Maryland Employers Improperly Classifying Workers as Independent Contractors Do So at Their Peril

On July 14, 2009, Maryland Governor Martin O'Malley signed an Executive Order establishing The Joint Employment Task Force on Workplace Fraud (Download PDF). Maryland businesses which fail to properly classify individuals as employees as opposed to independent contractors will face large fines, penalties and assessments by treating an individual as an independent contractor when that individual should be treated as an employee. Employers may have heard about recently enacted language focused on the construction and landscaping business, but this Executive Order establishes a Task Force that may affect all Maryland businesses.
This Executive Order comes on the heels of the passage of Maryland Senate Bill 909, the Workplace Fraud Act of 2009, which will take effect on October 1, 2009, and will affect construction and landscaping businesses operating in Maryland. The Executive Order on The Joint Employment Task Force on Workplace Fraud seeks to coordinate and expand in areas other than construction or landscaping. One of its goals is "to develop strategies for systematic investigations of workplace fraud within those industries in which misclassification is most common," and "to consult with representatives of business, organized labor and other agencies to improve and expand upon the operation and effectiveness of the Task Force and its members." This new executive order is a "preview of coming attractions" for Maryland employers other than construction and landscaping contractors. Any Maryland employer utilizing "independent contractors" needs to carefully evaluate its practices because if the newly created law dealing with construction and landscaping contractors expands into other areas at the recommendation of the Joint Employment Task Force on Workplace Fraud, it is conceivable and even likely that the draconian logic of the newly enacted workplace fraud law will be expanded to other types of businesses. Click to Continue...

Tell your Congressmen - NO TAX ON DTC ADS!

Clark Rector, Head of Government Affairs for the AAF has issued an urgent request that we all email our Congressmen ASAP to protest reducing or eliminating tax deductions for Direct To Consumer pharmaceutical advertising in connection with funding healthcare reform. The result would be an unconsitutional tax on DTC ads and a restraint on speech. Worse, it could encourage Congress to eliminate deductions for all advertising.

Rector: "The Ways and Means Committee is scheduled to release it's list of revenue options for healthcare reform on Friday [TOMORROW!]. We are down to the final hours that we have to convince members of the committee and others in the House of Representatives, that it would be bad policy and very harmful to media and advertising industries to impose a tax on the advertising of prescription medications. By denying the ordinary and necessary business expense deduction for this advertising, it would be the first time in history that the Congress would have targeted one form of speech and made it more expensive in order to discourage people from speaking.

Every advertising club member, every newspaper publisher, every magazine publisher, every broadcaster who calls his or her Member of Congress is critical to this effort. We only have a few hours left. Be sure that every member of Ways and Means hears our message."

Clark's message may be read seen in the AAF Government Affairs bulletin linked at right. His message includs a letter from Global Insight that predicts that potential tax revenue from the proposed DTC Ad Tax is far less than the Ways and Means Committee estimates.

Clark also attached a letter from the Advertising Coalition (comprised of the AAF, 4A's, ANA Broadcasters and other media) urging the House Ways and Means Committee to look elsewhere for healthcare reform funding because in addition to raising only modest tax revenue the DTC Ad Tax is an unconsitutional restriction of speach and will further slow the economic recovery of the advertising industry.

Email Maryland Congressman Chris Van Hollen who is on the Ways and Means Committee and let him know that you do not support the DTC Ad Tax and that it will have a devastating impact on the advertising industry! Then email your Congressmen.

Here is suggested text:

Dear Congressman ______:

As a taxpayer working in Maryland's advertising industry, I oppose any effort to eliminate tax deductions for the cost of advertising prescription drugs. There are several compelling reasons NOT to eliminate the deduction of advertising prescription drugs as ordinary and necessary business expense:

• It will increase the cost of informing the consumer about prescription drugs by 35%. If an advertiser is taxed at the highest corporate rate of 35%, the loss of the deduction for prescription drug advertising becomes a 35% tax on such advertising.
• Taxing advertising expenses for prescription drugs but not other advertising expenses is discriminatory.
• Taxing advertising expenses for prescription drugs chills constitutionally protected commercial speech. In 1936, the Supreme Court struck down a 2% tax on newspapers as an unconstitutional restraint on speech in Grosjean v. American Press Co.
• Consumers - particularly elderly consumers - will receive less information about prescription drug choices if advertisers reduce spending on prescription drug advertising.
• Legislation requiring a tax on advertising expenses for prescription drugs will make it easier to tax other advertising expenses, adversely affecting the advertising industry.

Advertising for all products and services helps generate $6 trillion in U.S. economic activity and supports more than 21 million jobs. I request that you do not support any legislation that eliminates tax deductions for the cost of advertising prescription drugs.

Sincerely,

Your Name
Address

Have the Munchies for Self Regulation of Cookies?

Today's Wall Street Journal reports ($ - sorry) that the 4As, ANA, IAB and DMA are expected to announce new guidelines to better protect consumers' privacy online soon. The joint recommendation is to give consumers more control by employing an icon that appears when a website is tracking consumer information. Clicking the icon would reveal what information is tracked and how it is being used.

