The laws governing employees and contractors affect community papers

Tonda Rush

Sep 10, 2013

A watchful reader asks:

Q Wasn’t Pub Aux wrong in the headline “Freelance reporter fired” last month? We don’t fire contractors. We end the contract.”

Thanks for giving us a springboard to discuss contractors one more time. You are correct. Contractors are not “hired,” they are “retained” or “engaged” and they are not fired. Their contracts are canceled or not renewed.

The laws governing employees and contractors are fraught with potholes for community newspapers. Plus, newspapers are affected not only by federal laws of the U.S. Department of Labor and the Internal Revenue Service, but by state laws as well.

Contractors pay their own benefits and employment taxes so they are usually less costly than employees. But if the relationship isn’t set up and managed correctly, the cost can skyrocket when a government agency decides to reclassify the person as an “employee” and charge back taxes and penalties to the newspaper. Many is the newspaper that faced a contractor filing for workers compensation after an accident or unemployment after a contract ended. The disputes usually arise in claims in areas where contractors are most common: newsroom and distribution engagements.

It is useful for managers to set at least one day a year make sure there is a contract for all contractors and that supervisors understand how to manage the contracts (not “supervise the employee).

 Here are some guidelines to discuss with your attorney when you review your contract practices.

Watch your language. There are such things as contract employees, but the typical newspaper freelancer or carrier is not one of those. Don’t call them employees if they are not. You retain them; you do not hire them.

Have a contract that clearly spells out the output expected and the price you will pay. E.G., “up to two sports stories per week, to be paid upon acceptance by the editor.” (Editors are often tempted to engage writers or photographers on a hand-shake basis when deadlines loom. That practice puts the contract status at risk and may cost the newspaper the ability to claim copyright ownership.) Keep all contracts on hand for as long as your state’s statute of limitations for contract lawsuits runs—usually 1 - 3 years. And remember it isn’t a contract unless you and the contractor have both agreed. Handing out a copy of your policy won’t suffice.

Contractors should supply their own equipment, such as computers, cameras, vehicles and Internet-connecting devices. If that simply is not possible, talk to your attorney about including access to the equipment as part of the compensation for work.

Insurance issues are tricky. As a general rule, contractors should not be insured by you. But some insurance carriers are now insisting that certain contractors must be covered. This is an area where consulting with your attorney on where the greatest risk lies is essential.

Supervisors should not treat contractors like employees. For instance, barring union restrictions, it may be ok to require an employee reporter to change out of flip-flops before going out on a story. But dress codes for contractors could be seen as micromanaging. If you have a contractor whose public appearance bothers you, your remedy is not to renew the contract.

Absolutely do not withhold taxes from the pay. And plan to produce a tax form 1099 at the end of the year if you pay more than $600 in the tax year to the contractor.

Don’t try to restrict the contractor from working for others, even your competitors. But you can contract for first use of content, for example, so you get the story first.

Specify a general time frame for performance of the duties. For instance, if you have a bundle dropper, make it possible for the work to happen any time within a given afternoon, rather than insisting on specific hours.

Precisely because you can’t micromanage contractors, contracts that give you a liberal ability to cancel if you are not satisfied with results will give you flexibility.

Avoid “model” contracts and templates. Yes, lawyers can be expensive. But avoid copying other companies’ contracts the same way you would avoid taking someone else’s medical prescriptions. State laws vary widely and your own management needs can affect how a contract is written. It is better to work with your lawyer on a contract with some blanks to fill in for prices and outputs that you can adapt as needed.

Another incentive for getting your contracts in line? The Obama administration has put out a call for an entrepreneur to come up with a smart phone application that would help employees and contractors decide whether the law has been followed. See http://fairlabor.challenge.gov/.

Legal Standing is a column provided periodically for Pub Aux readers by CNLC LLC, a Virginia law firm that manages NNA’s Business Laws hotline. Information here is intended to provide general legal information for the education of NNA members and should not substitute for consultation with your attorney about your own situation. Questions may be directed to tonda@nna.org, or sara@nna.org.