HomeMy WebLinkAboutMINUTES - 07121994 - IO.3 TO: BOARD OF SUPERVISORS I .O.-3 S,•..L
��,�•r:. o� Contra
FROM: INTERNAL OPERATIONS COMMITTEE Costa
G' •(S
��,� ._.: . •
DATE: .��Z
June 27, 1994 ; �
?rr+
c6U County
cam•
sueJEcr: STATUS REPORT ON TRACKING THE RACE AND SEX OF CONTRACT
EMPLOYEES
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS:
1 . ACKNOWLEDGE receipt of the attached report from the Acting
Personnel Director on the steps which have been taken to
identify and be able to track the race and sex of contract
employees working for the County.
2 . REQUEST the Acting Personnel Director to report to the
Internal Operations Committee on the results of their survey
of County departments regarding contract employees and, if
possible, present our Committee with a summary of the number
of contract employees, the department for which the contract
employees is working and the race and sex of each of the
contract employees . We would like this report made to our
Committee on September 12, 1994 .
BACKGROUND:
On March 22 , 1994 , the Board of Supervisors approved the following
recommendations from our Committee:
1 . ACCEPT the attached report from the Acting Personnel Director
on progress which has been made in efforts to track the sex,
race and ethnicity of temporary and contract employees and
express the Board' s appreciation for the substantial progress
which has been made in tracking various characteristics
regarding temporary employees .
CONTINUED ON ATTACHMENT: Y SIGNATURE:
RECOMMENDATIOWE
MINISTRAT RECOMMENDATION OF BOARD COMMITTEE
APPROVETH MARK DeSAULNIER
SIGNATURE(S):
ACTION OF BOARD ON jn l y 12., 1994 APPROVED AS RECOMMENDED OTHER
VOTE OF SUPERVISORS
.�^ �( I HEREBY CERTIFY THAT THIS IS A TRUE
UNANIMOUS(ABSENT ` 4- ) AND CORRECT COPY OF AN ACTION TAKEN
AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN.
ATTESTED
Contact: PHIL BATC / OR,C RK OF THE BOARD OF
cc: County Administrator SUPERVIS(4(9SAND COUNTY ADMINISTRATOR
Acting Personnel Director
Affirmative Action Officer
BY DEPUTY
I .O.-3
2 . REQUEST the Acting Personnel Director to make a further report
to our Committee at our second meeting in June, 1994,
focussing particularly on progress in tracking the sex, race
and ethnicity of contract employees .
On June 27, 1994, we received a status report (attached) from the
Acting Personnel Director regarding the work which has been
completed to date in attempting to identify all contract employees
and track the race and sex of each of these contract employees .
What remains now is for the Personnel Department, working with the
departmental affirmative action coordinators, to identify the race
and sex of each contract employee and key that information into the
computer and establish a regular reporting system so reports can be
generated on the race and sex of each contract employee.
The Personnel Department believes that they can have this work
completed by September so we can actually see the type of report
that will be generated. We will make a further report to the Board
of Supervisors following that meeting.
t �
s...... Personnel Department
Contra _
Costa
Administration Bldg.
Pine Street
Ma
., Martinez, California 94553-1292
•rra roUK
DATE:' June 23, 1994 V"
t
TO: Internal Operations Committee
FROM: Eileen K. Bitten, Acting Personnel Director
;P)-"*,
By: Lloyd G. Madden, Human Resources Program Manager
SUBJECT: Status Report on Tracking Contract Employees By Department,
Ethnicity and Sex
The Personnel Department has completed its initial review of various records pertaining to the
identification of individuals hired county-wide as contract employees.
Our research included a thorough review of the procedures developed in 1991 by the County
Administrator and County Counsel for determining independent contractors. This procedure
(attached as Exhibit-A)was developed as a result of IRS agents conducting audits of smaller
businesses and counties regarding improper use of the independent contractor category.
As a result of this relatively new procedure, the Payroll Division of the Auditor-Controller
maintains a contract employees' master file for the purpose of paying contract employees
through the County's Payroll system. In that regard,contractors are informed of the necessity
to file a W-4 with the Auditor-Controller. In addition, the contractors are informed that
payroll taxes(i.e., Federal and State withholding and FICA)will be deducted automatically
and paid to the federal and state governments.