Yawn. Yes, there are people who don't realize that websites work more efficiently when tracking applications ("Cookies" etc) remember your shopping preferences. And in return, few of us actually mind that websites serve up ads that reflect our wants and needs. Those who do can use Ad Blocker but bear in mind that these free websites we love could disapear with out our eyeballs seeing the ads! Cookies are pretty basic web tracking applications. But how we protect our privacy become considerably less clear when we participate in one of the multitude of social networking "quizzes." These "Which Back Street Boy are you?" quizzes quietly examine and quantify our demographics while we share our humorous test results with our "friends" online.

The 4As' industry self regulation effort followed closely on the heals of an FTC announcement that Sears agreed to enter into a consent order because its website did not effectively apprise visitors of Sears' collection and use of visitor information. The FTC had previously announced that it would allow the industry to pursue self-regulation, but wants meaningful guidelines for websites and consumers. Let your representatives know that self regulation and educating online consumers is more effective than increasing regulation. The Sears Consent Agreement makes it crystal clear that the FTC Commissioners are not going to be patient with the online ad industry.

Two important tips for online businesses arise from the Sears FTC action -- (1) Sears' website must now clearly, conspicuously display its privacy policy separate from the its terms of use. (2) Sears must provide a means to allow a visitor to agree or "opt in" before enabling the tracking applications to collect his or her consumer information. If this sounds familiar, the requirements in the FTC consent order are similar California's privacy statute. It would be a good idea to check your privacy policy now! Do you have one?

Lawsuit planned to challenge FDA tobacco regulation

Congress passed legislation on June 12 that places tobacco under the purview of the FDA. The bill, H.R. 1256/S. 982, was sent to President Obama, who announced that he would sign it, but the signing ceremony has been announced. The New York Times reported last Sunday that one aspect of the legislation -- the reimplementation of a 1996 regulation that restricts tobacco advertising within 1000' of schools and limits certain tobacco advertising and labelling to black text on a white background. It seems likely that the tobacco advertising regulation will be challenged on free speech grounds. The Congressional Research Service issued a report analyzing H.R. 1256/S. 982 suggesting that the 1996 advertising rules are unconstitutional. The Supreme Court in Lorillard Tobacco
Co. v. Reilly (2001) decided that the same regulation-- restricting tobacco ads near schools did not meet the four-part test for deciding the constitutionality of commercial speech regulation set out in its earlier decision in Central Hudson Gas & Electric Corp. v. Public Service Commission (1980).

Mr. Obama advocates an open and tranparent government process and actively solicits feedback, so make your opinion known by contacting the President here http://www.twitter.com/whitehouse or in email here http://www.whitehouse.gov/contact/.

Minnesota Consider Sales Tax on Unboxed Items

"Unboxed" does not refer to purchases of bulk organic oats and the like. Unboxed is music and video downloads. Today's AAF Government Report notes that a bill has been introduced in the Minnesota Legislature to tax "specified digital products." Specified digital products is defined to include digital music and videos, ringtones, e-books and electronic greeting cards.

Relevant to the advertising community -- The bill also includes digital artwork and periodicals as specified digital products.

Come On and Take a Free Ride — Blogging Without Infringing

Ober's new IP Watch is out, here's my lede:

The wonder of the internet is the speed and ease with which it allows us to share information. Before it can be shared, however, this information must be produced or procured and producing this original content takes time and money. As media companies move to monetize their online publishing, "free-riding" by blogs that reuse content to channel traffic to their own sites is increasingly challenged. As print advertising declines, media companies are less willing to simply give content and traffic away. ...

Maryland Legislative Update

Children's Online Safety. Two recently proposed bills, if passed, would require "Internet Access Providers" to provide parental controls to Maryland households. Senate Bill 550 - Online Child Safety Act of 2009 was proposed on February 5th and had its hearing today. The Online Child Safety Act is positioned as a consumer protection measure and would amend commercial laws to provide that a failure to offer parental controls that meet the acts' standards to internet access subscribers in Maryland is an unfair and deceptive practice. The standards require the parental controls to prevent children age 18 or younger from accessing the internet, particular websites and categories of websites that the subscriber selects to be blocked. Senate Bill 893 - Protection of Children from Online Predators Act of 2009 proposes a similar measure but adds criminal measures aimed at online sexual predators, including preventing a convicted online sexual predator from accessing the internet and a safe harbor for interactive service providers from civil liability from wrongly blocking access.


My take--Both bills seek to bolster the ailing Children's Online Privacy Protection Act (COPPA) which suffers from Constitutional enforcement issues. SB 550 requires ISPs to do mo more than provide subscribers with a link to parental control software vendors. This bill expects parental controls to work on older teens. Best of luck with that one. I rely on my older teens to fix computers. They're more likely to block ME from sites I'd like to see, like their Facebook pages! SB 893 takes that requirement and raises the bid by profiling an online sexual predator as someone 4 or more years older than a 16 year old who prompts the teen to expose or touch "private parts" online. A surprise is that SB 893 appears to exempt mobile applications. Many teens do everything from their phones, looks like a loophole to me.