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.
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.