Monday, April 16, 2007

A Few Questions Remain on Secondary Employment

Late last week, a small number of articles appeared in both the Post-Gazette and the Tribune-Review concerning the police secondary employment. As discussed in an earlier post at the beginning of the month, Pittsburgh's interim mayor has finally decided to institute a cost-recovery fee whenever city police officers whore hire themselves out to perform security functions for private employers. Even if he was against the cost-recovery fee before he was for it, Interim Mayor Luke Ravenstahl has now agreed to charge private employers $3.85 per hour for the use of each City of Pittsburgh police officer they hire.

At the end of last week and over the weekend, the police department released a few details about how the new secondary employment system, and its associated cost-recovery fee, is going to work.

As described in a letter from Chief of Police Nate Harper, all businesses who wish to employ off-duty police officers must fill out an application with the police department. After their application has been approved, business owners can schedule off-duty officers either by contacting the police department directly (through its Special Events Office), or by working with a small number of police officers who serve as "designated schedulers" for off-duty employment. As the Tribune-Review article tells us, most businesses are choosing to work directly with the police department:

The special events office will handle scheduling and payroll for off-duty officers for 345 of those businesses. The remaining 150 businesses have designated one officer, who will schedule other officers for off-duty patrols and receive a cut of the off-duty officers' pay.
For each officer-hour used, the city will then bill the employer directly to collect the $3.85 per-officer-hour fee.

Despite this additional information, there remain a small number of questions that are, at least from what I can tell, unresolved. For example, none of the stories about the new secondary employment plan indicate exactly how the officers will be paid. In the past, some officers worked "under-the-table" when they were off-duty, were paid in cash, and had the option of evading taxes on this income.

For the majority of secondary employers under the new system, the officers who do the work will be assigned to them by the city, and it will be possible to monitor how many hours they work when off-duty. But the businesses can set their own hour pay rates, and those who use designated schedulers must somehow account for the "cut" that comes out of the other officers' wages to pay for the services of the scheduler. Will all secondary employment pay be passed through the city's payroll system or will some officers continue to work on a cash basis? What kind of auditing is in place, especially when designated schedulers are used, to ensure that all of the hours worked by the officers are duly reported to the Special Events office? And, as posed in comment left over at the Busman's Holiday by reader Jason Phillips, how will these additional wages figure into any calculations for pension, worker's compensation, and other purposes?

Also, when a designated scheduler is used, it looks like the officers who work the detail will either have to pay the scheduler directly for the privilege of doing the work (in cash?), or will have their pay docked a bit by the private employer in order to pay the scheduler for their services. How will officials prevent this system from descending into an ordinary kick-back scheme? And how will this schedulers fee work for tax purposes; will it also be tracked through the Special Events Office? Will the officers who have to chip in to pay the designated scheduler have to pay taxes on the wages that portion of their income which the "voluntarily" hand over to the scheduler?

In general, the new Ravenstahl plan looks like a good deal for city taxpayers. But the devil is in the details, and some of those details remain unclear at this point.


Skip said...

Yeah, I blogged on this last week but hesitated to publish it because I remained confused after reading about the cost-recovery program. Maybe that was the intention of the 'new' program.
Specifically, Boren reported on a fee collected by the bureau, "The fee will feed the police union's legal defense fund and cover medical liability costs if an officer is hurt while working off duty." I raise the point that if the bureau collects the fee why doesn't it bear the responsibility in the event of a lawsuit as in the Eggleton case. This is another comment on the points you raise about the devilish details.

Anonymous said...

There may be more to this story than meets the eye. The same Sgt. John Fisher who was involved in the mayor's Heinz Field incident and the same Sgt. John Fisher who was promised a commander's job, will also a designated scheduler. Watch and see!

EdHeath said...

I guess the secondary employment could work in a few different ways. I suppose businesses that want to have a long term relationship with a particular officer could set them up as a W-2 employee. But any pension or workman’s comp issues would reside with the second employer, not the city.

I expect most if not all businesses would want to pay the officers as 1099 subcontractors. They would make a similar payment to the city out of their AP system. 1099 payments would likely mean no taxes withheld, but any income over $600 would be reported to the Feds (and the state). I expect some officers are already familiar with quarterly payments

Really, the liability issues are kind of staggering. If an officer were injured on the second job, who would pay the workman’s comp or disability? Or would the officer have to suck it up. Considering how dangerous police work can be, seems like a bad deal.

Anonymous said...

It's not clear whether cops can continue to be paid under the table (a minus for taxpayers), however, it's clear that the system is significantly flawed insofar as the city is at the mercy of a cop to determine how much $ the city will make from a job. In other words, a cop can work 8 hours, tell the city he only worked 4, so the city will only get $3.85 x 4, not 3.85 x 8...but of course, a cop would never lie...

Anonymous said...

there are still a hugh amount of cash details and details that pay by check, but no 1099 is ever reported. you can always call the special events office 323-7825 and ask them.

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