All approved independent contractor agreements are sent to the Auditor-Controller to support
payments to the contractor. Agreements that meet the IRS criteria for independent contractors
are sent to the Accounts Payable Division for processing and payment. All others are
considered as contract employees and are processed through the Payroll Division as previously
mentioned.
Based on the above process,we requested a computer generated list of contract employees by
department from Payroll. A facilmile is attached as Exhibit-B. Since the information received
from payroll does not include the ethnicity and sex of contract employees, we are requesting
that information through each department's Affirmative Action Coordinator. Our
memorandum requesting the information is attached as Exhibit-C.
After we have received the requested information, we will be prepared to formalize a monthly
reporting system for contract employees county-wide.
LGM:tm
Exhibit A
OFFICE OF THE COUNTY ADMINISTRATOR
CONTRA COSTA COUNTY
Administration Building
651 Pine Street, 11th Floor
Martinez, California
DATE: February 1, 1991
TO: All Administrative Service Officers and Budget Officers
FROM: Phil Batchelor, County Administrator
By** �Sondra Ryttxuwell, Management Analyst
SUBJECT: NEW PROCEDURES FOR INDEPENDENT CONTRACTORS
Effective immediately, the following procedure should be
implemented when hiring independent contractors. Departments are
responsible for evaluating each new or renewal independent
contractor relationship.
1) Questionnaire for Determining Independent Contractors
The attached revised questionnaire should be used when
determining independent contractor status. If the independent
contractor status is unclear, contact the Personnel Department
and the- County Administrator's Office for further review. When
there is a dispute, the matter may then be referred to County
Counsel. County Counsel may elect to submit an IRS Form SS-8 to
the IRS for a ruling.
2) Withholding and FICA Deductions Addendum to Short Form
Contracts
The attached addendum to the County's Short Form service contract
should be reviewed and Initialed by the contractor and the
department personnel and attached to the service contract. Also,
attached are instructions and procedures to be used when it is
necessary for the Auditor-Controller to process independent
contractors through the payroll system. If you have any
questions regarding the payroll procedures for independent
contractors please contact the Auditor's Office.
Finally, all service contracts should be amended to include the
questionnaire and addendum for the purpose of paying independent
contractor through the payroll system by June 30, 1991. If you
have any questions or concerns contact Sondra Rothwell at
extension 6-2764.
PB:SR:CD
Attachment
QUESTIONNAIRE FOR DETERMINING INDEPENDENT
CONTRACTOR PAYMENT METHOD
All new or renewal independent contractor agreements that do not
meet IRS criteria for independent contract status must be paid
through the-payroll system so that withholding taxes and Social
Security can be deducted (note: this does not apply in the case
of contracts with corporations, temporary help agencies,
partnerships or established businesses with Taxpayer
Identification number) .
For completion by Department Personnel
YES NO
a. Do I. as the employer, have the right to
control not only the result of the work,
but also the way in which itis done? ( ) ( )
b. Am I setting the independent contractor's
hours? { ) ( )
c, Is the independent contractor restricted
from taking jobs from. other businesses
at the same time they are working for me? ( ) ( )
d. Do I or other departments have employee (s)
with similar duties as the independent
contractor? ( ) ( )
e. Does the County supply assistants to the
contractor? ( ) ( )
f. Is the duration of employment for a
specific period of time rather than a
specific job? ( ) ( )
g. Does the County furnish training, tools,
or equipment to the contractor? ( ) ( )
A "yes" answer to any of the above questions will constitute
justification for paying the contractor through the payroll
system. However, the department may yet be able to pay the
contractor through the claim process if all of the following
conditions are met:
• There is a "reasonable basis" for doing so. A department
must show reliance on any of the following: judicial
precedent published rulings, technical memoranda, or letter
rulings issued in connection with past IRS audits of the
County, or consistent long-standing practices by the County.
