The Times Shell Game

http://www.futureofcapitalism.com/2011/12/the-times-shell-game

The New York Observer's Foster Kamer has a dispatch about how the New York Times has "bought out" several of its veteran employees, while retaining them as "contractors" to do the same jobs they were doing before. It quotes an email from Times staffer-turned-contractor Diana B. Henriques:

You may hear that I have accepted the latest NYT buyout. I have, but I am not retiring or leaving the Times. I was immediately offered and accepted a contract to work as a contributing writer – same email, same phone, same address, an NYT cubicle, etc.

And the Observer article further notes:

Ms. Henriques is not the only one with a contributing gig moving forward with the paper; Clyde Haberman [who also took the buyout] will continue to write his Metro column for the paper's CityRoom blog, The Day, as a freelance contributor, thrice-weekly (as opposed to his previous schedule of appearing four-times-a-week).

The Observer doesn't connect the situation with the Times's previous news coverage of the independent contractor issue. The paper's Caroline Rampell wrote last year: "The misclassification of workers as 'independent contractors' when they should really be treated as employees is a persistent problem."

The Times's Steven Greenhouse, also last year, wrote an article under the headline, "U.S. Cracks Down on 'Contractors' as a Tax Dodge":

Many workplace experts say a growing number of companies have maneuvered to cut costs by wrongly classifying regular employees as independent contractors, though they often are given desks, phone lines and assignments just like regular employees. Moreover, the experts say, workers have become more reluctant to challenge such practices, given the tough job market.

Companies that pass off employees as independent contractors avoid paying Social Security, Medicare and unemployment insurance taxes for those workers.

Mr. Greenhouse's article quoted the attorney general of Ohio, Richard Cordray, as calling this misclassification "a very significant problem" while noting that "Misclassifying can mean a 20 or 30 percent cost difference per worker." Mr. Cordray has since been nominated by President Obama to head the new consumer financial protection agency.

There's a related issue, which is that this isn't just tax-savings driven, but stock-market driven. If the Times tells analysts or the SEC that its headcount of employees is down, but in fact it has the same workers doing the same jobs but just reclassified as "contractors," it's certainly possible that investors might be somehow misled.

I'm a big believer in the right of contract, so if the Times and Clyde Haberman or Diana Henriques want to agree between themselves that Mr. Haberman and Ms. Henriques, while doing the same work they were doing before, are now magically contractors rather than employees — "same email, same phone, same address, an NYT cubicle, etc." — I have no problem with it whatsoever. What I do have a problem with is the Time running news articles characterizing as a "tax dodge" or a "persistent problem" a practice in which it is itself engaged in. That's just blatant hypocrisy. Or, I suppose, welcome candor.

by Editor  |  Dec 19, 2011 at 5:33 pm Related Topics:  Press, Regulation, Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list