Robin's Ruminations

This posting completes my direct analysis of the six part test used by Washington to determine whether or not a worker is an employee or an IC.  The sixth test is very similar to the fifth in that it is fairly simple to determine whether or not the worker can be classed as an IC.

6.  Maintain Books - If you want to use IC's you must make certain they are maintaining their own set of books.  They need to keep some kind of accounts receivable and payable.  They need to file their own tax returns (see tests 4 and 5).  They should maintain a checking account separate from their personal account just for business related income and expenses.  

I understand some IC's don't want to bother with this boring side of being in business.  They're process servers not bookkeepers!?!  The only problem is, if you get audited and the auditor looks closely at your IC's, and discovers they aren't keeping their own books - well you fail the six part test.  When he's done the auditor will hand you a bill for three years taxes plus penalties plus interest!  Now how much trouble is it to make sure your IC's are keeping their own books?  Given the alternative I don't think it is much trouble at all.

SUMMARY
I'll take a moment here to muse about what I've covered on this topic over the past couple of weeks.  And, because it was the department which is triggering so much angst in our industry right now, I'll say a few things about L&I.  But keep in mind that pretty much the same applies to Employment Security and the IRS.

We've been told by L&I that they are focusing on the process serving and legal messenger industry.  Some companies have been audited already, some are under audit, and others are sure to follow.  It doesn't matter how small you are you need to prepare for the knock at the door.

The interesting thing is, L&I is a creature of business.  It was created to solve some serious problems businesses were having with their employees.  Namely they were getting sued on a regular basis by injured workers.  Judgments were being handed down which crippled many companies and pushed others out of existence.  The solution was a system of insurance in which both sides, workers on one and business on the other, agreed to certain trade offs.  Workers gave up their right to sue and employers agreed to fund L&I.  

But time has taken its toll and the original problems have been forgotten.  Many in business now chafe under what are seen as burdensome taxes.  Some employees game the system and milk it for every paid day off they can get.  And society itself has changed thus making some of the established ways of doing things outmoded and outdated.

Process serving, though an ancient profession, seems to have slid under the government radar until only recently.  When L&I finally began to take some notice of us they attempted to apply their existing rules to a group for which they didn't even have a classification.  After considerable effort and negotiation L&I finally established a classification for us under the private investigator / security guard heading, 6601-07.  

We are an unusual industry.  We don't really fit the norm when it comes to government's preconceptions about business.  Even the application of the six part test doesn't make sense.  The test was created to keep prevent abuses in industries much larger than ours.  The most prominent of which is the construction industry.  We have little in common with most other businesses.  I don't think it would be a stretch to say we're somewhat unique.

I've received some information from my friend Tony Klein in California.  The process servers there have already gone through the problems we are now encountering.  As time permits I'll examine it and attempt to determine its usefulness to our situation.

I urge all of you, whether you use employees or IC's, to learn the law as it applies to your business.  Apply what you learn and play within the rules.  If you don't think the rules are fair then work to change them.

In my opinion, the first four tests are subject to a fair amount of interpretation and debate.  Here in #5 we're given a test that appears straight forward and lends itself to fairly easy compliance.

5.  Required Registrations - Have your IC's complied with all requirements for the operation of a business in Washington?  To answer this question in the affirmative you'll need to do a little background work but it is nothing onerous.  Have your IC's satisfied the following?

Department of Licensing - DoL requires the completion of a Master Business License application.  If you're in business in Washington you need to fill one out and submit it.  In return you'll receive a UBI number (Universal Business Identifier).  UBI numbers are used by various agencies to identify you as a valid business in Washington.

Department of Revenue - Anyone doing business in Washington needs to register with DoR.  In doing so they will receive the honor of paying the B&O tax (Business & Occupation - This is really a state income tax on business but that is another story for another day).

Local government - Many local governments have registration requirements.  You need to know with which each of your IC's need to register.  Usually they'll need a city or county business license.

Employment Security Department and the Department of Labor & Industries - You only need to register with these if you have employees.  Since many IC's don't have employees they probably won't need to register.  However, they can register and then exempt themselves from the taxes.  This might be worth thinking about because it will go a long way towards establishing them as truly INDEPENDENT contractors.

Department of Social and Health Services Division of Child Support - As with ESD and L&I, a business only needs to register here if they have employees.  When ever a new employee is hired they are to be reported to DSHS.  The purpose is to locate workers who owe child support.  

Secretary of State Corporations Division - If the IC operates as some kind of corporate entity (corporation, S-Corp, LLC, etc) then they must maintain their registration with this office.  I can see some advantages in having IC's who are set up in this way.  Seems to me it would really help a lot in establishing them as IC's.

I'm familiar with a situation where a process server failed to keep up his various registrations.  He went on for almost 10 years without a current UBI number.  But when one of his clients, who was also a process serving company, was audited, he became caught up in that audit.  Why?  Because the state said he was an employee and not an IC - even though they were in substantially different parts of the state!  And frankly, from the state's point of view, that is exactly what he was.  This created problems for him and for the company which was under audit.  Fortunately he has registered and is now square with the state.

