Amendment that would classify news carriers as independent contractors likely to hit Senate floor today

UPDATE: The amendment to H.169 was passed over by the Senate on Friday.

Are news carriers employees or independent contractors? Should newspapers in Vermont get a pass on paying unemployment costs for news carriers?

That’s the question senators will take up today as they consider H.169, a bill that gives unemployment tax relief to employers impacted by Tropical Storm Irene.

Sen. Kevin Mullin, R-Rutland, will offer an amendment to H.169 that would ensure news carriers are classified as independent contractors, and therefore ineligible for unemployment insurance.

Never mind that that same amendment was shot down in the Senate Finance Committee in a 4-2-1 vote. That there doesn’t appear to be enough support for the measure among the majority of senators. Or that the Department of Labor recently issued a legal determination that a bulletin the department, under the Douglas administration, issued in 2006 giving newspapers an effective exemption from the unemployment insurance program went against legislative intent. Or, that a 1985 Vermont Supreme Court ruling required The Times Argus to classify news carriers as employees, and in order for the exemption by rule, unauthorized by lawmakers, to hold, the Legislature must provide a clear legislative remedy.

Clarity is in the eye of the beholder. Lawmakers dispute what the intent of the 2006 legislation (H.717) was. The bill gave “direct sellers,” an exemption to unemployment payment requirements. Rep. Warren Kitzmiller, D-Montpelier, who was a member of the House Commerce and Community Development Committee at the time the bill passed, calls the Douglas administration bulletin a “rogue ruling.” He says the bulletin from the statute does not include news carriers in the definition of “direct seller.” Sen. Vince Illuzzi, who was chair of Senate Economic Development then, has said in a letter that he remembered the bill including news carriers. The statute, however, does not include any specific language about news carriers.

Meanwhile, the Douglas administration issued a bulletin (UI Bulletin 482) that year that gave newspapers an exemption to the law — in direct opposition to legislative intent, according to Kitzmiller.

Since that time, newspapers have treated news carriers as independent contractors ineligible for unemployment benefits.

A few years ago, the issue came to Michael Sirotkin’s attention. The lobbyist who has represented union interests says the misinterpretation of the 2006 law sets a bad precedent and deprives low-wage workers who typically earn about $15,000 a year of benefits — including workers’ compensation, matching FICA payments, and legal protections — they deserve under the law. Most news carriers, he says, are not teenagers who are trying to earn a few extra bucks — they are adults who distribute newspapers as a way of making ends meet.

Sirotkin, who has lobbied to get the Department of Labor to reconsider the bulletin, says news carriers fail the “ABC test” — a three-part test the department uses to determine whether a worker is an employee or an independent contractor. By definition, employees are told what to do, when to do it and where to do it. Independent contractors, on the other hand, are the masters of their own fate and are not controlled by the companies they work for.

“Employers who misclassify their workers try to illegally categorize their workers as independent contractors to save upwards of 30 percent on their payroll costs,” Sirotkin wrote in a statement to senators.

Sirotkin describes the Douglas administration bulletin as an “end run by the Executive Branch and a clear abuse of power.”

Eventually, the Department of Labor changed its tune. While the agency does not take a stance on what the law should be, under current statute, lawyers for the department have said news carriers should be considered employees eligible for unemployment benefits.

In a letter to lawmakers, Annie Noonan, commissioner of the Department of Labor, wrote that at the time H.717 was passed, eight separate bills exempting newspaper carriers from unemployment had been introduced since the 1985 Times Argus decision. “If it had been the Legislature’s intent to exclude newspaper carriers from coverage, it could easily have added the provisions … by amendment,” she wrote.

“The Vermont Legislature, in passing H.717, did so with the knowledge that the Vermont Supreme Court had expressly ruled that newspaper carriers should be employees, subject to coverage under Vermont’s unemployment law,” Noonan wrote. “It follows, then, that the legislature would have expressly included newspaper carriers in the definition of “direct seller” in H.717 if it intended to overrule the holding in Times Argus v. Department of Employment and Training.”

The department went to the Legislative Committee on Administrative Rules last fall for a rule change. Lawmakers were divided on the issue and voted 5-3 earlier this year to overturn the administration’s proposal to revert to the pre-2006 interpretation of the law. Since then, the department issued a statement that the department will be conducting a thorough economic impact analysis of the issue.

Kitzmiller says the kindest language he can find to describe Illuzzi’s contention and that of the other lawmakers who spoke in opposition to the proposed final rule, is “they misspoke.”

