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All political campaigns must decide whether staffers should be legally considered employees or consultants.
Rep. Mark Critz, D-Johnstown, and Keith Rothfus, his Republican Party challenger for Pennsylvania's 12th Congressional District seat in the U.S. House of Representatives, have chosen clearly different approaches.
Rothfus hires all of his staff members to be consultants, campaign manager Jon Raso said. Because they are designated as independent contractors, the consultants are responsible for covering both the employee and employer shares of taxes, including Social Security and Medicare, when filling out Internal Revenue Service forms. Therefore, Rothfus has not paid any taxes for them in 2012, according to his Federal Election Commission reports.
“FEC law has not issued guidance on any differences,” said Raso, who declined to provide a number when asked how many people work on the Rothfus campaign team.
“It comes down to agreements with the staff.”
By contrast, Critz uses a combination of employees and consultants. His campaign, being considered an employer, covered $40,000 in taxes for workers specifically designated as employees throughout the first half of 2012.
Under common-law guidelines, as provided by the IRS, an individual must be treated as an employee if the candidate can “control or have the right to control what the worker does and how the worker does his or her job.” Rules also exist, similar to all businesses, pertaining to the use of personal facilities and tools, how payment is issued, training, permanency of the relationship, contract language and degree of integration into the operation.
The Critz campaign feels Rothfus is not following proper IRS procedure. “It’s astonishing to me that someone running for office would circumvent laws when running for office,” said Mike Mikus, Critz’s campaign manager.
Mikus is operating as a consultant with his company, EIS Solutions, which has received more than $17,000 in fees from the Mark Critz for Congress Committee in 2012. Mikus works from home, handles other clients and is not told when and where to perform his job.
“By any definition, I am a consultant,” he said.
It is more understandable for campaign managers to be labeled as consultants than it is for individuals involved in the day-to-day operations of running an office or holding a political event.
“The higher-skilled you get, the more it looks like outside consulting, as opposed to being a cog in the wheel, the more likely you can say you’re a consultant,” said Catherine Ruckelshaus, legal co-director for the National Employment Law Project.
This is the second election cycle for Rothfus and Critz, who both first ran for Congress in 2010, although in separate districts.
Critz won three elections that year – a special, primary and general. He has withheld $89,000 in taxes and $38,000 in employer contributions to federal and state programs for campaign staffers over the past two-plus years.
Rothfus earned the GOP nomination in what was then the 4th district before losing to Rep. Jason Altmire, D-McCandless, in the 2010 general. Rothfus’ 2010 FEC reports showed no tax withholdings.
According to Raso, Rothfus plans to continue considering all staff members to be independent contractors – not employees – through the current election cycle.
“It’s very usual,” said Raso, who, as a consultant, received direct payment of $14,500 from Rothfus for Congress during the first half of this year. “It’s a very commonly-used practice in seasonal campaigning.”
Regionally, though, Rothfus is an exception among House candidates by using the all-consultant approach.
Counting the 12th and the four districts abutting it – the 9th, 3rd, 14th and 18th – there are a combined total of 10 Republicans and Democrats seeking seats in the November election. Seven have listed payroll taxes, salary and/or workers’ compensation contributions on their 2012 FEC reports, albeit small amounts in some cases. Two are running campaigns with limited budgets and no paid workers, having raised less than $20,000 apiece through the first two quarters.
“To me, that’s what is important,” said Mikus when discussing the difference between Rothfus and other southwestern Pennsylvania candidates.
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