(As used herein: ( 1) "consistent" means that all persons
-- performing the same or similar functions for the County have
been as independent contractors; and (2) "long-standing"
means since before 1978. )
2
• The position has never been treated as an employee at any
time.
• 1099 - tax returns (similar to a W-2) are filed on a
consistent basis for payments made to the independent
contractor.
If the independent contractor status is unclear, contact the
County Administrator's Office and the Personnel Department for
further review. If the independent contractor does not want
taxes withheld, submit an IRS Form #SS-8 to the IRS. They will
review the independent contractor relationship and decide the
proper status.
Department Responsibilities
Informing the independent contractor, to be paid through the
payroll system, of the necessity to file a. W-4 with the
Auditor-Controller's Office. In addition, the contractor should
be informed that payroll taxes (i.e. , federal and state
withholding and FICA) will be deducted automatically and paid to
the federal and state governments.
Submitting all -new or renewal independent contractor agreements
to County Counsel for approval "as to form" prior to submission
to the Board of Supervisors or the Purchasing Agent for
execution. Pro Forma independent contractor agreements are
available from the County Counsel. They must be accompanied by
the "Questionnaire for Determining Independent *Contractor Payment
Method".
Sending a copy of all approved independent contractor agreements
to the Auditor-Controller to support payments through either the
Accounts Payable section or payroll system.
Revised 2/12/91
3
.r,+.: ..."y. 'r` '.'Yi .,. x f.a �x•Z-.Ys^}'� '...'•:+'L.y«.q"r�'•:'•r
� •C .i .,.• ..yv yi. ...f ./?:�.•^:G�,',:".;.. „tiCx'c�7';" ' :i: 2. + i :Y.. e:
..•`'�`[''f� ! 4.I!Y••T+"•i:•` ,t.: .i.'.1':.� 1 �a• 'v-i'•�:',: =r:=• .s:�;i•t::t_r $r•.:`,,! :; 2 •f: ..a;..;j.,'..-::
3i `�f '�♦�•`w� .rr;:.� tyt. ,
1..tir., f: :<.i.-�..,,;Li+.•�Y,ej..•':T,S y:.:-�- "�, y!,.r:�... .I,r`.:i.. t.
.� ".'. .j.. v;t. .:r: Yi._ .Yi.; n ai;'. ;"t4..arw�7'•�f ,..�.." :-.r.
W. ;•i� .;, qhs.. t - _.;;:, .'':' ir:';
�•`� •:1'r c .rN'i°i� '.�ti•• La fi• r +ti•. `" r:3`t`x.�.... "i. �y
'••!. S. 'L. .ji.,,_ti•'• M� '':}P.w.f<...fi.!S,i 'A'._., a.y...�•r Ji. 's: .14i
1. ! .Tr'". ..y"• "5�e'.as=.. iy"""!-xi. 4i, .,L...•' -•,"�'.. � .,t;:'r '%i.x rj.i.
��a:.t?ti`!:« :J^:4,.:�::! r. - v�•..:)i:.,..,.:r':• :i. .�.•�n`.�.`;�.-.i.:aC:'::: .,: :: .9 •ir..:•:;=_.� Q
-�..• _ .:'f-�5•=�:• .af.Y.,y�t::w.',1•i•«' ri':tl'1'e` :afro•. `.�•} {
"•/: ':r .•S':�k�• '•Y:...'r.• :«::a 'i'".:•':. 1f
�y• `t;•a - i .Z,': - ':V�•i`'fr•'w•.p •••,1. +i` s'�"fa+•.:
• ♦;y''• :Y- - f 'C-�i ytY:. w tit r ��:;;.,,.:: Y j ,�wth� , '�, .:'3-"
' {_ '-.•,• i!♦ "11µw:;'"' 1"_
' •-�: :F' - Cid';,' .'a. _ �t•.+:.
< • � ."'' ;fir='{ _
' �a�." r�a•��fiv Y.
