By Lou Anne Wolfe
Journal Record Staff Reporter
A terse letter from the U.S. Department of Labor about a new
independent contractor rule approved by the Oklahoma Employment
Security Commission strongly suggests the commission change or
revoke the rule.
The June 30 letter, addressed to commission Executive Director
Wayne Winn, from Dallas regional labor department Administrator
Floyd E. Edwards, asks for a response by July 15. The commission
is scheduled to meet Thursday morning at Fountainhead Resort
Hotel in Checotah, and the issue is on the agenda.
Ben Blackstock, manager of the Oklahoma Press Association and
an ardent supporter of the new rule, said: "We ain't giving up
Legal action could be taken against the U.S. Department of
Labor, he said.
"We've put up with the Department of Labor on this simple
issue far too long," Blackstock said.
Failure by the Oklahoma agency to act on the directive of the
regional labor department office could mean an eventual loss to
Oklahoma of some $18 million in federal funding to run the
Oklahoma Employment Security Commission, according to Jim
Sullivan, deputy director for unemployment insurance with the
Additionally, the federal labor department could revoke the
4.5 percent offset credit for state unemployment taxes that
Oklahoma employers currently receive on their federal
unemployment taxes, Sullivan said.
The offset credit results in Oklahoma employers paying 0.8
percent in federal unemployment taxes, compared with 6.2 percent
they'd pay if the credit were unavailable.
The labor department directive is the latest volley in a
controversy over exactly which employees can be classified as
independent contractors for unemployment tax purposes.
Some Oklahoma employers campaigned for a new and clearer
independent contractor rule because they said despite goodith
attempts to follow Oklahoma law, employment security commission
auditors were charging them penalties and back taxes for
The U.S. Department of Labor, however, says the new rule does
not conform with federal law. If the state commission fails to do
something by July 15, the issue will advance to the U.S.
Secretary of Labor in Washington, D.C., Sullivan said.
"There have been states that have gone as far as conformity
hearings, but no one has ever won. They've always given in,
because they stand to lose too much," he said.
The money losses to Oklahoma's commission, and the tax hike to
employers on their federal unemployment taxes, would not happen
for a few years, pending resolution of the matter, Sullivan said.
He said the issue would be up to the labor secretary, and could
go either way.
However, Sullivan did acknowledge that the position taken by
Dallas regional officials has the backing and support of the
After outlining the aspects of Oklahoma's rule that federal
regulators find troublesome, Edwards' letter to Winn said: "These
issues, which attack the foundations of the unemployment
insurance program, can only be resolved by rescission or
modification of the rule. We reiterate that this situation is
extremely serious, and that we must have your response to the
information requested by July 15, 1992, which is fourteen (14)
business days from the date of this letter."
Edwards' letter essentially complained that under the Oklahoma
rule, individuals signing a contract with an employer that would
classify them as independent contractors would throw away their
right to unemployment compensation coverage. …