The Oregonian, Monday, October 6, 1997

Rulings raise costs of initiatives

  • The Oregon Employment Department redefines the status of paid signature gatherers, making petition drives more expensive

    By Steve Suo
    of The Oregonian staff

    The two-volume mailbox choker of a Voters' Pamphlet sent out last fall could be a thing of the past after a decision that makes it more expensive to put measures on the Oregon ballot.

    At issue are paid signature gatherers, those people who confront you with a petition outside Fred Meyer or the post office. An estimated 600 to 700 people worked as signature gatherers in 1996, earning 50 cents to $2 a name.

    Their presence is a key reason why the number of initiatives and referendums on the Oregon ballot grew from four in 1982 to 17 last year.

    In rulings during the past year, the state Employment Department said two companies that hired signature gatherers must treat them like employees and not as independent contractors, as the companies argued.

    That means campaigns and canvassing companies must start paying a minimum wage, unemployment insurance taxes and workers' compensation premiums on those workers.

    "It is going to basically turn the initiative process over to people who can afford" to pay the added costs, said Lloyd Marbet, an environmental activist in Boring and chairman of the Coalition for Initiative Rights. "I don't know many people who have that kind of money except corporate interests."

    The new direction stems from cases involving two Oregon canvassing companies, Affinity Communications and Canvasser Services Inc.

    Both companies started the 1996 election year with strong credentials on winning petition drives. Ruth Bendl of Canvasser Services ran petition drives for initiatives to prevent the Legislature from overturning voter-approved laws and to increase prosecutors' powers in criminal cases. Ronda Buffington helped qualify Measure 44, to increase the tobacco tax, and Measure 36, to raise the minimum wage.

    But in July, a few weeks after the deadline to turn in petitions, Bendl and Buffington received separate notices of audits from the Employment Department. Workers at each company had filed for unemployment benefits, but neither employer had paid unemployment insurance taxes.

    Canvassing companies long have maintained their workers are independent contractors. Buffington's canvassers even signed forms when they were hired saying they were independent contractors.

    But state officials said the forms are meaningless.

    State law assumes that workers are employees unless a company can prove they meet the definition of an independent contractor. Key to that qualification is: Workers must be free from direction or control and must run an independent business, which generally means it's advertised as such and has a separate phone number and office.

    The Employment Department decided signature gatherers working for Affinity and Canvasser Services failed the test. Affinity was assessed $16,000 in back unemployment insurance taxes. Canvassers Services owes $10,500 plus interest.

    Bendl says the move was political backlash against a populist initiative system that galls the establishment.

    "Many of these issues would never see the light of day if it weren't for the initiative process," Bendl said. "They'd be buried in committee."

    Businesses cut costs

    Employment Department officials say they're simply trying to hold the line against businesses that cut costs at the expense of employees, one-quarter of whom are temporary, part-time and seasonal workers.

    "What do you call a real employee any more?" said Donna Hunter, the department's unemployment insurance tax manager. "It's a social question of how do you cover workers who might become unemployed?"

    Hunter denied the agency was targeting the initiative process. The reason it has come up, she says, is no signature gatherers have been rejected for unemployment claims in the past.

    The agency's decision is having little effect, although officials say it's risky not to comply.

    The Real Joint Ways and Means Committee, a group that was circulating a referendum to prevent the recriminalization of marijuana, treated its paid signature gatherers as independent contractors.

    A competing referendum by the Citizens for Sensible Law Enforcement Committee also involved paid canvassers. Spokesman Todd Olson did not respond when asked whether the committee was treating those workers as employees.

    Technically, the Employment Department would have to determine on a case-by-case basis whether a worker is an employee or an independent contractor.

    But Hunter said she plans to send a warning letter to all canvassing organizations, through the state Elections Division, before the big spring petition drives. The probable message: The agency has ruled twice that signature gatherers are not independent contractors.

    A number of other state and federal taxes and regulations could kick in based on the independent contractor rule. They include paying the state minimum wage of $5.50 an hour and workers' compensation premiums.

    Agencies overseeing those benefits investigate only when complaints arise, so canvassers aren't likely to be hit with audits right away.

    Bendl and Buffington have appealed their cases to administrative law judges. Buffington said she has spent $9,000 on a lawyer, and the costs are mounting.

    Ruling's effect uncertain

    If the Employment Department's ruling stands, it's hard to say how much the cost of a petition drive would increase because the nature of the business would change, canvassing groups say.

    At the market rate of 50 cents a signature, a canvasser would have to average 11 signatures an hour to reach the $5.50 minimum wage. The best canvassers get 40 to 50 signatures an hour, said Bill Sizemore, executive director of Oregon Taxpayers United, which has had several successful initiative drives.

    But others say it would be costly to monitor the canvassers, who work alone in the field. And there are rainy days when a canvasser might go home with no signatures - but still get paid.

    The bigger problem, Bendl said, is determining which petition campaign is billed for the labor costs. If a person carries three petitions in a day, do all three campaigns have to pay minimum wage and unemployment insurance?

    That's not the only complication. A new accounting system would have to be set up to deduct workers' Social Security, Medicare and federal income taxes.

    The practice of paying signature gatherers has been around at least since 1984, two years after a federal judge ruled that Oregon's ban on it violated free-speech protections.

    In the seven election cycles before the ruling, 28 initiatives and referendums made the general-election ballot. In the seven cycles since, 78 have.

    Some observers cite other reasons for the upswing, such as increasing public disillusionment with the Legislature. But the ability to hire hundreds of canvassers appears to have played a role in elevating initiatives. Today, few make it to the ballot without a paid field staff.

    Taxpayers group busy

    Oregon Taxpayers United, which hired signature gatherers to qualify the Measure 47 property tax cut in 1996, continues to treat such workers as independent contractors.

    The group has canvassers out drumming up support for a measure that would prevent governments from collecting money for political activities. The initiative is a swipe at public employees' unions, which let members have political action committee money withheld from their paychecks.

    Sizemore said he considers his case different from Bendl's because his workers are free from direction and control.

    If the state rules his canvassers are employees, Sizemore says he would fight the decision on constitutional grounds. Courts have struck down laws in other states regulating the way signature gatherers are paid.

    "Those inside government are continually attempting to throw up roadblocks to prevent people from using the initiative process to be self-governing," Sizemore said. "Our side keeps winning in the courts."

    Steve Suo covers campaign finance, politics and consumers for the Public Life team. Contact him by phone at 221-8234, by mail at 1320 S.W. Broadway, Portland, Ore. 97201, or by e-mail at


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