Blogger Files Claims Of Violations By Saratoga County with IRS and NYS Labor Department

Saratoga County appears to be violating state and federal laws in its COVID contact tracing program as they are contracting with workers rather than hiring them as county employees. Due to the overlapping of jurisdictions, I have submitted formal complaints to the New York State Department of Labor, the Joint Task Force on Worker Exploitation and Employee Misclassification (JTFWEEM), the New York State Public Employee Relations Board, and the United States Internal Revenue Service. The JTFWEEM was established to better coordinate the overlapping nature of the violations.

It is illegal to “contract” with an individual rather than hire them as an employee to do work if the purpose is to circumvent payment of benefits (social security, Medicare, etc.) and/or to deny the individual the protections of the minimum wage and health and safety regulations.

At the end of this post, I lay out the criteria for categorizing workers as employees vs contract workers.

One of the challenges of pursuing this issue is the opaque nature of Saratoga County’s government. I believe that the case against the county is strong based on the available information on the county website but my efforts to further investigate this have been frustrated by my limited rights as a citizen to information.

The Freedom of Information Law (FOIL) is a very slow process. In effect, the county can legally put off providing FOIL requested information for roughly a month.

Getting a response from employees at the county is limited because outside of FOIL, they do not have to respond.

I have tried to get information through Supervisor Tara Gaston but this has proved to be challenging. Granted, it is the holiday season, but so far the result of multiple emails to her has been her eventually advising me that the Saratoga County Attorney assured her that the county’s use of contracting is completely legal. She writes that she will look into the matter further.

The readers of this blog will recall that this is the same County Attorney who claimed that the COVID committee was not subject to the Open Meetings Law. This, in spite of the fact that I had written to him regarding the New York State Open Meetings Commission determination that the COVID Committee was subject to the law. Eventually, the law firm that investigated the county’s COVID bonus debacle confirmed the violation.

I had asked Supervisor Gaston in my emails to help me answer a simple question (discussed later) which was important in determining the county’s violation. For whatever reason she apparently did not inquire about this with the County Attorney when she spoke to him, and her email to me simply ignored my question.

How The Use Of Contracting Has Exacerbated The Problem Of Hiring Tracers

The county has been subject to embarrassing coverage by area television and newspapers about their failure to provide sufficient contact tracing. Anecdotally, as recently as this week I am aware of a number of people who have contracted COVID or were in contact with someone who contracted the disease and have heard nothing from any tracer even though the county was aware of these cases.

In May the county authorized the hiring of fifty tracers. According to the Daily Gazette, as of December the county had only been able to hire the equivalency of ten tracers since some were part time.

I reviewed the minutes of both the Health Committee and the Human Resources and Insurance Committee of the Board of Supervisors for December, and there is nothing in the minutes about the fact that hiring of tracers has been an utter failure.

Tara Gaston is a member of the HR subcommittee and was present at the December meeting but apparently did not raise any concerns about this situation nor did any other members of the committee.

Putting aside legal and ethical issues, the county’s use of contracting has to be a major obstacle for getting people to apply to be contact tracers.

The county solicitation for contact tracers says they will be paid $25.00 per hour but this is misleading. Those contracted with will have to pay what would normally be the employer’s share for Social Security and Medicare in addition to the employee share (normally deducted from their check). This represents a reduction in pay of at least 7.5%. This does not include other potential items like unemployment insurance. What is probably even more of a problem is that these tracers will have to deal with how much to withhold for both state and federal taxes along with needing to find out how to report these to the respective government bodies. They will probably have to hire an accountant to assist them.

As a further indication of how indifferent the county appears to be to the need to hire people, applicants are told that they must submit their application by mail. So much for modern technology. The county’s website does not provide a contact number for any questions the applicant might have.

Understanding The Legal Limits of “Contracting”

The Internal Revenue Service and the New York State Department of Labor use a number of criteria to determine whether an employer is properly categorizing someone as a contractor.

The following is taken from the New York State Department of Labor website:

Misclassification of Workers

Misclassification occurs if an employer treats people as independent contractors when they are employees. Some employers use this tactic to avoid compliance with: 

Unemployment insurance (UI)

Workers’ Compensation

Social Security

Tax withholding

Temporary disability

Minimum wage and overtime laws that protect workers

NYS Department of Labor

Briefly, a contractor is supposed to work independently to complete some task. In general, their hours, their equipment, and their training is supposed to be their own. Think Uber drivers.

