Monday, September 8, 2014

'Contract to Cheat' and the newspaper industry

Updated 10:57 p.m. Monday

The Observer and other McClatchy newspapers this week are reporting the results of a year-long investigation of how the construction industry avoids billions in taxes by misclassifying workers. By calling them independent contractors rather than employees, the companies avoid payroll taxes, unemployment taxes, workers' compensation and other costs.

Most of these workers are clearly employees, not independent contractors. State and federal law and rules spell out the criteria for each. Many of the employers in the series essentially acknowledge as much.

Newspapers have long treated their carriers as independent contractors, and a few readers have sent letters to the editor saying the newspaper industry is guilty of the same thing our "Contract to Cheat" series reveals.

Phillip DeWitt of Huntersville, for example, writes: "I agree with your article that taxes and wages are short-changed in the illegal use of contract workers. But The Observer needs to get its own house in order. Your use of contract workers in the distribution of your newspaper is one and the same." Writes Coy Powell of Charlotte: "Should not The Observer, and McClatchy, clean your own house first? Will you publicize pay records for your carriers? I don't think I'll hold my breath on this one."

Some newspaper contractors have raised these issues in court -- and lost. As a story in Sunday's Observer said, McClatchy, which owns the Observer, and other newspaper companies have successfully defended the practice on various occasions. Other newspapers -- such as the Orange County Register -- have paid settlements, and the San Diego Union Tribune lost a case involving its carriers. The Sacramento Bee and the Fresno Bee currently face lawsuits on the question that could be resolved this fall.

The question with newspaper carriers is complex and hinges on each state's laws and on precisely how the job is structured and documented. McClatchy and the Observer argue that their carriers are correctly classified as independent contractors under the law.

UPDATE: I contacted Heather Fagundes, McClatchy's vice president of human resources, who said that McClatchy has several procedures and protections in place to ensure that all workers are classified correctly. The company, she said, regularly uses audits, training, legally approved contracts and gatekeepers who review contractor relationships in order to stay in compliance.

-- Taylor Batten


cmsparent2010 said...

Of course you would argue that - but the reality is - you hire and fire your carriers - you decide when and how they must work - it has nothing at all to do with full or part time - I cannot even believe you used that as a defense

Wiley Coyote said...

Hmmm... Sacramento Bee?

The California Supreme Court ruled today (June 30) that a worker is an employee if the employer has the right to control the worker's behavior. The matter at hand was whether carriers for Antelope Valley Newspapers could be granted class-action status in a case similar to one in which carriers won a $10 million judgment against the Union-Tribune in January.

The highest court upheld the appellate court's decision granting class status to the Antelope carriers, who were arguing that they were not independent contractors but were actually employees because the company controlled their conduct. That was the major issue in the U-T case. The Orange County law firm of Callahan & Blaine won such cases against the Orange County Register and the U-T, and has similar cases against the Sacramento Bee and Fresno Bee.

Ghoul said...

Wiley can you post a link to that story, google couldn't help me.

Wiley Coyote said...


I never use Google for anything. I go out of my way to avoid them like a plague.

Anonymous said...

I still don't know why this nominal only expose' dances around who this cheated workforce comprises. Everyone knows what's going on and why already.

Wiley Coyote said...

Interesting story today in another McClatchy paper, The State:

Exotic dancers say they are employees, not independent contractors

Read more here:

John said...


Typical media hypocrisy, you always make excuses for doing the same things you bash others for doing... which is one of the many reasons you are losing revenue and laying off employees. Real journalism has been dead for years!

Richard Parisse said...

These contractors are skirting the law so they can use illegals to do construction. The government turns a blind eye because they are part of the scheme

Wiley Coyote said...


How many WORKERS are skirting laws to keep from paying taxes while at the same time collecting unemployment, food stamps, etc. and getting paid under the table?

I think we all know the answer to that question.

Derek Bullard said...

The Observer and their parent company are hypocrites. The newspaper industry has robbed carriers and others for years by classifying them as contractors. The Observer mandates when the paper must be delivered, what days the carrier works, they hire and fire carriers all the time. Somehow, even the O-pinion writer who responded to the question conveniently skirted the question by citing legal rulings, which by the way, many newspapers have lost nationally on this argument. Dear Observer, if you want really present a credible piece, please provide us with stories and interviews of the thousands of carriers you have abused and misclassified over the years. If you want names please contact me, I'll be happy to provide you with contact info for carriers who have had tax issues, car wrecks and issues while being a contractor for you.

Derek Bullard said...

The Observers response regarding their use of contractors and the update posted by Taylor is likely the exact same argument the companies highlighted in the "Contract to Cheat" have used to justify their use of contractors. The Observer is no different than any of the companies they highlighted. For a long time during the late 80's the Observer even used 14 and 15 year kids to sell door to door subscriptions to their newspaper. These kids were also treated as contractors and worked way past the legal limit mandated by child labor laws. I know this because I, along with at least 20 other teens worked all over the city doing this for the circulation department of the Observer. This is a real issue but in my opinion poorly written and presented by the Observer and McClatchy who has absolutely no credibility on this issue.

Karl said...

Another "Do As I Say, Not As *I* Do" article....laughable at the hypocrisy The Disturber shows as they shite on their newspaper carriers while 'upholding' the class warfare rhetoric that gets placed onto Republicans!