For now, in practical terms, the department is in something of a conundrum. If it asks newspapers to pay for benefits, there is a good chance publishers will sue. On the other hand, if the law isn’t enforced, news carriers could sue.

Meanwhile newspaper publishers from the Vermont Press Association, including the Burlington Free Press, Caledonian-Record and the Times Argus and Rutland Herald, have stepped up their lobbying efforts. They hired a national law firm to testify on their behalf and have lobbied the Senate, where they have found support from Senate President Pro Tem John Campbell. Mullin and Campbell sponsored the original amendment, and 10 senators in all have signed off on the new amendment, this time without Campbell.

Mullin is going to bat for John Mitchell, the publisher of the Times Argus and Rutland Herald, who has been a daily presence in the Statehouse this legislative session. If the amendment fails, Mitchell could have to pay about $45,000 to the unemployment insurance fund. It’s a cost, he says, that the company can ill afford at a time when his industry is suffering financially. Mitchell’s company has laid off dozens of employees at the Herald and the Argus, and he recently sold the Times Argus building to Barre Mayor Thom Lauzon. The news and business staff will be moving to another location in Barre. Meanwhile, less of Mitchell’s business is direct home delivery as readers migrate to the Web for news from the Times Argus and Rutland Herald.

“It seems an almost hurtful change in practice — making the newspapers pay unemployment insurance for something news carriers are unlikely to have the benefit of,” Mullin said.

Mullin says it’s not a labor issue because news carriers don’t hit the threshold that allows them to qualify for benefits. In the end, he says newspapers would be forced to pay into a system that benefits seasonal employers who lay off workers every year.

Campbell says he doesn’t want to put a financial burden on publishers at a time when newspapers are suffering and Vermonters need good information about government, business and society. He’s had trouble, though, soliciting support for the legislation.

“We’re missing what’s happening to the media,” Campbell said. “A lot of it is being bought up by Rupert Murdochs who are controlling the messages. We are fortunate not to have that problem.”

Sen. David Zuckerman, P-Chittenden, opposes the amendment on principle. “We should maintain our laws, which have been misapplied for a long time,” he said.

Editor’s note: This story was updated at 6:32 a.m. April 26.

DISCLOSURE: VTDigger has a media partnership with the Caledonian-Record; Sirotkin and Necrason have been business sponsors of VTDigger.

Anne Galloway

Comments

  1. Renée Carpenter :

    “Sen. Kevin Mullin, R-Rutland, will offer an amendment to H.169 that would ensure news carriers are classified as independent contractors, and therefore ineligible for unemployment insurance.

    “Never mind that that same amendment was shot down in the Senate Finance Committee in a 4-2-1 vote. That there doesn’t appear to be enough support for the measure among the majority of senators. Or that the Department of Labor recently issued a legal determination that a bulletin the department, under the Douglas administration, issued in 2006 giving newspapers an effective exemption from the unemployment insurance program went against legislative intent. Or, that a 1985 Vermont Supreme Court ruling required The Times Argus to classify news carriers as employees, and in order for the exemption by rule, unauthorized by lawmakers, to hold, the Legislature must provide a clear legislative remedy.

    “Clarity is in the eye of the beholder. Lawmakers dispute what the intent of the 2006 legislation (H.717) was. The bill gave “direct sellers,” an exemption to unemployment payment requirements….”

    Thank you, vtdigger, for this article. A few points we all must remember (some of which are touched upon here), is that: News is essential for an informed electorate; that the broad attack on our news outlets–from recent disclosures that the Koch Brothers intend to purchase a large block of our most prestigious newspapers to the recent passage of CISPA in Congress while all eyes were on Boston–is an attack on the heart of Democracy; and that Kevin Mullen has been the Vermont Chair of ALEC, the nationwide group that has covertly planted and worked to pass model legislation in state legislatures throughout the country to push forward a neo-conservative agenda. Through the lens of these facts, Mr. Mullen’s amendment, and whether or not it is apropos to Vermont, becomes perfectly clear.

  2. Kathy Callaghan :

    Most of the news carriers I know are older adults who are trying to make ends meet. They deserve employee status and the benefits that go with it.

    They are not “independent contractors” who set up a contracting business and contract out to do this work. In many cases, they are long-term, faithful and reliable employees who get up way before the crack of dawn, schlep heavy bundles of newspapers, and drive through all kinds of inclement weather to ensure that we get our morning papers on time.

    One carrier I know is a woman who lost her trailer home to Hurricane Irene and has been desperately trying to make ends meet ever since.

