Independent contractor will fill city position

The Sisters City Council on September 8, in their first regular workshop following a month-long recess, decided that the economic development manager's position will be filled by an independent contractor hired by the city.

The manager will not be a direct city employee.

The position will also not fall under EDCO's (Economic Development for Central Oregon) banner.

Although the printed workshop agenda listed discussion about the "Economic Development Services Agreement," many assumed the workshop would be an "unveiling" of EDCO's recommendation for the economic development manager.

It wasn't.

EDCO was assigned, earlier this summer, the task of writing the position description and independent contractor agreement, posting the listing, interviewing the twelve candidates that applied, and submitting a recommendation to the council.

None of the five councilors were involved in any of those steps, nor were they aware of the candidates or members of the interviewing panel.

EDCO directed people to an online position description (www.edcoinfo.com), stating that "the independent contractor will provide staffing of the Sisters Business & Attraction Team (SBART) and coordinate with the City of Sisters and EDCO to provide economic development services for the greater Sisters Country area. This 10-month, $30,000 contract-for-services period begins September 1, 2010, and ends June 30, 2011, and will be paid in equal monthly installments by EDCO with funding from the City of Sisters."

The $30,000 will come from the City of Sisters' budget and is intended to cover the independent contractor's wages and all expenses.

City Manager Eileen Stein began the workshop with a spreadsheet laying out for councilors the positives and negatives of the position's reporting structure. She wanted councilors to decide if the position status should be "employee" or "independent contractor" and whether the position should report to the City of Sisters or EDCO.

A majority of the discussion centered on the risk of legal entanglements. If the manager became a city employee, the city would be responsible for an on-the-job injury or an unemployment claim. The city would also be responsible for payroll and other employment taxes for the position, not to mention supervising a position the city has little experience with.

"We're not economic development people," said Mayor Lon Kellstrom.

The council clearly wants a cap on the $30,000 budget - and no lawsuit down the road dealing with the basis for employment. At this time there are no other sources of funding for the position.

The challenge for the council is how to provide oversight to a position that, at this point, doesn't have a direct reporting structure, measurable goals or receivables. Indicating a reporting structure, measurable benchmarks and goals could look to a court like an employee relationship.

City Attorney Steve Bryant advised the councilors to be cautious.

"Looking at the EDCO independent contractor agreement, it sure looks like the 'independent contractor' is more of an employee, not an independent contractor. If you really want accountability with the position, make the person an employee," said Bryant.

Early in the discussion it appeared that Mayor Kellstrom was in favor of the manager becoming an employee.

"Based on Steve's (Bryant) comments, I suggest that the independent contractor route is very difficult," said Kellstrom.

Councilor Weed felt there was a simple test for determining whether the person should be an employee or independent contractor.

"Seems to me that we need to determine what we want this person to do, then determine whether it's an employee or independent contractor relationship," she said.

Councilors Bogart and Thompson both agreed with Council President Bill Merrill that the person should be an independent contractor.

"I agree with Bill, we can still have oversight (of the position)," said Bogart.

"I'm concerned with how much an employee would cost, what with roll-up costs for employees these days," said Thompson.

Mayor Kellstrom, mulling the pros and cons, said, "But if we don't like what's going on and we try to direct the person, that's when we could cross the line (into an employee relationship)."

The mayor asked City Attorney Bryant what he could do.

"If we tighten-up the independent contractor's agreement to avoid employment claims, can we still do it?"

Bryant replied, "Just determine, as a council, the receivables you expect and I'll write them into an independent contractor agreement. I can make the agreement as tight as possible, but I can't provide any guarantees. There's always an inherent risk that the person will claim to be an employee," said Bryant.

Nearing the end of the hour-long workshop, Councilor Weed offered a suggested set of deliverables for the position. These included surveying the entire business community, two or three community-wide meetings, and creating a central information location for business grants and loans.

"There was really not enough time to hash things out. I plan to draft a message to Lon (Kellstrom) and Eileen (Stein) outlining my concerns and ideas for the position," said Weed following the workshop.

Roger Lee, EDCO executive director, attended the meeting.

"Our economic development managers (Prineville, Redmond, Madras) have deliverables which include the number of new jobs created, number of new companies, etc., within a given year," he said.

Mayor Kellstrom asked attorney Bryant to draft an independent contractor's agreement by September 30, with an effective date of the contract October 1, 2010. He also asked Bryant to look into including language that offers one- and two-year

options.

The mayor is expecting EDCO to have completed interviews with the 12 applicants before September 30, bringing their recommendation to the council by that time. Kellstrom indicated the goal was to have a person "on board" by October 1.