-
Adrnini
� :,
w
Contra Costa County Standard Form 1/91
WITHHOLDING AND FICA DEDUCTIONS ADDENDUM
1. Withholding and FICA Deductions. Notwithstanding Paragraph 14 of the
General Conditions [Paragraph 10 of the Short Form Contract]. for purposes of
withholding state and federal taxes and Social Security only from payments due, the
Contractor will be treated as an employee and the Auditor-Controller will make
deductions for these purposes as if Contractor was an employee. Contractor agrees
that for all other purposes. Contractor is not a County employee and remains an
independent contractor. Contractor further agrees that the County has no
obligation to provide, and Contractor will not be provided, with workers,
compensation insurance and fringe benefits, including but not limited to, vacation,
sick leave, retirement, and health plan coverage.
4 Initial
[Contractor] (County]
PROCEDURES FOR PROCESSING PAYMENTS TO CONTRACT EMPLOYEES
Effective immediately, all new contracts for personal services must be
reviewed to determine whether the contractor is an employee of the County or an
independent contractor under IRS guidelines. This determination is accomplished
by completing a Questionnaire For Determining Independent Contractor Withholding
Status form. This form must accompany each contract submitted to the Board of
Supervisors and/or the County Administrator for approval.
If, upon completion of the questionnaire the contractor is determined to ,be
a true independent contractor, the contract will be set up in the Auditor's Office
Accounts Payable section. Payments required under the contract will continue to
be requested and paid as is currently done.
If, however, the contractor is determined to-be an employee, the originating
department will be required to submit an Independent Contract Employee Master File
form to the Auditor's Office Payroll section. This form, when completed, will
allow the Payroll section to set up the contract/employee for payment through the
County payroll system. An Oath of Allegiance form and a W-4 form Will also need
to be submitted to the Payroll section before any payments can be made.
Payment Process for Contract Employees
The basic input document for contract employees will be thestandardD-15
Demand-form. The form must include a description of the services prdvided, the
amount to be paid, the contractor's signature and the authorization of the
department. Completed forms must be submitted to the Payroll section on the same
schedule as employee time cards (see Information Bulletin "Schedule of Time Report
Due Dates").
Note that only payments for the personal services of contract employees will
be paid through the payroll system. Contracts that provide for reimbursement of
other miscellaneous expenses (e.g. mileage, various office expenses, etc.*) will
require two D-15's to be submitted; one to Payroll -for personal services and
another toAccountsPayable for the miscellaneous expense items. This split
handling is necessary because all reimbursements paid through Payroll will be
subjected to tax withholding; however, miscellaneous expense reimbusements are
generally non-taxable.
Other Information
A. Contractemployees paid through the Payroll system will have State and
income ncome taxes withheld based on their W-4 status. In ,addition,
the contractor will have FICA taxes withheld. The County department
employing the contractor will be charged for the employer share of the
FICA taxes.
B. Payment. through the Payroll system for personal services will be charged
to expenditure sub-account 2310. The employer share of FICA will be
charged to sub-account 1042.
C. The gross payment amount, withheld amounts and the net payment amount
will be included on the Pay Register (which is distributed to all depart-
pents along with the payroll checks). In addition, the gross payment
and the employer FICA amounts will be shown in the Payroll Cost Detail
reports.
D. The contract employees' departmental payroll clerk will be responsible for
picking up the paychecks at the Auditor's Office and distributing the
checks to the contract employees. Pick up time will be the same as the
regular County employees payroll .
INDEPENDENT CONTRACT EMPLOYEE MASTER FILE
W-4 ATTACHED
OATH ATTACHED
i
CONTRACT EMPLOYEE FOR THE DEPARTMENT
BUDGET UNIT ORG LOCATION CODE
CONTRACT EMPLOYEE'S NAME
SOCIAL SECURITY NUMBER
CONTRACT DURATION FROM THRU
TYPE OF PAYMENT
FIXED MONTHLY AMOUNT$
FIXED HOURLY RATE
OTHER
TOTAL AUTHORIZED CONTRACT AMOUNT$
CONTRACT REFERENCE NUMBER
PLEASE INDICATE: NEW
RENEWAL
MODIFICATION
SIGNATURE OF APPOINTING AUTHORITY
�:xcx.,�.ur2arwucccJEROME
aa:ca:axar:
EMPLOYEE NUMBER
CLASS CODE :DALAdLj 1"I US U� `\ po
INSURANCE COVERAGE- THROUGH
6
INTRODUCTION
Recently, IRS agents have been conducting audits of small
businesses . and Counties .with one goal in mind. Identify
employers who should have people on ' their* :'payroll with F•.I.C.A.
and income tax withholding, rather' than classified'- as independent
contractors without those taxes withheld.
