all they have. While small businesses provide the opportunity and flexibility for innovation, many of these organizations lack the resources to move beyond the prototype stages. Too many brilliant ideas have been waylaid by simple logistical errors that could be avoided through partnership with an established contract manufacturer—especially one that is well versed in the needs of small businesses.

It was at this crucial juncture, moving from prototype and proposal to market-ready production, that the environmentally-focused Massachusetts start-up Freight Farms stepped up to the plate and hit a home run. By partnering with an established manufacturer like Columbia Tech they were granted access to world class facilities and years of experience—something most small businesses only gain over years of trial and error.

Freight FarmsThe Freight Farms model is simple: a repurposed 40-ft freight container is converted into a self-contained, modular environment for growing fresh vegetables in any locale, regardless of climate or available resources. On paper this idea might even look easy, but the challenge the project developers faced was daunting. How would they build containers at a rate that satisfied demand and remained profitable? How would the ‘farm-in-a-box’ be transported to its final destination?

While the project founders knew these concerns existed, they were focused on the big picture of creating a sustainable food source that could eventually reduce or eliminate world hunger. An ambitious task, but with these intimidating goals in mind, they turned to Columbia Tech’s expert teams, who helped them standardize production at maximum efficiency. Utilizing a contract manufacturer helped Freight Farms sidestep the delays that accompany building a new production facility, allowing them to move rapidly from concept, to prototype, to market.  By selecting a partner that had a strong background in container-based manufacturing, the Freight Farms team could keep their focus on the product and rely on the experience of Columbia Tech to guide them through the sometimes arduous process of turning their great idea into reality.