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Your First Local Hire in Boston (Massachusetts · W-2 · PFML)

What a newly established U.S. entity must do before and after its first hire in Massachusetts: the W-2 versus 1099 decision, pay frequency and treble damages, earned sick time and PFML contributions, and what you may not ask a candidate.

This is a summary of official guidance, not legal or tax advice. Hiring carries money and liability. Confirm with a Massachusetts employment attorney or a payroll provider before you act, and read the official sources linked at the foot of this page alongside it.

This page collects the points where Massachusetts practice differs most sharply from what a Korean head office will expect when its U.S. entity makes its first local hire. You do not need to read it in order — sections 2 and 4 are the expensive ones.

1. Registrations to complete around the first hire

ItemWhat it involves
Federal EIN Employer identification number. Required before you can run payroll.
DUA unemployment Register with the Department of Unemployment Assistance. Registration happens after you have paid your first employee. Liability is triggered by one employee working at least one day a week for 13 weeks, or $1,500 in wages in a quarter.
Workers' compensation Required under MGL c.152 as soon as you have any employee. Exemptions are narrow.
New hire reporting Report within 14 days of hire or rehire (MassTaxConnect or Form NHR).

2. W-2 or 1099 — the most common and costliest mistake

Starting the first person as a 1099 contractor looks lighter, but Massachusetts applies one of the strictest tests in the country. All three prongs must be met, and the employer carries the burden of proof.

Massachusetts ABC test Under MGL c.149 section 148B a worker is an employee unless all three prongs are met: free from control, service outside the usual course of business, and an independently established trade. All three are required. Independent contractor only if ALL three are true A Free from control Not directed in how the work is performed AND B Outside usual course The service is not what the business does ← most failures happen here AND C Independent trade Customarily runs the same business independently All three met → 1099 contractor the employer carries the burden of proof Any one fails → W-2 employee misclassification: treble damages + fees MGL c.149 § 148B. Among the strictest contractor tests in the United States. A worker is presumed an employee until the employer proves all three.
In practice almost every failure is prong B. Engaging someone as a contractor to do clinical, regulatory or business development work for a company whose business is exactly that cannot satisfy "outside the usual course of the business". A misclassification finding carries treble damages on unpaid wages plus the other side's attorney's fees.

3. Pay — the frequency causes more trouble than the amount

  • Minimum wage — $15.00 per hour (unchanged since 2023-01-01; 2026 figure)
  • Frequency — hourly employees must be paid weekly or biweekly. Within 6 days of the period close for a 5- or 6-day workweek, 7 days for a 7-day workweek. Semi-monthly is not available for hourly staff.
  • Salaried and exempt — biweekly or semi-monthly. Monthly only with the employee's written consent.
  • Moving from weekly to biweekly requires 90 days' advance written notice.
Late wages carry automatic treble damages under MGL c.149 § 148, with no good-faith defence. An arrangement where payroll depends on a transfer from head office, or on an FX window, is a risk in itself. Holding a payroll buffer in the local account is the normal answer.

4. What sits on top of salary

Item2026
Earned Sick Time 1 hour per 30 hours worked, up to 40 hours a year. Paid if you have 11 or more employees; unpaid below that.
PFML 25 or more employees: total 0.88% (employer 0.42% + employee 0.46%).
Fewer than 25: total 0.46%, entirely employee-funded — no employer share.
2026 maximum weekly benefit $1,230.39
FICA Employer share 7.65%, matched by the employee.
Unemployment & workers' comp Rates vary by industry and experience. Get a quote from a payroll provider.

Two thresholds favour a small office — below 25 employees there is no employer PFML share, and below 11 sick time may be unpaid. Both flip automatically as headcount grows, so it is worth knowing where the lines are.

5. What you may not ask a candidate

  • Salary history is off limits. You may not ask the candidate or a former employer, and you may not require past pay to meet any threshold (Massachusetts Equal Pay Act). You may confirm figures the candidate volunteers, and you may ask after making an offer that includes compensation.
  • Pay transparency — effective 29 October 2025. Employers with 25 or more employees whose primary place of work is Massachusetts must state a pay range in job postings, disclose it to an employee on request, and disclose it when offering a promotion or transfer. Headcount is the average across the prior calendar year's payroll periods. — Most small offices fall below this, but the line moves as you grow.

6. Three habits that do not travel

Common at a Korean head officeMassachusetts
Monthly payroll, once a month Weekly or biweekly is mandatory for hourly staff. Monthly needs written consent, salaried only
Payroll slipping a few days Automatic treble damages. No good-faith defence
Asking current salary at interview Prohibited until after an offer with compensation

Where to verify

Every source below is an official Commonwealth or legislature page. This article gathers them in one place and does not add interpretation. Confirm with an attorney or payroll provider before acting.

Checked 10/11/26 Refresh annually

Schools and agencies change these without notice. Confirm on the official pages below before you act.

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