    I would wager that a newspaper corporation can better afford the $45,000 per year, than these employees can afford to do without the benefits they deserve. Have a heart, legislators!

  3. Karl Riemer :

    We congratulate ourselves in Vermont that we’ve so thoroughly repudiated the pernicious classism and persistent dishonesty of the Republican Party. We smirk knowingly when Kevin Mullin pulls crap like this, defending the unqualified power of employers to do anything at any time for any reason to their employees, because he’s a wolf in wolf’s clothing (or corporate lapdog, if you like). For him to say news carriers aren’t employees, a transparent falsehood, is perfectly in character, expected behavior. For him to say it’s not a labor issue because news carriers get no benefits is despicable but similarly predictable. But time and again, if we’re paying attention, we see that Republican “values” aren’t nearly as weakly represented in the legislature, nor even in the executive, as we might hope from ostensible party affiliation. John Campbell amounts to a pretty fair Republican much of the time and he’s hardly alone.
    I remember Howard Dean once claiming to represent the democratic wing of the Democratic Party. In Vermont we have our own blue dogs and cheerful capitulators, willing to rationalize away principles and buy bologna wholesale.

    • Patrick Cashman :

      But how do they get elected if we’ve “repudiated the pernicious classism and persistent dishonesty of the Republican Party.”? Perhaps they were appointed? Or perhaps your neighbors may not agree with your viewpoint, and isn’t that great?

  4. Ron Pulcer :

    I think that the term “direct seller” as applied to newspaper carriers is bogus! The newspaper carriers may be paid on a per sale basis, rather than hourly. But these folks are “delivery” people, they do not make the sales.

    For example, here is the Subscribe webpage for the Rutland Herald. So the Rutland Herald is “selling” their subscriptions online. If you pick a subscription option that includes print edition (home delivery), then the Rutland Herald will notify the “newspaper carrier” in your neighborhood or town that they have a new “delivery” to your address.

    https://home.rutlandherald.com/clickshare/subscriptionCenter.do

    The Rutland Herald does not ask you to call the phone number of the “direct seller” in your neighborhood or town to setup a subscription. The “newspaper carrier” does not collect the money and they do not engage in selling. They “deliver” the newspapers.

    This is a ridiculous statement by my Senator:

    “It seems an almost hurtful change in practice — making the newspapers pay unemployment insurance for something news carriers are unlikely to have the benefit of,” Mullin said.

    Huh? I have worked over 30 years and luckily have not been laid off. But my employers have paid unemployment insurance over those years. I would rather have a paycheck than an UI check, and I’m sure that the newspaper carriers feel the same way.

    So why is Sen. Mullin focused on this? Why are they singling out a relatively small group of workers?

    If these folks are considered “independent contractors”, then the Rutland Herald and other newspapers can also avoid paying Social Security taxes. I suspect that they would also be off the hook on handling Fed and VT income tax withholding. That means a low-wage newspaper carrier will have to either hire an accountant to help them with estimated tax payments, or spend hours each quarter filling out more paperwork.

    This is not a seasonal job. The news is “delivered” 365 days a year. I would think that they should be considered part-time employees.

    So while the Legislature is debating one-off taxes like candy, soda, break-open tickets, bottled water, cigarettes, gasoline, etc. other legislators are introducing an amendment to allow a certain industry (newspapers) to avoid paying unemployment and Social Security taxes.

    You can bet in 2014 both parties will again claim they “feel our pain” about the taxes we pay and point fingers at the other candidate.

    The “cost shift” in the healthcare pales in comparison to our taxing systems (federal, state and local). Tax breaks for some (newspapers and some TIF district towns) and new taxes or taxes raised on working people.

  5. Steven Farnham :

    I felt that this article was extremely confusing – but maybe I just didn’t have enough caffeine before I started reading it.

    It would have helped to have some discussion about Times Argus v. Department of Employment and Training, some history of what led up to it, plus a few words about H.717 BEFORE delving into all the fiefdoms of subtle nuanced interpretation surrounding them.

    Anyway, just a comment about news carriers. Unless earning money is not part of the desired outcome, it is a job for the dim-witted. I tried it once – very briefly. After completing the route, I figured up the mileage expense. It took all I was paid for mileage plus most of what I was paid as hourly wages, just to defray the mileage expense. The result yielded me about 50 cents per hour earnings (but I still had to pay income tax on the full amount of the portion my “employer” (“contractor”?) classified as “wages”).

