The Joint Committee on Labor and Workforce Development heard a parade of freelance writers, artists and photographers complain Jan. 27 that they were being forced out of business or to move out of the state because of the “unintended consequences” of a law that was supposed to help independent contractors in Massachusetts.

The independent contractor legislation, Section 148B of chapter 149 of the Massachusetts General Laws, as amended by section 26 of chapter 193 of the acts of 2004, was intended to prevent employers from misclassifying individuals as independent contractors and denying them rights such as health insurance, workman’s compensation and unemployment insurance. The joint committee hearing was relative to House Bill No. 1844 that amends the law as described below. There is a Senate bill before the committee that also amends the legislation.

Individually and in groups, dozens of freelancers told the legislative committee, headed by Sen. Thomas McGee and Rep. Cheryl Coakley-Rivera, that the law had cost them jobs and projects with out-of-state corporate clients. Several also said the law also makes it more difficult to negotiate their ownership rights for copyrighted materials and art works.

According to a study by the National Endowment for the Arts, Massachusetts ranks third in the nation in the number of independent artists and writers. Newburyport and surrounding communities have long been home to artistic independent contractors. Massachusetts defines the independent contractor more strictly than federal regulations.

The state law defines an independent contractor as a person who:

(1) 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)  performs a service outside the usual course of the business of the employer; and

(3) customarily engages in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

House Bill No. 1844, which was sponsored by several legislators, would replace the word “and” with the word “or” between numbers two and three, which would give freelancers more flexibility in working with out-of-state corporate clients that have a business presence in Massachusetts.

Newburyport freelance editor Debra Michals said: “Even the proposed fix for the law may not go far enough. It leaves the three-prong criteria for what constitutes an independent contractor in place.”

These criteria for defining a freelancer or independent contractor – called “prongs” or “A, B, Cs” - have proven to be what one freelance editor described as “a game changer” for thousands of Massachusetts residents. Several of the freelancers said they are considering moving to New York or Connecticut so they can continue to work for clients that have stopped assigning them work because of the law.

A petition with more than 500 signatures and comments from freelance entrepreneurs was presented to the committee.

One writer testified that she had gone from five or six projects at a time in previous years to two this year because out-of-state corporations are afraid that Massachusetts will impose penalties on them for contracting with freelancers. Others said their projects had been cut in half or they had no work as a result of the law.

Most who testified said they were unaware of the law until last year when strippers, including those working at Tens Show Club in Salisbury, filed lawsuits against two Massachusetts clubs for misclassifying them as independent contractors. In May 2008 the Massachusetts Attorney General issued an advisory to businesses describing in detail the Massachusetts law.

The committee will also consider proposed revisions of the independent contractor law now in the state Senate. Senate Bill No. 670, sponsored in part by recently-elected United States Sen. Scott Brown and state Sen. Bruce Tarr, eliminates completely prong number two and adds the words “and has validly registered said trade, occupation, profession or business pursuant to state law” at the end of prong three.

In the photo: Freelance editor and Newburyport resident Debra Michals