Source: Charlotte Observer

An Earthquake centered in Virginia shows East Coast tremors can travel much farther and cause damage over larger areas than previously thought, the U.S. Geological Survey said Tuesday.

The agency estimated about one-third of the U.S. population could have felt the magnitude 5.8 tremor centered about 50 miles northwest of Richmond, which would mean more people were affected than any earthquake in U.S. history. Scientists also found the quake that caused more than $200 million in damage triggered landslides at distances four times farther and over an area 20 times larger than research from previous quakes has shown.

“Scientists are confirming with empirical data what more than 50 million people in the eastern U.S. experienced firsthand: this was one powerful earthquake,” USGS Director Marcia McNutt said in a news release about the findings presented at the Geological Society of America conference in Charlotte, N.C.

Researchers used landslides to see how far-reaching the shaking from East coast earthquakes could be. The unexpected jolt cracked the Washington Monument in spots and toppled delicate masonry high atop the National Cathedral. The shaking was felt from Georgia to New England.

According to the findings, the farthest landslide from the quake was 150 miles from the epicenter, a greater distance than any other similar-sized earthquake. Previous similar quakes have resulted in landslides no farther than 36 miles from the epicenter.

Additionally, the landslides from the 2011 tremor occurred in an area of about 12,895 square-miles – about the size of the state of Maryland. Previous studies indicated an area of about 580 square-miles – about the size of Houston – from an earthquake of similar magnitude.

“It’s just much more dangerous to have an earthquake at that level back on the East Coast than it would be on the West Coast,” said Edwin Harp, a USGS scientist and co-author of the study. “If something big happened, although it’s much less frequent, it would tend to damage a lot more buildings because they’re probably not quite up to the codes that they are in California.”

Geologic structure and rock properties on the East Coast allow seismic waves to travel farther without weakening compared with the West Coast, Harp said.

He said equations used to predict ground shaking might need to be revised now that scientists know more about the power of East Coast earthquakes.

The information also will help with building codes as well as emergency preparedness, the USGS said.

While West Coast earthquake veterans scoffed at what they viewed as only a moderate temblor, the August 2011 quake changed the way officials along the East Coast viewed emergency preparedness. Emergency response plans that once focused on hurricanes, tornadoes, flooding and snow are being revised to include quakes.

Some states have enacted laws specifically related to the quake, and there is anecdotal evidence of a spike in insurance coverage for earthquake damage.

By Mandy Locke
mlocke@newsobserver.com
Source: The News and Observer

Gov. Bev Perdue assembled a task force to deal with employers who wrongly classify workers and use inadequate workers’ compensation insurance. The task force will pull together representatives of the state Industrial Commission, Department of Revenue, Department of Public Safety, Department of Commerce, Division of Employment Security, Department of Insurance, Department of Labor, Secretary of State, Attorney General, the N.C. Rate Bureau, the State Controller, Director of the N.C. Administrative Office of the Courts, Sheriff’s Association, and leaders of both the House and Senate.

Insurance Commissioner Wayne Goodwin has been put in charge of the task force. He expected the group to begin meeting within the next few weeks. He expects the group will solicit feedback from businesses that are abiding by the law and hear explanations from those that aren’t.
The task force will report progress to the governor’s office every six months. It will suggest changes to the law to enable the groups to share information, and a detailed explanation of any barriers they face.

•    Employee vs. contractor

The federal government estimates that employers who inappropriately classify employees as contractors cost as much as $2.72 billion in lost tax revenue in 2006.

Determining whether a worker can be considered a subcontractor (classified in tax code as a 1099 worker) is based on a list of questions that deal with the employment relationship. While some agencies that examine whether a worker is properly classified may have particular standards, many use a 20-question test compiled by the Internal Revenue Service.

Questions that would help determine whether a worker is a W-2 employee deal mostly with the employer’s control over the worker. Answers that indicate more autonomy generally mean the worker can be treated as an independent contractor.

Among the questions:
•  Does the employer tell the person when and where to go for work and how to do the work?
•  Did the employer train or have another employee train the new worker?
•  Did the employer provide tools and other supplies needed to complete the job?
•  Is this a continuous or expected to be a continuous working relationship?
•  Does the employer dictate hours and approve time off?
•  Is the worker expected to devote full time or substantially full time to the work?
•  Is the worker required to submit regular or written reports to the employer?
•  Is the worker paid by the hour or by the job?
•  Does the employer pay travel expenses for the worker?
•  Does the worker gain profits or suffer losses as the employer does?
•  Does the worker work for others as well?

North Carolina’s leaders – and those campaigning to take charge in the coming year – promised Wednesday to wake a sleeping government in order to stop businesses that misclassify employees as contractors and avoid paying taxes and buying workers’ compensation insurance.

