Outsourcing is nothing new in the HR world. Some companies, such as construction firms, often use freelancers as a way to reduce payroll costs, and they normally classify these workers as independent contractors and not as employees.

But some companies have been classifying workers as freelancers when they really aren't, which can deprive workers of benefits such as unemployment insurance, workers's comp, and health care. In Massachusetts alone, between 13 to 19 percent of employers misclassified workers as independent contractors between 2001 and 2003.

To that effect, the Massachusetts Independent Contractor Law was tightened in 2004 to stop companies from misclassifying workers. This law now stipulates that an independent contractor or freelancer must perform duties that are "outside the usual course of the business of the employer."

Freelancers in Massachusetts are not happy about this. Many of them, especially unemployed workers, look to freelancing as a way to pay the bills. They are losing work, because companies are not using independent contractors so they can avoid the potential legal penalties ranging from $10,000 to $25,000 for first time offenders. This law conflicts with the trend of companies outsourcing more and more work.

Word is that this Massachusetts law will eventually spread to other states. If you are in HR, or are a manager, this is something you may wish to think about.

Please share your thoughts. Are freelancers' days numbered in the US?