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Evaluation, Contract Extension…Oh and about that whole W-2/1099 problem… Vallas in Wonderland

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By Jon Pelto from Wait, What {except for my interjection – JDK}

“Sentence first, verdict afterwards” shouted the Queen

“Stuff and nonsense!” said Alice loudly. “The idea of having the sentence first!’

“Hold your tongue!”’ said the Queen, turning purple.

According to the Bridgeport Board of Education website, the sudden special meeting scheduled for tonight appears to have been moved to tomorrow and instead of evaluating superintendent Paul Vallas’ performance and discussing extending his contract, the agenda has been changed to read:

“Review Evaluation Criteria with Superintendent

Plan Public Hearing and Collecting Public Input.”

Criteria and public input before evaluation and contract extension? Will wonders never cease!

{I wonder if Jon’s previous post had anything to do with this – JDK}

But alas, just as suddenly, a new agenda item has appeared.

The meeting will start with the item – “Resolution on W2 employees.”

Readers of Wait, What? will recall a dozen or so no-bid contracts that Paul Vallas signed soon after his arrival in Bridgeport. The majority of those contracts were to retain the services of people who worked for Paul Vallas’ private consulting company or individuals he worked with in other cities.

It turns out that more than a year later; many of those employees continue to be paid as consultants rather than employees of the Bridgeport Board of Education.

Board of Education members and others have raised the question about the legality of paying people as consultants when they appear to be employees.

As far as the IRS is concerned it is no small matter. As every small business person knows, failure to use the correct employee status can lead to significant fines for the employer, in this case the Bridgeport Board of Education.

With all the extra legal help that Vallas has brought in to support his work, you’d think the problem would have been easily resolved. In 2012, the Board of Education reported spending $434,000 on outside lawyers. Although it still appears the Board of Education has yet to approve a school budget for 2013, Vallas’ proposed budget called for spending $781,250 this year on outside legal counsel (an increase of about 80 percent) and Vallas’ recent December Financial Update Report (which can be found on the Board of Education Website) estimates that they will now spend at least $1,050,000 on outside legal assistance (something like 35% higher than budgeted.)

But Team Vallas has maintained that the ten to twelve individuals are not employees, they are consultants and should continue to be paid as such.

But here is the problem…

Connecticut is one of the 14 states that is part of the United States Department of Labor’s Misclassification Initiative…an initiative created by Vice President Biden’s Middle Class Task Force.

Really, no lie!

Here is the information, as taken directly from the U.S. Department of Labor Website. It is worth the read, if for no other reason, the underlying humor of the entire situation:

“The misclassification of employees as something other than employees, such as independent contractors, presents a serious problem for affected employees, employers, and to the entire economy. Misclassified employees are often denied access to critical benefits and protections – such as family and medical leave, overtime, minimum wage and unemployment insurance – to which they are entitled. Employee misclassification also generates substantial losses to the Treasury and the Social Security and Medicare funds, as well as to state unemployment insurance and workers compensation funds.;

The Department’s Misclassification Initiative, launched under the auspices of Vice President Biden’s Middle Class Task Force, is making great strides in combating this pervasive issue and to restoring these rights to those denied them. In September 2011, Secretary of Labor Hilda L. Solis announced a major step forward with the signing of a Memorandum of Understanding (MOU) between the Department and the Internal Revenue Service (IRS). Under this agreement, the agencies will work together and share information to reduce the incidence of misclassification of employees, to help reduce the tax gap, and to improve compliance with federal labor laws.

Additionally, labor commissioners and other agency leaders representing fourteen states have signed MOUs with the Department’s Wage and Hour Division, and in some cases, with its Employee Benefits Security Administration (EBSA), Occupational Safety and Health Administration (OSHA), Office of Federal Contract Compliance Programs (OFCCP), and the Office of the Solicitor. (See interactive map of participating states). The Department is actively pursuing MOUs with additional states as well.

These MOUs will enable the Department to share information and to coordinate enforcement efforts with participating states in order to level the playing field for law-abiding employers and to ensure that employees receive the protections to which they are entitled under federal and state law. Employers that misclassify their employees may not be paying the proper overtime compensation, FICA and Unemployment Insurances taxes, or workers’ compensation premiums.

That’s right. Connecticut is part of a national initiative designed to “level the playing field for law-abiding employers and to ensure that employees receive the protections to which they are entitled under federal and state law.

And considering the federal criteria make it pretty damn clear that Vallas’ people are employees and not consultants, you’ll definitely want to check back to hear about what happens at tomorrow’s special Bridgeport Board of Education meeting.

No, you are right. You can’t make this stuff up.

Categories: General

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