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Newspapers suffer sales tax setback in North Carolina

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For decades, the newspaper industry enjoyed a sales tax exemption in North Carolina. The exemption read, "... sales of newspapers by newspaper street vendors, by newspaper carriers making door-to-door deliveries, and by means of vending machines." Effective Jan. 1, 2014, that exemption has been repealed.

If a newspaper's contract with its newspaper carriers does not wholesale the paper to the carrier, but rather pays the carrier a negotiated per-copy fee, then the sale is from the publishing company directly to the subscriber. Therefore, the publishing company must collect the tax from the subscriber and remit to the state.

What if the newspaper still has a buy/sell relationship with the carrier? In that context, the sale is from the carrier to the subscriber. Technically, the independent contractor newspaper carrier is responsible for collecting and paying the tax. Currently, North Carolina publishers are trying to decide whether to have the carriers pay the tax directly or to collect and pay the tax for the carriers.

Independent contractor agreements should be drafted to make it clear that the contractor is responsible for the collection of the tax. Some North Carolina publishers are considering collecting the tax in the buy/sell relationship.  Giving the contractor a choice to pay the tax directly or to pay the publishing company a fee for the company to forward the tax would give the publisher some independent contractor cover.

NLRB dismisses its appeal on 'quickie election' rule:
On Dec. 9, 2013, the National Labor Relations Board voluntarily dismissed its appeal on a lower court decision dismissing its "quickie election" rule, which it had promulgated on Nov. 30, 2011. The lower court had invalidated the election rules as unlawfully promulgated because one of three sitting board members did not participate in the promulgation process. Thus, the NLRB lacked a quorum when the rule was promulgated.

The case was further complicated by the fact that one of the two participating board members had not been properly recess appointed under the D.C. Circuit's Noel Canning decision. The D.C. Circuit had placed the quickie election case in abeyance, pending the U.S. Supreme Court's ruling in Noel Canning. The Supreme Court is expected to hear argument on that case this month.

Reasonable speculation is that the board dismissed this case and will restart the rulemaking process. The NLRB has no doubt decided that abandoning the appeal and restarting the rulemaking process is quicker than going through all the litigation on the other case.

NLRB general counsel opines on property rights:
Recently, the United Food and Commercial Workers (UFCW) engaged in mass demonstrations at various Wal-Mart facilities.

At one store, demonstrators arrived on large buses and tried to form picket lines in front of the entrance. The group was informed that it was not allowed on Wal-Mart's property and advised to move its demonstration to a nearby sidewalk. At a demonstration at a second store, managers likewise told the group it needed to move to public property.

During that second demonstration, managers recognized two of the people in the group were Wal-Mart employees. Wal-Mart's policy on solicitation and distribution of literature states that it allows employees to engage in those activities outside of Wal-Mart's facilities during non-working time. However, neither of the employees asked if they could stay on the store's premises to picket.

In a recently issued Advice Memorandum, the NLRB general counsel determined that Wal-Mart acted lawfully in applying its policy's non-employee provision to the group of demonstrators, as no Wal-Mart employee within the group identified him or herself as an employee. None of the employees asked or attempted to remain on Wal-Mart's property to engage in protected activities.

The Advice Memorandum opines that the employees had to affirmatively assert their right to access their employer's parking lots and other non-working areas for the purpose of soliciting or distributing literature.

Unions may not insist on supervisor termination:
The union representing employees of a bakery disliked the bakery's human resources director, CFO and CEO. The union especially despised the human resources director, who conducted bargaining and grievance resolutions.

The bakery lost money several years in a row and a new chairman was brought in to turn the company around. The company had to lay off several bargaining unit employees and several salaried employees.

The union drafted a Memorandum of Understanding to layoff 26 unit employees and a similar percentage of management employees, as well as conceded an hourly pay reduction. In the Memorandum, the union specifically targeted the human resources director for discharge and for her role in the grievance procedure.

The ALJ found and the board upheld, "It is an unfair labor practice for a labor organization to 'restrain or coerce ... an employer in the selection of his representatives for the purpose of collective bargaining or the adjustment of grievances.'" He found that the union president conditioned the granting of concessions and bargaining upon discharging the human resources director thus violating 8(b)(1)(B).

The ALJ further found that these indirect actions were made in order to "adversely affect the manner in which the representative performs his or her duties such as grievance processing." The board granted a make-whole remedy for the human resources director's loss and required that the union compensate her.

L. Michael Zinser is the founding partner of The Zinser Law Firm in Nashville, Tenn. The firm, which has a heavy concentration of clients in communications media, represents management in the area of labor and employment. Zinser can be reached at (615) 244-9700 or mzinser@zinserlaw.com.

Zinser, independent contractor, NLRB, taxes, unions
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