All the fuss comes from the, government' s- contention ;that,.it is
loosing millions of dollars in payroll taxes- each•.year because. of
improper use of the independent . contractor category. - Employers
who have used that designation incorrectly, "are being billed for
back payroll. taxes {social " security, unemployment insurance, ,
etc. ) plus large fines (running . into five and six digits) and .
. interest on the amount which should have-been :withheld.
In order to avoid future problems with this issue we . need to
ensure we are properly classifying',. employees. The IRS and EDD
base their employee versus independent contractor -determinations
on 20 "common law. tests" or criteria* that" may carry different
weight, depending on the facts and circumstances in. a, particular ,
situation. The underlying factorin all of ' these. tests centers
around the amount of "control" the • employer has over. the
individual working for them. The right to ,this control is the
dominant issue,. .not that control was actually exercised,
LIST OF•CRITICAL COMMON LAW FACTORS
A copy of these common law factors is attached..
One of the basic issues - that ' is -examined in determining
independent contractor status is the. employer' s right of control.,
If a business has the right to direct, and control the worker•; -
that individual should be classified as 'an. employee and not as an
independent contractor. Relevant questions include:
1. is the . person. provided training to enable -, him or her to
perform a job in a particular method' or -manner?
2. Is the person providing services required to comply with
instructions about when; where, and how the work is to be
done?
3. Are the services provided integrated into the business
operation? -
4., Must . the' service be rendered personally by the supposed
independent contractor?
5. Does the person providing services have a significant
investment in facilities used to perform services?
' b. Does the person make his or her services available to the
general public?
7
A common sense- test to use with each of the . people you have
classified as independent contractors is; first, do they have a
business license? . If so', one.' tan argue -they ,are in business.
Secondly, do. they get less than 'half of their yearly income from
the county? . Mbst independent contractors legitimately work for
many different .employers during- the year. Thoughnotfool;-proof ,
these two test questions -can ,help .one decide if you have an issue
to pursue. Please contact County Counsel's ,Office
Of f ice if you have
any questions regarding interpretation of these factors.
CONTRA COSTA COUNTY'S NEW POLICY AND PROCEDURE FOR DETERMINING
INDEPENDENT- CONTRACTORS'- WITHHOLDING STATUS:
Effective at 'the beginning of the' tax year,. Janu' ary 1, 1991, all
independent contractors whd *are determined*-' to require - tax
withholding, on the basis of the common law tests referred to
above, will be paid through thd County pay*
roll system with
F.I.C.A. alid- income tax withholding processed.* automatically in
the same way- as for regular county employees.' To determine which
service contracts require withholding, the County will- use the
attached questionnaire. In the future, each department should
fill out a questionnaire. for, each , service contract. Guidelines
to use in answering the questions on the questionnaire are alto .
attached. . Completed questionnaires' must be .*signed '-by the
department representative charged with this project and by the
contractor.
8
INDEPENDENT CONTRACTOR'S PRESENTATION
20 COI.MON LAU FACTORS
CRITICAL FACTOR 1. NO INSTRUCTIONS
Contractors .are not required to follow, nor are they
furnished with instructions to accomplish a J ob. They
can be provided job specifications --by the hiring firm.
CRITICAL FACTOR 2. NO TRAINING
Contractors typically do not receive training by the
hiring firm.' They use their own methods to accomplish
the work.
FACTOR 3. SERVICES DON'T HAVE TO BE RENDERED PERSONALLY
Contractors are hired to provide a result and usually
have the right to 'hire others to do the actual work.
CRITICAL FACTOR 4. WORK NOT ESSENTIAL TO THE HIRING FIRM '
A company's success or continuation should not depend on
the service of outside contractors. . An example violating
•this would be a Taw -.firm which called their lawyers
i r,ci�;�e:sdent
contractors.