    It was a losing proposition, and I resigned immediately. There was cute young woman delivering the Times Argus to my house years ago, so of course I took the opportunity to chat her up a bit one day. In the conversation, I explained the math regarding mileage expense and pay. She quit in less than a week. Her mama raised no fool.

    The same is true of most minimum wage, part-time jobs. If you are commuting a significant distance to a four-hour, minimum wage shift, most of your after-tax earnings pay for your commuting expense. What’s left over, if any, isn’t worth the effort.

    So many businesses are propped up by employees, who are willing to ignore this fact, or are merely unaware of it. Basically, when welfare-to-work programs force a person into a minimum-wage job, all that is accomplished is a subsidy of the person’s employer and the automobile industry, all at the expense of the most disadvantaged people in our communities. It’s a scourge.

  6. Jill Charbonneau :

    If it walks like a duck and quacks like a duck it is probably a duck. The newspaper carriers work diligently, before the crack of dawn, over hills and dale,in all sorts of weather to ensure people have their papers available to them long before many of us have even enjoyed the first aroma of our morning coffee. How is it they are not employees? They are as much employees as migrant farm workers. Why is it so convenient to look the other way? One may think they are the least of us when looking at their earnings. If one looked instead at their diligence we would think they are the best of us. They at least deserve to be treated like the rest of us with the same benefits many smaller and larger employers provide for employees.

  7. Susan Bilkowszeki :

    I wish they would do this nationwide & finally consider all carriers “employees”. I have been delivering for years now. I drive about 50 miles a day in the only car we own. I do about almost $300 a month in gas and only get $42 every two weeks for gas allowance. If there’s a complain I’m double charged the price of the paper and on weekend triple charged the price of the paper which comes out of my check. I have to pay for all bags, rubber bands, collection envelopes, etc. out of pocket. Not to mention blowing through brake pads three times a year with all the braking and stopping I do when delivering to over 150 houses every dday 7 days a week. We get zero days off, if we get sick that’s our problem they don’t care, we aren’t allowed to call out sick or we’re threatened with getting fired or they’ll charge us an entire week’s pay for that single dday we call out. If there’s a blizzard or a hurricane oh well you still have to go & be out there between 1am and 6am. If someone claims their paper didn’t arrive and I tell the paper that I did in fact deliver they’ll still charge me money for it, so basically I’ll have to pay double the price of the paper out of my cehck no matter how many times I say I was there & gave them their paper. The amount of money I go through in a month between supplies, gas, car repairs, complaints etc I’ll never see what my route actually pays. Every two weeks I get aroun $200 but that flucuates & changes, it may go down but only goes up if I get any tips, last week the only tip I got was $1.50 for the past two weeks. We’re not just throwing from our car windows, we have to walk these routes in the dark in the ice & snow & all kinds of conditions. We NEED to be considered employees and at the very least given 2 days off a week. Get the average person to work 7 days a week with no days off in years for $4 an hour and they’d tell you to take a hike. Modern day sweatshop.

    • Steven Farnham :

      Dear, Susan

      The feds allow 55-1/2 cents a mile for mileage expense. That assumes normal use. You are working parts of your car way harder than average. Your per-mile driving expense may be closer to $1.00 or $1.50.

      Do the math. Multiply the length of your route by $1.00 or so. Deduct that from all that you are paid per day (’cause their measly mileage allowance won’t be enough). Divide the remainder by the number of hours you’re on the road per day. If it ain’t at least minimum wage, it’s time for a new job.

      Or unionize, but good luck with that.

      Or get a job you can walk to.

      Or move into town, and get a job where you can take the bus.

      The longer you stay where you are, the more you enable them, and the more money you lose.

      Get out of the business of serving cruel, unappreciative schmucks!

      And best of luck to you!

  8. Bryan Bouchard :

    The newspaper publishers have been abusing the delivery folks for years and this is just more of the same. If you were to do the math, these delivery people are delivering the papers for free. These people cannot deliver the papers when they feel like it, they do it under the direction of the newspaper. They are employees and should be treated as such.
    Campbell doesn’t want to put financial burden on the publishers, so lets squeeze some poor working guy with three jobs trying to make ends meet. Mr. Campbell you should be ashamed of yourself.

  9. Ellen Oxfeld :

    The newspaper carriers deserve the same benefits as other workers. Also, when we enlarge the pool of workers who have good benefits and labor protections we are not only doing them a favor, we are helping our entire economy. Ultimately, we all benefit. Even business cannot do well when everyone is just scrapping by.

