The government is cracking down on businesses that file a lot of 1099s, and that includes Utah Stories.
We use a lot of contractors. Our magazine relies on freelance writers, and we hire contractors to deliver our magazines statewide. I believed we were compliant. But a letter that our colleagues received from the Department of Workforce Services reads: “To be classified as an independent contractor you must meet two conditions. First, you must be established in your own business as the same work you did for this employer. Second, you must be free from their control and direction.”
This makes nearly every contractor I use to produce great stories invalid. None of my freelance writers own their own journalism business. And none of them are completely “free from [our] control and direction.”
These letters might be scary enough to force someone to give up the world of “independence” and become an “employee” (chained to a desk where they are safe), but businesses like Utah Stories do not use independent contractors for nefarious reasons.
We at Utah Stories love bureaucrats individually. We have people who assist us each month who are employed by various government agencies. This is not an attack on individuals, including the congenial caseworker at Workforce Services who is investigating Utah Stories.
But those who believe that going after free magazines for not making their contractors employees is a complete waste of taxpayer money. We write stories about small businesses, entrepreneurs, farmers, artists, communities and development projects. Our goal is to make Utah a better place for small business. Our charter reads, “We will protect small businesses and the free market when politicians and corporations enter into collusion to inhibit competition or assume control.”
There is nothing corporations love more than laws that thwart competition. According to the Small Business Administration, in the past eight years small-business start-ups have been at an all-time low. Small businesses, not giant corporations, have always been America’s economic engine, but grassroots job and wealth creation isn’t happening as it should be. Now Workforce Services, designed to help create jobs, wants to snub out even more start-ups?
When I launched Utah Stories in the midst of the 2008 recession, I realized that if I became a corporation and hired employees right away, I would need to borrow at least $150,000 to survive 12 months. Where would I get this money? Nobody would lend it to me because, “Print is dying,” and “A new print publication would be DOA.” Utah Stories would never have come to be unless I could find another way. So I chose to rely on contractors.
In 2008, the marketplace was saturated with talented journalists working less-fulfilling jobs. A flood of applicants wanted to produce great stories or edit for us on a freelance basis. It was a less-than-ideal business model, but I decided to run it as what I always called “an experiment.”
But if the Division of Workforce Services decides that we are non-compliant, I find comfort in the fact that the Salt Lake Tribune, Deseret Connect (owned by the LDS Church), City Weekly, SLUG and Catalyst are also non-compliant, for they hire freelancers without businesses whom they direct as well.
If you, or a business owner you know, is suffering from the same battle, we would love to hear from you.