From: Mari

Sent: Tuesday, September 18, 2007 6:36 PM

To: Jayme.White@mail.house.gov
Cc: Melissa.Mueller@mail.house.gov; cks@steuartlaw.com; HQ-ORF@ci.irs.gov;
employerfraud@lni.wa.gov; Maria_Cantwell@Cantwell.Senate.gov
Subject: [S.2044.IS] Written Testimony for the "Independent Contractor Proper
Classification Act of 2007"

Mr. Jayme White, Tax Aide to

The Honorable Jim McDermott
1135 Longworth House Office Building
Washington, DC 20515

Dear Mr. White:

Thank you for taking the time to speak with me on Friday September 14, 2007 regarding
the proposed legislation to protect workers who are wrongfully
misclassified as Independent Contractors (ICs).

Per our conversation I’m submitting the letter below for the official record. As part of
my submittal I’ve attached copies of the applicable pages taken
from Secondary Supplier Agreement which are referenced in the body of my letter below.
The pertinent sections are highlighted for your convenience.
I’ve also included pages 10, 11 and 12 taken from the Defendant’s Motion for Summary
Judgment which was granted on June 8, 2007.

While I understand and wholeheartedly agree that workers designated as ICs so that
companies can avoid the expense of employer side taxes and insurance
payments yet are still treated as at-will employees need to be protected, there exists a
large group of workers who either directly or through their own
companies are bona fide independent contractors who are also being treated as at-will
employees and also need protection.

There are many unscrupulous companies who intentionally lure individuals into working
for them as Independent Contractors. They lead them to believe that
they will be allowed to operate in accordance with the laws governing ICs. Specifically
there are IRS tax rules and various state laws which stipulate
that ICs have the right to control the manner in which the work is performed, the hours
during which they work as well as other designations. These
companies do this for the sole purpose of escaping the financial responsibility of paying
benefits, employer-side taxes, and other legally required
insurance payments, while never intending to allow the worker to perform in any manner
other than as their at-will employee.

Entering into a contract with the intention of never fulfilling the terms is the very
definition of “bad faith” which refers to dishonesty or fraud in
a transaction and is a violation of most state and federal labor laws. I will demonstrate
precisely how they do so below.

I am a Microsoft Certified Solutions Developer and as such I apply and interview for
positions in which I provide my skills as a software developer to
various companies, generally through recruiting firms. In December 2002 I created the
corporation Aegis IT Solutions which is a Microsoft Registered
partner. I created this corporation for several reasons – (1) so that I could work for my
own company, (2) build it up through customer referrals and
(3) eventually obtain Microsoft Certified Partnership status. One of the big advantages of
working through my own company and working on a corp-to-corp
contractual basis is that a contract, at least in theory, is supposed to provide a little more
job security than simply being an at-will employee.

The reality though is that in spite of the fact that every single contract I’ve worked
stipulates that the relationship between the retaining company
(the company that pays my invoices) and Aegis IT Solutions is that of “independent
contractor”, they then take measures, via the language of the contract
which can then be subverted and through actual deed, to treat the workers as at-will
employee. As a matter of fact, I’m submitting as attachments to this email, information
obtained from actual court documents in which Cingular Wireless admits that even
though the contracts used for retaining workers stipulates that the relationship between all
parties is that of “independent contractor” that it never intended and in fact refused to
allow any of it’s workers, including temporary and contract workers, to operate as
anything other than at-will employees.

They accomplish this goal of designating a worker as an IC and still retaining at-will
employment rights using several means.

First the worker is not even allowed to enter into the contract with the recruiting firm (in
this particular case TEKSystems doing business out of Bellevue,
Washington) until submitting proof that the corporation that is to be designated as the IC
has a current insurance policy of $1,000,000+. TEKSystems also
required that it as well as Cingular Wireless be listed on the insurance policy as
additionally insured parties. (please see the attached document
entitled Addendum to Secondary Supplier Agreement) Then they required submission of
the last 4 IRS tax forms 941 filed for Aegis, Aegis’s master business
license for Washington State (UBI number), a certificate of good standing from the
Secretary of State as well as several other documents.

The contract also stipulates that Aegis bear the financial responsibility for all employer-
side taxes (please see page 1, paragraph 2 of the attached
document entitled Secondary Supplier Agreement).

In addition to the requirements of TEKSystems, Aegis IT has an account with the

Washington State Department of Revenue. It pays quarterly taxes to the
state on all revenue it generates.

Then after having escaped the financial expense of having an actual employee by
contractually shifting the burden onto the Independent Contractor as well
as removing any protection that is afforded to employees from agencies such as the
EEOC and in Washington state, the Human Rights Commission, these
employers then began to abuse the worker’s new “status” by then treating the purported
Independent Contractor as an at-will employee.

