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Home My WebLink About2000-05-08 00-181 ORDERItem No. 00-191 Date: 5-8-00 (beam/gubject: ORDER, Authorizing the City Manager to Execute an Employment Agreement with Charles R. Mitchell to Serve as Risk Management Officer Responsible Department Finance Charles Mitchell has served as Me City's Was Control Officer since 1991. His employment status has been as an independent contractor. oven his wort relationship with the CN and recent In Interpretations of Me definition of Independent contractor, Mr. Mitchell an nen longer be classified In this manner. The City does, however, desire to retain Mr. Mitchell to puede a variety of risk management functions. The attached Council Order would authorize the City Manager to engage Mr. Mitchell under an employment contact in the stats as a City employee. This arrangement will allow Me City to retain Mr. Mitchell while satisfying In regulations concerning Me appropriate classification of those who work for the City. Department Had Managers Comments: This Item was reviewed and recommended for approval by Me finance Committee at its May 1, 200D Yl�i. meeting. v_z.A City Manager Associated Information: Council Order; Background Memorandum dated 9-29-00 and 10-1&00; employment agreement provided under separate cover. I�fiFliRir.ft ;tT Legal APpmsal: city solicitor Introduced for _. Passage C FFr _ First Reading Page _ of _ Ref mal V AwigwdtoComcilw Mevcnecce xa> B. zaoo CITY OF BANGOR (TITLE.) Authorizing the City Manager to an Employmen Agreement ith ChArIeS R MitchelltoServe as Risk ManagerneM Officer � ORDERED, THAT the City Manager Is hereby authorized th execute an Employment Agreement with Charles R. Mitchell to serve as Msk Management Officer in accordance whh the terns and condidons set forth In the agreement between the Parties. ] CTTY COMM tl y 8. 2000 Passed C [ fie. Aathorieiog the City Nauager to Execute an employment Agreement: with Charles H. Mitchell t0 Serve as Risk eanagemat Officer To: Finance Committee From: Robert W. Farrar, Assistant City Manager Subject: Charles R. Mitchell — Employment Status Date: April 28, 2000 As you may be aware, Charlie Mitchell has served the City as toss Control Officer since 1991. His employment status with the City has been as an "independent contractor", not as a City employee. His agreement with the City calls for 30 hours per week at $90 per hour. Recent changes by the IRS concerning the interpretation of Independent contractor status caused the City to review all situations invowing independent contractors (see attached memo dated 10-18-00). The end result of that review was a determination that Charlie's status did not meet the minimum established requirements to continue as an independent contractor. The risk to the City in continuing this arrangement could be substantial — fries, payment of back payroll taxes for both the City and employee, and interest on those amounts. In order to avoid this situation, we are proposing to engage Charlie as an employee with an employment contact, a copy of which is attached. The contact follows the standard format which has been used for Department Directors and other special employment situations. For example, Dr. Fachella at the Renal Climc and Brian Erman, Golf Professional. The benefit to the City under this proposed arrangement is that we would have Charlie available for a full workweek rather than the current four days per week. Additionally Charlie would have time to become more involved in areas which are important to the City Including workers' compensation, safety, Insurance, OSHA compliance and other related risk management functions. In addition to the need to comply with applimble IRS regulations, this course of action will also keep the City moving In a positive direction with respect to Has Risk Management function. ChadWs efforts haw: been very successful over the years, both with employees and the public, and this arrangement will provide for_ the continuation of this work. Finally, Charlie, Ron Heller (his immediate supervisor) and I have developed the proposed employment contract, which has been agreed to by those involved. We will plan to discuss this proposal further with the Finance Committee on Monday night In executive session. In the meantime, should any committee members have questions, please feel free to contact Ron Heller or me at your convenienoe. RWF/j MEMO To: All Department Directors and Division Heads From: Robert W. Farrar, Assistant CM Manager Subject: Independent Contractor Status Date: October 18, 1999 As you may be aware, the Internal Revenue Service routinely conducts audits of public sector employers for the purpose of determining compliance with a variety of tax laws, employment practices, payroll Issues and similar topic. The City was audited several years ago and, as a result, we instil several changes in various areas and practices to comply with the law. In anticipation of the potential far future IRS audits, Finance and Human Resources have been reviewing a number of current practices to ensure that we are in compliance With their rules and regulations. This memorandum and request for Information deals specifically with the issue of Independent Contractor versus employee status. A number of Departments use or employ "independent contractors" to perform work for them. These are individuals who perform work for us, but are paid under a contract basis. Typically, these individuals are not provided benefits and do not have state/federal tax withheld by the City. Generally, they are not the City's pay plan and may not be in positions for which there is an established job description. _ The IRS has and will be closely reviewing all employment situations in which the employer Indicates that there is an "independent contractor" relationship. Accordingly, we are reviewing all of the City's situations in which "independent centractor' status is claimed to determine whether we are in compliance. The almmabve is that the employment relationship would be reclassified to an -employer-employee- relationship. This is a serious matter In that if the City cannot document and substantiate the -independent contractor- status, we are liable for payroll taxes (both the City's share and the employee's share) as well as penalties -equal to the amount of tax clue -and interest on the tax due. Thus, it Is extremely important that we have everyone conectly classified — whether "independent contractor or employee. Please provide the following information so that we may begin our review: 1. List of the Independent Contractors in your Department/Division. 2. Detailed description of the Independent Contractors job (or job description if available). 3. Whether the independent contractor has an office or workplace in your department/division. 4. If the independent contractor uses City equipment, is It dedicated to them or do other employees use it as well. 5. When the job Is performed (hours of work, days of week) where the job is performed and how they perform the job. 6. The level of supervision/direction provided or needed. If possible, I would like to have this information by November 5, 1999. Our goal would be to have any independent contractor Issues resolved by the end of the calendar year. This will enable us to begin calendar year 2000 with people in the correct classifications — employee or independent contractor. Should you have any questions or need assistance with this request, please feel free to contact Dave Little, Treasury Division, or me at your convenience. Thank you for your assistance with this project. RWF/jr cc: David Little, Treasury Division