- The Washington Times - Tuesday, May 18, 2004

The Maryland State Teachers Association avoided paying payroll taxes by wrongfully denying employment benefits to its union organizers, according to a recent Internal Revenue Service ruling.

The teachers union, over a two-year span beginning in 2002, improperly classified its own organizers as independent contractors, forcing workers to pay self-employment taxes and freeing the union from paying Social Security, Medicare and federal unemployment taxes, according to an IRS letter to the union dated Feb. 23.

The Washington Times obtained a copy of the letter, which also advised that MSTA could challenge the ruling or apply for relief of the taxes owed.

Neither IRS nor MSTA officials would comment about how much the union owes, but tax accountants told The Times that, based on the number of employees involved and the hours worked, the bill could run as high as $56,000.

“Whatever is required is what we have done,” said Patricia A. Foerster, president of MSTA, a National Education Association affiliate that represents about 60,000 public school employees in Maryland and ranks as the state’s largest union.

She also told The Times that the union’s organizers were properly classified as independent contractors. “There was no misclassification,” she said. “There was a change in status because of a change in the association’s expectations and needs.”

She declined additional comment and directed further inquiries to the union’s legal counsel.

Susan Russell, chief counsel for MSTA, said the union had done nothing wrong.

“We always try to do what we think is appropriate under the law, and if we didn’t, will take necessary steps to change it,” she said. “The reality is we are an employer like anyone else, [but] we bend over on the side of employees.”

Miss Russell declined to say whether MSTA had filed amended tax returns for 2002 and 2003 in response to the IRS letter. “It’s none of your business. It is none of the public’s business,” she said.

The IRS ruling specifically applied to the employment status of Jeffrey J. Dean, who organizes Eastern Shore public school employees and lost more than $3,300 by paying self-employment taxes since 2002.

However, the IRS letter indicated that the ruling likely applied to other employees with the same job as Mr. Dean. The union had about eight organizers working as independent contractors since 2002 and reclassified all of them as “part-time casual employees” a few months before the IRS ruling.

The new employment status appears to satisfy federal tax requirements, though the organizers still lack employment benefits, such as paid vacations, paid holidays, sick leave, medical insurance or collective-bargaining rights.

“I would gladly accept the benefits if they were offered,” said Josh Barmer, who for three years has worked as an MSTA organizer in Harford County. His job also was reclassified, along with Mr. Dean’s, but he couldn’t remember the reason given by his bosses.

As with many of the organizers, Mr. Barmer did not want to discuss the union’s performance as an employer.

Meanwhile, three union employees have filed charges this year against the MSTA with the National Labor Relations Board. The charges include complaints that union officials obstructed collective bargaining and harassed employees, according to federal documents obtained through the Freedom of Information Act.

“A union cannot have the moral high ground if it is going to treat its employees like this,” said Edward C. Fortney, a former MSTA organizer on the Eastern Shore who wrongly had to pay about $1,800 in self-employment taxes over the past two years.

The IRS has advised Mr. Fortney that he can recover the money by filing amended income-tax returns for 2002 and 2003.

Mr. Fortney also claims that he was fired by union officials Feb. 24 because he pressured them to give him employment benefits. His claim is disputed by MSTA officials.

“The hypocrisy is staggering,” said Mr. Fortney, who organized noncertified school staff, such as nurses, secretaries and cafeteria cooks. “I’m supposed to go out there and preach the union cause of protecting workers’ rights and enforcing contracts, but when it comes to myself, I get nothing but grief from it.”

The MSTA’s attorney declined to discuss the complaints.

“We are going to respond to the appropriate agency, which is the National Labor Relations Board,” said Miss Russell. “We are not going to discuss personnel matters in the newspaper.”

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