  10. Susan Bilkowszeki :

    In terms of direction by the paper in how we do our job (I’m in Pennsylvania, came across this article in my search online pertaining to newspaper carriers) we have been told numerous things such as we have to count our papers in the morning to make sure we have the proper amount & if we don’t & call in a shortage we’re told they could terminate our contract for not counting papers when in fact there’s nothing in the contract that says we have to count any papers-if they gave us the correct amount we wouldn’t have to count int he 1st place. We can start at any time but we absolutely must be done by 6:30 am Mon-Sat & by 7am on Sundays. We cannot change the price of how much we sell the paper to the customers, not sure if we can even do that. I’m sure there are other things I’m forgetting. The van driver that brings us our papers gets $10//hr. as an employee, many of us make around what I do-$200 every two weeks, and during Black Friday they give us a credit for the inserts-THREE CENTS per insert per paper….seriously I kid you not. I’ve been looking for another job. Originally I was looking for something on top of doing the paper but now I’m looking for something to replace it, I can no longer keep doing this type of work at this kind of pay & I can’t keep damaging my car. On average, as I stated previously, I go through brake pads around 3 times per year, just put new rotors on the car, new wheel bearing, oil changes, I blew through mileage went from something like 80,000 miles on the car last year now I’m up to 110,000 all in 1 year. In the past year I’ve put way over $1,000 into my car. It used to pay decent, I used to bring in alot but my checks have been decreasing, last month I only made $189 for 2 weeks. I had a second route at one point but one route wound up paying for gas for the other route since they refused to give me route allowance on the 2nd route so I quit the 2nd route & I’m just doing one now which gives me only $42 every 2 weeks for gas which does nothing for me since I can do $100 in gas in one week easily. In complaints alone since I’ve started delivering it must be way over $100 in charges from complaints. I don’t get them often but when I do I’ve told them I delivered to the house but they charge me anyway, I questioned this once in a phone call & was told by a manager that “we can’t call a paying customer a liar” pertaining to when the customer claims they didn’t get a paper. If it’s a windy day & the papers blow away I’m charged….this gets annoying. So much money taken out of my check for complaints on top o f ordering supplies, I’m at the point where I can no longer afford my supplies…who eever heard of not being able to afford to work? No one should have to PAY in order to work & essentially this is what we do. It most certainly is a modern day sweatshop. If more people in the public knew how horribly paid we are I’m sure many would cancel their subscriptions. Not to mention if they knew we never get any days off with no benefits. For the life of me I dson’t know how in 2013 in the USA they can get away with doing this, the pay and work conditions are like something you’d hear about in a third world country but it’s right in our backyard. Many of us would love to try and form a union or something but so many so desperately need an income they’re afraid of having their contracts terminated & I’ve heard it’s extremely difficult to form a union for newspaper carriers & that it’s been shot down before. I’ve been delivering for almost 5 years now and I’ve only called out once back in 2009….4 yrs with no day off is starting to get exhausting, literally. Been handing out resumes like crazy & some interviews but nothing as of yet. and because of the 7 day work week you’re literally ball & chained to this job you can’t visit relatives or stay overnight anywhere, when my grandfather died this past Oct I couldn’t stay out of state for the funeral because I couldn’t afford to pay a substitute. During hurricane sandy I didn’t want to leave my family home sleeping in the dark but we still had to go…something needs to change, they need to nationally reform this position for so many carriers.

    • Ron Pulcer :

      Susan,

      Do the newspapers allow you to share contact info with other carriers so that you can cover for each other to enjoy a vacation, or weekend off, or for bereavement of a family member?

  11. Kathy Callaghan :

    Thank you Susan, for putting some reality into this ridiculous argument. Of course these are employees – ill treated employees, but employees none the less.

    These newspaper companies should be thankful for dedicated employees such as Susan and others whom I have met (described in post above). Of course the news companies can afford $45k – and far better than these dedicated employees who are working at this thankless job just to make ends meet.

    Both Kevin Mullin and John Campbell should be ashamed of themselves. On a human level, they know better, both of them.

    If you can’t be a champion of the little guy, at least don’t try to make life more miserable.

  12. The senators sponsoring this amendment should be ashamed of themselves. The newspaper delivery drivers have a hard life and serve at the pleasure of the company. If they lose their jobs for circumstances beyond their control they should have the protection of the unemployment compensation system, just like any other employee.

    These drivers are not independent contractors, they’re employees. They have none of the characteristics that define independent contractors and should not be treated as such.

    Everyone who disagrees with this amendment should call the Sergeant at Arms and leave a message that they want their senator to vote against this amendment. 828-2228.

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