Gov. Bev Perdue ordered a team of agency leaders to meet and figure out how to work together to crack down on cheating businesses. Both men campaigning to be governor – Republican Pat McCrory and Democrat Walter Dalton – said fixing these problems is at the top of their priority list.

The commitments follow a three-part series in The News & Observer highlighting how honest business owners are losing their foothold as they compete against businesses that break the law to avoid taxes and insurance.
The practices are prevalent in the construction industry and have seeped into other fields. Some employers are treating their laborers as independent contractors instead of direct employees to avoid paying Social Security, unemployment tax, overtime and workers’ compensation.

Some business owners are buying “ghost policies,” inadequate workers’ compensation policies that sometimes leave wounded workers fighting for needed medical care.

Businesses that break the rules have prospered as North Carolina’s agencies worked in information silos, tending to their own sets of rules and failing to share critical information with fellow agencies.
“I am expecting this task force to cut through any red tape and make any recommendations needed to protect workers,” Perdue said in a statement.

The task force will report to the governor’s office every six months. The next governor could stop the task force formed by Perdue, who is not seeking re-election. But the nominees of both major parties seem likely to continue the effort.

Promising action
McCrory, who served as mayor of Charlotte from 1995 to 2009, said the N&O’s report reinforces his belief that state government is broken.

McCrory said it’s impossible to know who is in charge in state government and that the current setup of agencies leads to little accountability. If elected, McCrory said, he’ll examine whether some agency heads who now are elected ought to be appointed and report to the governor, a change that would require a constitutional amendment.
And he insisted that all state government information technology workers need a central boss who coordinates databases and upgrades to ensure those systems are equipped to share data.
“Toes will be stepped on,” he said. “Our state government is set up with a process of governing that’s stuck in the 1900s.”

Dalton, currently the lieutenant governor and a former state senator, also said the practices raise critical questions about the way the government is organized. He called the N&O findings about government agencies operating in silos “disappointing.”

If elected, Dalton said he would consider charging a single agency to crack down on businesses instead of sharing these responsibilities among many.

“Sometimes it’s too many cooks in the kitchen and nobody’s watching the stove,” Dalton said.

A legislative study
Legislators echoed calls for change.

Phil Berger, Senate president and an Eden Republican, said he’d be looking to the state controller to make recommendations on how agencies can better share their data and detect fraud. A report is due in October.
This summer, legislators formed a study commission after The N&O reported that at least 30,000 businesses were failing to buy required workers’ compensation insurance. That group will soon start meeting, and Berger said it could look at the larger issues as well.

“There seems to be a failure of the regulatory agencies to curb the inappropriate activity,” Berger said. “This can’t go on.”
Thom Tillis, speaker of the House and a Republican from Cornelius, near Charlotte, said in a statement that these issues are critical especially as the state tries to climb out of a recession. He urged the federal government to create meaningful immigration reform to address some of the business practices used to compete unfairly.
Many of the workers highlighted in the series are here illegally and cannot collect some benefits, but businesses are nonetheless required to pay on their behalf.
Support from the chamber
The N.C. Chamber says it’s time that businesses operating legitimately get some sort of protection against those that don’t.

“We have to make sure these folks (operating legally) aren’t penalized,” said Gary Salamido, vice president for governmental affairs. “More integration between agencies is very, very important.”

For those wrestling with an uneven playing field, change couldn’t come quickly enough.
Eric Mace, owner of Mountain Stone Masonry of New Hill, said issues of fairness have plagued the construction industry far too long, and he’ll be looking to vote in November for a candidate determined to fix them.
“People actually feel a little hope that this is finally coming to light,” Mace said. “The next governor has to fix this.”

Misclassifying employees as independent contractors can leave injured laborers in a bind

By Kerry Singe

Source: Charlotteobserver.com

James Morrison was on a roof cleaning tree debris five years ago when he stepped onto a ladder that slipped and sent him tumbling to the ground, breaking his leg and injuring his knee.

The Salisbury company he was working for didn’t have workers’ compensation insurance, and the owner said Morrison wasn’t an employee but an independent contractor responsible for buying his own policy.

The N.C. Industrial Commission ruled against the company, saying it should have provided the insurance.

Morrison is one of dozens of Charlotte-area workers who are injured each year only to find they don’t have proper coverage.

His case also underscores wide-ranging problems in the world of workers’ compensation – from companies that misclassify employees to avoid buying them coverage, to employers that simply don’t cover workers despite regulations that require it.

Companies that misclassify employees avoid paying Social Security, Medicare and unemployment taxes and taking tax withholdings from paychecks.

“It’s a fairly common scenario,” said Bob Bollinger, a Charlotte-based attorney who is handling Morrison’s case. “The government’s getting cheated, the taxpayers are getting cheated, the injured worker is getting cheated and the employer’s getting away with it.”

Others use a loophole in the law, buying a “ghost policy,” a type of coverage that makes it appear workers are insured when they are not. Such policies are legal in North Carolina.