CRITICAL FACTOR 5. OLIN WORK HOURS
Collcrazcors' sec rht!ir owti wort: I,uurs.
FACTOR 6. NOT A CONTINUING RELATIONSHIP
Usually. contractors don't have a continuing relationship
wi.th •a hiring company. The.relationship can be frequent,
but it must' be at irregular..intervalt; on call, or
whenever work is available. Warning:* -Parc-time.
seasonal, or short duration relationships have nothing to
do with independenz contractor status.
FACTOR, 7. CONTROL THEIR OLIN ASSISTANTS
Contracrors shot,l.iil' t hire, sttpe vise, or pay assistants
,at the direction of the hiring cbmpany. If assistants
are hired, it shoulJ ire at Ilia contractor's sole
discretion.
FACTOR 8. TIME TO PURSUE OTIiER WORE
Contractors should have 'enough time available to pursue
other gainful work.
9
FACTOR 9. JOB LOCATION
Contractors control -where they work. If they work on the
premises of the hiring company, it is not under that
company's direction-or supervision.
FACTOR 10. ORDER OF WORK SET
Contractors -determine. the order and sequence that they
will perform their work.
FACTOR 11. NO INTERIM REPORTS
Contractors are hired for the final result . . . and
therefore should not be asked. for progress or interim
reports.
FACTOR 12. PAYMENT TIMING
Contractors are paid by the job, not by time. Payment by
.the. job can include periodic payments based on a
percentage of job completed. Payment can be-based on the
number of hours needed to do. the job times a fixed hourly
rate. However, this should be determined before the' job
commences_
FACTOR 13., •WORKING FOR MULTIPLE FIRMS
Contractors often work for more than one firm at a time.
FACTOR 14. BUSiNESS EXPENSES
.'.��i► ►:►.-►nis are pe►►erally responsible for tl►eir
incidi:Il :a1 expenses.
FACTOR 15. OWN TOOLS-
Usually contractors furnish their own tools. Some hiring
firms have leased equipment to their independent
contractors - so that they 'could show the contractor had
their own cools and an investment in their business (see
w16). This strategy won't work if the lease is for a
nominal amount or can be voided by the hiring firm at
will. In short,. the lease must be equivalent to what an
independent business person could have obtained in the
open market. For more information, contact- a labor
attorney.
10
FACTOR 16. SIGNIFICANT INVESTMENT
Contractors should be -able' to perform their services
Without the hiring company's ..facilities (equipment,'
office -furniture. machinery, etc.) . The' contractor's
investment in his trade must be real, essential, and
adequate. (Please see X15 above)
FACTOR 17, SERVICES AVAILABLE TO GENERAL PUBLIC
Contractors make their services available to the general
public by one or more of the following: _
* having an office. and assistants
*• Having business signs
* Having a business license
* Listing their services ,in a business directory
* Advertising their services
FACTOR 18. POSSIBLE PROFIT' OR LOSS
Contractors should be able to make a profit or a loss.
Employees can't suffer a loss. Five circumstances show
that a profit or loss is possible.
* If the contractor hires, directs, .and pays assistants
* 1f the contractor has his own office, equipment,,
materials, or facilities ,
* If the contractor has continuing and reoccurring
liabilities*
k If the contractor has agreed 'to perform specific. jabs
for prices agreed upon in advance ,
if the contractor's services a€fect 'his own business
reputation
CRITICAL FACTOR 19. " LIMITED RIGHT TO DISCHARGE.
Contractors can't be fired so long as they produce a
result which meets the contract specifications.
FACTOR 20. NO COMPENSATION FOR NON-COMPLETION
Contractors are responsible for the satisfactory
completion of a jolt' or* they may be lebrally obligated to
compensate the hiring firm for failure to complete.
11
FEDERAL "SAFE HARBOR" RULES
The IRS has special independent contiactor .rules which "exempt" certain
workers from the 20 common .law factors if the following three statements are
true: (3)
1. CONSISTENT TREATMENT SINCE 1977
Since December 31", 1977, you (the hiring firm) and your predecessor have
consistently treated individuals doing similar work as an independent
contractor.