In my case, in all initial negotiations the discussions included a flexible work schedule.
These discussions occurred between the Technical Recruiter for
TEKSystems & Aegis, the project supervisor at Cingular, and with the Customer
Supervisor of TekSystems. Furthermore, upon starting the work the flexible
schedule was standard operating procedure all in conformance with my status and legal
rights as an Independent Contractor.

After having worked a flexible schedule for approximately 6 weeks, Cingular Wireless
via TEKSystems demanded that I begin working a set schedule of 9 to 5.
When I informed them that I had a contract that stipulated that I (meaning Aegis, my
company) had the autonomy to operate under the laws that govern an
independent contractor thereby allowing me to set my own schedule, their reply was to
conform or they would terminate my contract, which they ultimately
did.

Before they terminated the contract they concocted a story that I was being let go because
I “lacked the ability to perform my job”. This statement was
later modified in their response to our court complaint to “she lacked the ability to
perform her job because she could/would not come in at 9:00” a direct
violation of IC laws unless waived by the contract.

They have also listed, in various other documents, the reasons for termination of my
contract as “the project was cancelled” and that the client’s
“requirements for the job changed”, neither of which is true. One of TEKSystems
employees, Mr. Justin Born, actually told me on the day I was informed
that my services were no longer needed, that they were going to falsify my record to
reflect that the employer’s requirements for the project changed.
They evidently did so.

In the defendant’s Motion for Summary Judgment the defendants reveal what their true
intentions were from the beginning. The motion states on Page 11
Line 16.5 “Put simply, the Secondary Supplier Agreement allowed Cingular the same
right regarding the individuals placed by TEKSystems as it had regarding
its direct employees: each are subject to removal at the will of Cingular, for any valid
legal reason. In other words, the Primary and Secondary Supplier
Agreements affirm Cingular’s right to at-will employment even for temporary and
[independent] contract[or] workers…”
This intentional language design, which is incorporated into the agreements is clearly an
abuse of the laws that govern workers who are classified as
Independent Contractors. And just so that there is no misunderstanding, Cingular’s
“valid legal reason” for terminating the contract with Aegis is the
previously quoted reason that “she lacked the ability to perform her job [defamation per
se] because she could/would not come in at 9:00.

As an employee of Aegis and not an employee of either TEKSystems or Cingular, neither

one of them had the legal right to demand I work any specified hours
per the Secondary Supplier Agreement which stipulated that our (Aegis & I) services
were begin retained as an Independent Contractor . That would
constitute a change of the terms of the contract which both parties have to agree to in
writing per the Secondary Supplier Agreement. Therefore the
defendants reason for the termination of said contract is neither valid or legal since
they’ve admitted that there was no misconduct involved. Their
stated reason was simply a pretext to be used to deprive me of my rights as an
independent contractor (via my company Aegis IT) and the remainder of a
semi-lucrative 12 month contract.

Lastly, the Secondary Supplier agreement in paragraph 11 stipulates that the agreement
can be cancelled by Secondary Supplier only in accordance with the
terms of the Primary Supplier agreement to which the defendants readily admit plaintiffs
Aegis IT nor Akmal are a party yet the Primary Supplier can cancel
at any time without cause upon no less than 5 days notice.

Cingular and TEKSystems couldn’t even be bothered to comply with this last aspect.
They treated me as their at-will employee by terminating Aegis’s 12 month
contract little more than 2 months after it began and with no notice at all.

As I’m sure you’re aware, the ONLY recourse for Independent Contractors who are
abused by companies in this manner is to file a lawsuit. Lawsuits are
expensive and quite frankly locating case law and precedents in support of Independent
Contractors who actually want to be allowed to operate as
Independent Contractors instead of employees has proven difficult. Most of the case law
in which the worker prevails is for Independent Contractors who
want to be classified as Employees.

I don’t know the nature of the legislation you’re proposing but I can tell you from my
perspective as a small business owner/independent contractor that
designating an agency to either investigate or intervene in these matters when the
contractor can clearly show an abuse of their rights would be a godsend.

This lawsuit not only has me in debt but I’ve also been blacklisted. I was told just this
month by recruiter Chris Bloomquist of Robert Half International
in Seattle who placed me on a temporary project earlier this year, that he can no longer
work with me because of what’s being said about me by people on
the projects I’ve worked on previously. Now the case is currently in the assessment
phase of the 9th Circuit Court of Appeals. It is estimated that the
length of time until a decision is reached is 18 to 24 months pushing the projected
timeline to July 2009.

If you need any additional information or documents from me to clarify any of my

communications, please feel free to contact me. I’m willing to assist you
in any and all ways possible, including providing testimony.

Sincerely,

Ms. Mariyam Akmal, President

Aegis IT Solutions, Inc.
[address block removed]

cc: The Honorable Jim McDermott

Chairman, House Ways and Means Subcommittee on Income Security and Family
Support
B-317 Rayburn House Office Building
Washington, D.C. 20515

The Honorable Richard Neal

Chairman, House Ways and Means Subcommittee on Select Revenue Measures
1135 Longworth House Office Building
Washington, D.C. 20515

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