Wanted: Someone to define what is an independent contractor.
Report to: State Industrial Commission.Salary: None, except the undying gratitude of workers and employers who apparently now are in a tizzy over what constitutes an independent contractor.
It became apparent during Thursday's commission hearing that there is inconsistent application of definitions between federal and states agencies. It also was apparent that many people blame government intervention for many small business failures.
Because of the complexities in how independent contractors are used in various professions, the commission is facing a momentous task in trying to come up with a definition.
One of the problems that surfaced at the hearing revolves around the Utah Department of Employment Security ruling that people formerly operating as independent contractors were suddenly classified as employees, making some businesses responsibile for massive back payments of workmen's compensation payments, unemployment insurance premiums and other taxes.
The entire spectrum of government intervention is ruining the free enterprise system and it's the reason many businesses have collapsed, several people testified.
After three hours of testimony, the problem can be boiled down to this typical example: A company hires people to demonstrate products in a supermarket. Is the company liable to pay unemployment insurance premiums and other worker-related obligations.? Is the person an independent contractor willing to cover his own taxes? Is the supermarket where the demonstrations take place under any obligation?
These are the questions the commission will address while attempting to define what is an independent contractor, said Chairman Stephen M. Hadley.
Terry Morris, who along with her husband operated an auto repair business, said they were hassled by Utah Department of Employment Security employees who said a man they hired to help out when Glen Morris had health problems was an employee and not an independent contractor.
Even though the man signed a contract that he would be responsibile for his own work-related contributions, Morris said the department ruled he was an employee and the burden fell on the Morrises.
Ivan Wahl, a certified public accountant, said he formed a company and hired some people to do tax returns, but they were sitting around some of the time doing nothing so he fired them and rehired them as independent contractors to be paid for specific work.
Then he was required by government agencies to explain to whom various checks were written. Government officials ruled they were employees and Wahl was responsibile to pay the various contributions. He refused and at one time the Internal Revenue Service billed him for more than $20,000.
Sandy Cohn, who operates a product demonstration business, said the IRS ruled her demonstrators were independent contractors, but state agencies consider them as employees and she is liable for contributions. She said this situation is a national problem.