2. FILED REQUIRED 1099-S SINCE 1978
* You and your predecessor never treated your current "independent
contractor" as an employee; and
* Since December 31, 1978. you- have -filed all the required federal tax
returns (form 1099-Mise) for independent contractors.
3. REASONABLE-BASIS
There was a reasonable basis for treating the worker as an independent
contractor. Reasonable basis means:
* You relied on similar judicial rulings, IRS rulings,. or IRS technical
advice (the written response you get when you submit an SS-8) ; or
* In a past IRS audit', you were not charged fines for treating workers
doing' s similar type of work as independent contractors; or
* It is a recognized practice for a large segment of your industry to
treat certain types of workers as independent contractors.
WARNING: These safe harbor rules do not -apply to:
* Technical' services personnel performing services for their hiring firm's
clients. (engineers, designers, drafters, system analysts, computer
programmers, and,,other similarly skilled personnel) .
* California taxes, workers' compensation, or legal liability.
Without safe harbor protection, hiring firms' must show that their independent
contractbrs'comp'ly with the common law factors.
(3) If you cannot meet the three "safe havens" you may nevertheless be
entiiled to exemption if you can demonstrate, in some other manner, a
reasonable basis for not treating the individual as an employee. (IRS Ret :
Procedure 85-18) The IRS procedure indicates that agents should liberally
construe what constitutes a "reasonable basis" in favor of the taxpayer.
RAD '24 50
12
FACTORS TO' CONSIDER IN ANSWERING QUESTIONS IN SECTION B OF THE
QUESTIONNAIRE FOR DETERMINING CONTRACTOR WITHHOLDING STATUS
1. aUPERVISION
If the County has employees. performing substantially the same work
with the same degree of supervision, the answer should be "yes. "
If the department regulates hours of work, then the answer is
probably "yes."
If the individual acts for the County as a "deputy" (deputy.
controller, deputy court clerk, etc. ) , the answer is, "yes."
If the individual may be directed to do a variety of odd jobs that
differ from the primary activity, then the answer is probably "yes. "
If the independent contractor attends regular staff meetings; the
answer is probably 11yes. 14
If the County's oversight is limited to ensuring that it conforms to
the agreed upon product,- timeliness, etc. , then the answer to the
question is "no. "
If the individual is subject to the will and the control of the
County both as to what shall be done and how it shall be done, then
the answer. is- "yes."
2. TRAINING
If the County. pays for external training such as. seminars, college
courses, and conferences, the answer to this question is "yes."
If the County provides internal training other than rudimentary
orientation, the answer should be "yes."
3. RESIGNATION
The question is self-explanatory.
4. PLACE OF .WORKJTOOLS
If the County requires that the work be performed at a County
location and ,provides the tools. required to perform the job, the
answer to this question is "yes."
If the individual maintains an office and could provide the tools,.
but uses County tools and facilities as a matter of expediency
rather than as a requirement, the answer is probably "no."
If tools are not required, base your answer on facilities alone.
If tools are provided by the individual, but the County agrees to
perform maintenance on the tools, . the answer could be "yes. "
Your answer to this question should also consider tools used by
assistants, whether employed by the County or the independent
contractor.
13
Tools include standard office equipment such as typewriters,
computers, and calculators, as well as tools which are specific to
the job.
5. LENGTH OF RELATIONSHIP
Relationships are generally continuing if there is no contractually
specified output of a product or service and the end of the
arrangement is based upon the passage of* time rather than the
completion. of a product or service.
6. ABILITY TO PROVIDE SERVICES TO OTHERS
The prohibition referred to in this question need not be in writing.
"No" answers may also be based on the underlying concept that the
individual does -not have the time available to, providethe services
to others. Answers are often dependent upon the.'nature of the
services being provided and common practices associated with
obtaining such services from independent contractors.
For example, if someone provides* landscape maintenance services to
the County 4 hours per week, services can be provided to others.
