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Sep 18, 2019

Are Newspaper Carriers Employees or Independent Contractors?

My new column for the South Carolina Press Association:

There have been several developments in recent weeks regarding classification of newspaper delivery people as employees or independent contractors, with implications for newspapers around the country.


While many newspapers’ circulations—in the form of physical papers delivered to homes and offices—have declined in recent years, the carriers who deliver the physical newspapers continue to be an integral part of the newspapers’ operations. But do these delivery people need to be employees of the newspaper? Or can the newspaper classify them as independent contractors, which relieves the paper of paying employment taxes, and of providing the workers with benefits such as overtime pay, or unemployment, disability and health insurance?

There have been several developments in recent weeks regarding classification of newspaper delivery people as employees or independent contractors, with implications for newspapers around the country.

In Massachusetts, GateHouse Media—on the verge of its merger with Gannett—agreed in late August to pay up to $425,000 to settle a lawsuit over classification of newspaper carriers as independent contractors. The settlement came more than a year after a Massachusetts appeals court held that carriers for the Quincy, Mass. Patriot-Ledger should be classified as employees under state law because the deliverers “perform[ed] services on behalf of Gatehouse, not merely for their own account.”

Under the settlement, carriers who worked between September 2008 and November 2015 and who agree to the settlement will receive payments averaging $518.87. But the settlement does not require GateHouse to change its policies or procedures regarding carriers.

In California, meanwhile, the state legislature passed a bill in mid-September—expected to be signed into law—that would severely limit companies’ ability to classify workers as independent contractors. Under the bill workers whose activities are controlled by the companies they work for and whose work is part of a company’s regular business would be classified as employees. This would update California’s pre-existing law, which is vague on the question, in sync with a 2018 decision of the California Supreme Court. A similar 2017 decision by a California appeals court held that a newspaper had improperly classified carriers as independent contractors.

Newspaper publishers successfully pushed for an amendment delaying for one year application of the new law to newspaper carriers. But there is still concern about the long-term impact of the new law on the newspaper industry.

Similar laws have been proposed in New York, Oregon and Washington state.

South Carolina’s existing law on classification of workers is similar to the pre-existing California law, in that there are no clear statutory criteria for making this determination. Instead, the South Carolina Supreme Court has held that the question is “a fact-specific determination reached by applying certain general principles,” and “[t]he general test is whether the alleged employer has ‘the right and authority to control and direct the particular work or undertaking, as to the manner or means of its accomplishment.’” Courts also look at who provides equipment necessary for the work; how the worker is paid; and how the worker may be terminated. These criteria were reiterated in a 2017 decision by the South Carolina Court of Appeals.

At the federal level, different federal agencies have their own standards for determining whether a
worker is an employee or independent contractor, which differ from each other and also differ from the states’ standards. The Internal Revenue Service, for example, uses criteria such as where work is performed, to whom and how the worker reports activities, and how the worker is paid in determining whether an employer is responsible for a worker’s federal employment taxes. The federal Department of Labor in 2017 returned to a standard based on the “totality of the circumstances to evaluate whether an employment relationship exists” for purposes of determining whether a worker is an employee for purposes of the Fair Labor Standards Act, which involves basic minimum wage regulations, overtime rules, and child labor laws.

The National Labor Relations Board, which determines whether workers are employees who have the right to unionize, specifically ruled in 2005 that newspaper carriers were independent contractors, and thus could not unionize. It based this on the circumstances of the delivery workers for the St. Joseph (Mo.) News-Press, including the newspaper’s limited supervision and control of the carriers. The Obama administration NLRB rejected this standard in favor of one based on worker’s economic dependence on an employer, but this change was overruled by a federal appeals court. The NLRB restored the earlier standard in a January 2019 decision.

One bill currently pending in Congress would replace the various federal agencies’ standards for independent contractors with a single standard, based on the one currently used by the IRS. Another bill would expand the employee category to include any worker performing a function that is part of the usual course of business of the employer.

The issue of classification of workers as either employees or independent contractors has become more important in recent years, with the emergence and growing influence of “gig economy” companies such as Uber and Lyft. In this context, the categorization of newspaper carriers is not as prominent. But the evolving rules on this question can have profound effects on newspapers’ operations and futures.

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