A Seattle City council member is in a bit of hot water over her handling of campaign staffers.
Kshama Sawant has allegedly structured her employees in a way that allows her to avoid payroll taxes, overtime, and insurance.
Now, none of what she’s accused of allegedly doing is illegal — in fact, it’s very standard and necessary. But her own supporters — the folks who join her in her fight to demonize big business as exploiting the work force — are upset.
We learned of this story over at Publicola — a progressive online offshoot of Seattle Met Magazine.
It turns out Sawant is spending a sizable portion of her campaign funds on five different campaign consultants, as she tries to win her re-election campaign for city council. She’s spent just over $12,000 for the consultants so far and that’s in stark contrast to her colleagues. Jean Godden has spent about $6,000. Council member Tim Burgess spent just over $2,000 on consultants; Mike O’Brien has spent nothing.
And it’s the $12,000 Sawant is spending that has some folks wondering if she’s a hypocrite — because she’s not paying these consultants as employees, she’s paying them as contractors.
So what’s that mean? Why is that a big deal? According to Josh Feit at PubliCola, “there’s no sign of payroll taxes (such as unemployment insurance or social security payments).” And he writes, “Sawant has been skirting the rules by not paying into the public workers’ safety net.”
And that’s where the cry of hypocrisy comes into place. According to the Stranger, its “a practice businesses are known to use in an effort to, as the New York Times points out, ‘circumvent minimum wage, overtime and anti-discrimination laws.'”
Indeed, the New York Times reported:
Companies that pass off employees as independent contractors avoid paying Social Security, Medicare and unemployment insurance taxes for those workers. Companies do not withhold income taxes from contractors’ paychecks, and several studies have indicated that, on average, misclassified independent workers do not report 30 percent of their income.
One federal study concluded that employers illegally passed off 3.4 million regular workers as contractors, while the Labor Department estimates that up to 30 percent of companies misclassify employees.
It’s the exact type of conduct Sawant and her allies have used to criticize “evil big business.”
So why is it OK that Sawant is doing it? How isn’t this hypocritical?
One of her consultants is Phillip Locker. He told the Stranger that this kind of behavior is common practice amongst political campaigns — an ironic position for a candidate that says she’s not a typical politician.
And it also turns out he apparently is illegally working as a consultant. You need a business license to do what he’s doing and the Stranger reports he doesn’t even have one.
“We are absolutely against that,” Locker said about big businesses using contractor status to avoid proper labor practices. But, he adds, “there are some positions [and] some times when it is appropriate for someone to be an independent contractor.”
Now, the truth is, he’s right — this is how politicians work and this is how a lot of businesses work. The difference is he’s asking for a pass on behavior he’d never give a pass to if it was a business doing it.
If Wal-Mart or McDonalds did this, Sawant would be all over it — because when you’re driven purely by an ideological position (whether or not you and I agree with it), you tend not to give a pass.
So my question for Sawant (she hasn’t gotten back to me about coming on — and we have a very, very good relationship with her, she’s been on a dozen times or so), would be when is it OK for a business to utilize contractors the exact way she’s using them?