However, if someone works 40 hours per week providing the same
service, .services cannot be provided to others.
7. EVIDENCE THAT PRODUCT OR SERVICE IS PROVIDED TO OTHERS
Responses to this question should. be based on actions taken by the
individual that indicate that the person is 'in the "business" of
providing services to multiple clients. Factors to consider
include:
Does the individual have a business license?
Does the individual have a professional license or
designation provided by the state or some other regulatory
organization?
Does the individual maintain an office -which is available
for meetings with clients?
Does the individual advertise the availability of the
product or service in usual sources (newspapers, trade
journals; yellow pages, -etc. )?
Does the individual maintain policies of insurance
covering product lability, performance bonds, errors and
omissions, etc. , or an alternative, -does the individual
assume a financial risk associated with providing the
service or product?
8. EAYMENT TERMS
"Lump sum" contracts which provide for periodic progress payments or
which provide for the lump sum to be modified in the event of
changes in the scope of work are still lump sum contracts.
If a payment is based upon a "piece rate" method, such as. "per
-typewritten page" or "per patient" , the answer to this question is
"no."
9. USE OF ASSISTANTS
This question is self explanatory
14:
' Exhibit - B
t ,
t ,
, t
t ,
t ,
I ,
I I
, t
I ,
� , 1
CV3 -
Go
r rn
y I t
O
F � �
z '
O
W to
U o i 8 i
In W n
Hto
z a ; % ^
bA co V]
I t CV M Ln ce) � W
' v 1-1
q P4
(1) C) v u C0 ^ U) ^ ^ O
W a a v N x m
^" vv
� 0 ani >E-4 A4
.�
CC
Qt r-� d C: .'G'
j P4j 0a 4) p r0 'J U F
t 0 cd O O Cf 4 $�4 O 0 9 O O O 4 U O
U ; A z i H U H G4 Ca cn vA pa U p, F
t t
t ,
,
t t
t ,
t t
t t
tLn to 00 t- O cq lam. O O 00 O O
Ori M co t- O tfl� O to UM M CO O di 00 N CD
O O O O r•I N C7 M M . . . to to tD CO 00
P ; o a a O n O a O O O O O O 0 O O O
1 I
t a
t
i A O 1 000
i U U
1 00
' Exhibit - C
SEL Personnel Department
Contra ..�_.-._,:k--��..�F.
l i.
Costa�,(�c / + Administration Bldg.
� is 651 Pine Street
County .. . : :a
Martinez, California 94553-1292
5j"a CUUK�
Date: June 23, 1994
TO: Departmental Affirmative Action Coordina sJ
FROM: Eileen Bitten, Acting Personnel Director
SUBJECT: Tracking Individuals Hired As Contract Employees
Sometime ago (November 1992) the Board of Supervisors directed the Director of
Personnel to develop a system for monitoring the appointment of temporary and
contract employees, "commonly referred to as independent contractors" by
department, ethnicity and sex. Several months ago we completed the development
of a centralized reporting system through Data Processing that tracts temporary
employees on a monthly basis.
Over the past few months we have been discussing with payroll division staff in the
Auditor's Office and some departments that hire individuals on a contract basis, our
directive to establish a tracking system for contract employees similar to the system
for temporaries mentioned above. As a result of our research, we have identified
one hundred forty-seven contract employees paid under Contract Employee Payroll
Class through our payroll system. In order to establish the tracking system, we
need additional information.from appointing departments.
Attached you will find a forms) we are asking departments with Contract Employees
to complete. This information will enable us to complete the development of our
Contract Employees reporting system.
Please return the completed form(s) to the Personnel Department, Attention Lloyd
Madden, on or before July 15, 1994. If you have any questions please call Lloyd at
646-1732.
EB:LGM:cs
cc: Etyma Kuevor
� � 1
1 � !
1 ^ 9
Y Q) -
t
91
r U i
! i
1 � �
1
1 � i
1
U � �
V ++ r U, t
U
U U
1 1
r
t
s
t
!
r !
s � �
r t
r t
r r
r r
t t
r ►
i F
+j i 43 i
t p r
Cd
Q