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
Monday, September 8, 2014
Updated 10:57 p.m. Monday