People familiar with the situation say the poor economy is driving more employers to cut corners and avoid buying workers’ compensation insurance.

The practice occurs most often in professions that have relatively more injuries, such as the construction, trucking and tree-trimming trades, industries prominent in Charlotte.

Workers’ compensation insurance for office workers, such as accountants and salespeople, is considerably cheaper, according to insurance agents.

A (Raleigh) News & Observer investigation last spring found that at least 30,000 businesses in North Carolina that are required to have workers’ compensation coverage don’t have it.

In Charlotte, hail in April 2011 hammered people’s homes, creating a windfall for local roofers. Business boomed, and workers flocked to the area. The high demand meant local contractors could earn more money per job.

Once the work slowed, prices fell. One Charlotte-area roofing contractor said the price one company was recently willing to pay for a job is lower than her labor costs. The only way someone could make a living at that price is if they drastically cut operating expenses, she said. She declined to pursue the job.

She buys workers’ compensation insurance for her employees, an expensive item accounting for about a quarter of her overall costs. She asked not to be named because she fears retaliation within the industry. She said this year she has struggled to compete with contractors who don’t pay for similar insurance.

“It was not enough to cover expenses,” she said. “I understand there’s not much work and sometimes you have to take what they can offer. But as a contractor, we have to be responsible for our people.”

In North Carolina, businesses with three or more employees are required to buy insurance or certify with state regulators that they have enough assets to be self-insured.

In April, the N&O reported that tens of thousands of North Carolina businesses put their employees at risk by failing to buy workers’ compensation insurance. The newspaper analyzed the N.C. Rate Bureau’s database of policies written for companies required to have workers’ comp and found that insurance carriers writing policies in North Carolina reported they covered 140,472 businesses. About 117 large companies are certified as self-insured.

The N.C. Department of Commerce says up to 170,000 companies with four or more employees operate in the state.

Generally, a worker under state regulations should be considered an employee if the company provides tools and equipment and controls how and when the worker is to do the job. The more control the business has over a worker; the more likely it is that the worker is an employee rather than an independent contractor.

In Morrison’s case, the tree-trimming company provided all tools and equipment and controlled Morrison’s work hours, according to documents filed with the N.C. Industrial Commission. Company owner Wayne Allen argued Morrison was self-employed because he could take tax deductions for the costs of commuting and for having a home office.

Deputy Commissioner Robert Rideout Jr. called that assertion “disingenuous at best,” writing in his decision that “commuting mileage is not a tax deduction and furthermore, Mr. Morrison would have no need for a home office if he was simply working as a laborer for a tree service.”

Allen told the Observer that that day was the only time in his business’ history that he had three people working for him. Normally he has only two people, he said, which would mean he is not required by law to purchase workers’ compensation insurance.

“It was a violation that day,” Allen said.

Allen said the worker claimed tax deductions based on being self-employed. He said Morrison had a previous knee injury and questions the motive behind the worker’s pursuing of a claim with the state Industrial Commission.

Allen said he once looked into buying insurance and said it would have cost roughly $1 for every $3 the company made. He is still in business and continues to use only two workers, he says.

“There’s no way you can charge enough from the customer to cover workman’s comp,” he said.

Industry put under stress

Julian Arcila with the Hispanic Contractors Association of the Carolinas said his group is trying to educate members about the consequences of not providing the proper coverage. Lately, he said, he’s been hearing from more members concerned about the growing number of workers who aren’t covered by workers’ compensation insurance.

“They say they can’t compete because houses are built by guys who are not paying insurance,” said Arcila, who is based in Charlotte. “It is changing the shape of the construction industry.”

The Charlotte roofing contractor who didn’t want to be named said many of her former colleagues have closed their companies and switched to operating as independent contractors themselves to stay in business.

‘A chilling effect’ on claims

Charlotte attorney Mark Sumwalt now sees about 25 cases a year involving workers who were misclassified as independent contractors, a significant increase from past years.

“Rarely are they truly independent contractors,” he said. “People are trying to cut every corner they can. … Worker’s compensation is a regulatory requirement. You’re not supposed to be able to make a decision about it.”

Even when an uninsured worker is injured and sues a company, arguing it should have provided coverage, Sumwalt said, it can be difficult to recover any money. That’s because companies that misclassify employees often don’t have the money to pay for disability claims or medical bills.

“It has a chilling effect on injured workers to pursue claims,” he said.

Morrison, the Salisbury tree trimmer who was injured in 2007 and awarded disability payments and medical coverage for problems stemming from his injury, is still waiting for his money, his attorney says.

On April 20, 2012, thousands of people at hundreds of companies across North Carolina will “sport” a $10 Ronald McDonald House t-shirt in order to “share” a stay for one night at Ronald McDonald House with a family in need. We hope that you and your employees will choose to join us for this year’s event!