The IRS is involved because employers are supposed to handle withholding and to pay taxes such as those associated with social security and Medicare.

To understand the issues in more depth I offer the following from the IRS website. They use three criteria to determine if a worker is appropriately categorized as an employee or a contract worker.

Behavioral: A worker is an employee when the business has the right to direct and control the work performed by the worker, even if that right is not exercised.

• Type of instructions given, such as when and where to work, what tools to use or where to purchase supplies and services. Receiving the types of instructions in these examples may indicate a worker is an employee.
• Degree of instruction, more detailed instructions may indicate that the worker is an employee.  Less detailed instructions reflects less control, indicating that the worker is more likely an independent contractor.
• Evaluation systems to measure the details of how the work is done points to an employee. Evaluation systems measuring just the end result point to either an independent contractor or an employee.
• Training a worker on how to do the job — or periodic or on-going training about procedures and methods — is strong evidence that the worker is an employee. Independent contractors ordinarily use their own methods.

Financial Control: Does the business have a right to direct or control the financial and business aspects of the worker’s job? Consider:

• Significant investment in the equipment the worker uses in working for someone else.
• Unreimbursed expenses, independent contractors are more likely to incur unreimbursed expenses than employees.
• Opportunity for profit or loss is often an indicator of an independent contractor.
• Services available to the market. Independent contractors are generally free to seek out business opportunities.
• Method of payment. An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time even when supplemented by a commission. However, independent contractors are most often paid for the job by a flat fee.

Relationship: The type of relationship depends upon how the worker and business perceive their interaction with one another. This includes:

• Written contracts which describe the relationship the parties intend to create. Although a contract stating the worker is an employee or an independent contractor is not sufficient to determine the worker’s status.
• Benefits. Businesses providing employee-type benefits, such as insurance, a pension plan, vacation pay or sick pay have employees. Businesses generally do not grant these benefits to independent contractors.
• The permanency of the relationship is important. An expectation that the relationship will continue indefinitely, rather than for a specific project or period, is generally seen as evidence that the intent was to create an employer-employee relationship.
• Services provided which are a key activity of the business. The extent to which services performed by the worker are seen as a key aspect of the regular business of the company.

Appealing To Supervisor Gaston

Why am I pressing Supervisor Tara Gaston on this issue? Supervisor Gaston is both a Democrat and a self described progressive. If anyone would share concerns about these issues I would expect it would be she.

In my original email I had asked her whether the county was reserving the right to determine what hours the contact workers would be working since this would be one of the factors used to determine whether a worker was properly classified. I am still hoping that she will get an answer.

I still hope that she will find her voice and help drive reform at the county regarding contact tracing in general and pursuing the question of illegal contracting of tracers in particular.

Here is my last email to Supervisor Gaston.

I was disappointed by your response of December 29, 2020.  As you may recall, I specifically asked you whether the contact tracers’ hours were subject to control by the county.  The answer to this is important in helping to determine if the contact tracers are appropriately classified as contract workers.  Informing me that the County Attorney has advised you that all requirements have been met is not reassuring given that this is the same County Attorney who assured the Board of Supervisors that the meetings of the special COVID group were not covered by the Open Meetings Law when it was subsequently confirmed that they were.

The posting of the positions on the county website strongly implies that the county has the authority to determine their hours.  The posting states:  

“Weekend and evening hours may be required depending on established schedule and the needs of the County.” The IRS suggests that instructing workers “when and where to work…may indicate that the worker is an employee.”

https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation

It is important to resolve this issue for many reasons. The classification of these workers as contract workers may not only be illegal but may also be contributing to the failure of the county to hire enough staff to do effective tracing. Equally important is the fair treatment of those who sign on to do this important work.

I know that you share my sense of social justice and I appreciate the fact that you have responded promptly to my emails. To date, however,  your emails have not provided any clarification on these issues. I am looking forward to hearing more from you.

Best wishes for a healthy 2021.

Email From John Kaufmann To Tara Gaston