Side Note - I don't feel sorry for people who operate a business under the table in order to avoid paying taxes and fees and then cry about it when they get caught.  I may not agree with the way taxes are collected or the manner in which government spends the money but I pay my taxes.  Anyone not paying their taxes is cheating society and is causing me (along with all other honest taxpayers) to pay more than I would otherwise.  There are plenty of honest ways to effect change.  Cheating isn't one of them.

Well I'm half finished with this series on the six part test used by the State of Washington in determining whether a worker is an employee or an IC.  From the telephone calls, e-mails, faxes, letters, and posted comments I've received, this is a topic of interest not just in Washington but in other states as well.  Obviously each state is going to treat this topic in its own way but, that said, there is a great deal of overlap across the nation.

As a reminder, you can see L&I's pamphlet on this topic by clicking here.

4.  IRS Taxes - "When you entered into the contract, was this person responsible for filing a tax return with the IRS for his or her business?"  Notice the similarity with test #3.  In particular the use of the past tense "was" in terms of when you entered into the contract.  Let's look at this from a different point of view by asking the question in a different way.

Can I turn an employee into an IC?  It seems the answer would be qualified "no" based on the fact that the worker was not responsible for filing taxes for his business at the time you entered into the contract.  I say "qualified" because it appears the worker could leave your employment, set up his own business (part of which is becoming responsible for the taxes related to the business), and then enter into a contract with you as an IC.  Frankly, this might work but it sounds like something government would attempt to prevent.

 Always keep in mind, government agencies do not like the concept of IC's.  Government's goal is classify all workers as employees.  To achieve that end government will make it difficult, especially for the unknowledgeable, to use IC's.  The claim government makes to support this goal is worker safety.  There is a lot of truth in that claim but I'm sure power and money also enter into the equation.  Thus the use of the past tense in tests #3 and #4.  

As I see it, the most clean cut way of achieving "yes" answers to them is to only contract with people who are already in the process serving business in one form or fashion, have been filing their own business tax returns,  and have never been your employee.  

Parts one and two covered supervision and separate business.  Part three is very similar to part two.

3.  Previously Established Business

The test gives us a single question to answer for this part.

Do they have an established, independent business that existed before you hired?  This is similar to test #2 but remember that, according to the rules, you must answer "yes" to all 6 of the tests in order to qualify a worker as an IC.  The question presented here may make it a little difficult to answer "yes" to it if you aren't careful.  As I read this test and speculated in my mind about its implementation by government, I reached the conclusion the contractee (that's you if you use IC's) can only qualify a worker as an IC if you can demonstrate the worker had a full fledged business before you contracted with them.

L&I suggests this demonstration can be made by showing the IC had other customers or was advertising for customers before you contracted with them.  I speculate that other forms of demonstration could be in the form of business licenses, proofs of registration with government agencies such as L&I and Employment Security, 1099's from existing clients, etc.  

The trap that exists in this test is the reference to the past - "... that existed before you hired?"  If you exercise some care I think this is quite doable in many situations.  Make certain a potential contractor has his government registrations in place, has his own business cards, has some kind of advertising page or brochure he can hand out, etc, before he signs your contract and before you assign any work to him.  

In essence, the contractor needs to be able to compete with you and, perhaps, has done so in the past.  If you don't allow an IC the ability to do this then you are removing some of their independence and making them appear to be an employee.  

If the server is an employee you have control but must pay taxes and be subject to various work place rules.  On the other hand, if the server is an IC you may lose clients to him.  I'm aware of a situation in the Puget Sound area where this latter actually happened.  An IC took away several accounts from the company with whom he was contracting.  The company survived but was hurt financially.  

There is always a trade off.  There is no free lunch.

Recall that the first test in determining whether a worker is an IC or an employee related to supervision.  The second test asks whether or not the worker is operating a separate business.

2.  Separate Business

This test is broken down into 3 questions which are joined by the logical operator "or".  Frankly, I'm surprised they use "or" instead of "and" because the use of "or" means you only need to answer one of the three questions with "yes" in order to qualify the worker as an IC.

Do they offer services that are different from what you provide?  There are a lot of different ways this could come into play.  For instance, suppose your business doesn't serve process but acts as an aggregator.  You receive service assignments from a variety of clients but none of those assignments are served by you or your employees.  Instead you contract them out to local IC's who are process servers and do the actual serving.  In this arrangement you clearly do something quite different from what is done by your IC's.  On the other hand, suppose you (or your employees) serve some papers now and then.  In this case you are a process server just like the IC's.  Based on this part of the test, you cannot use IC's.

Or, do they maintain and pay for a place of business that is separate from yours?  This one is fairly simple.  Does your IC have his own office which is separate from yours and for which he pays the rent?  If the answer is "yes" then, based on this part of the test, he qualifies as an IC.  

Or, do they perform their service in a location that is separate from your business or job sites?  Answering yes to this one is a common reason for using IC's.  The IC covers an area outside of your normal coverage area.  For example, my office is in Bellingham and I cover Whatcom, Skagit, and Island counties.  But I don't cover Spokane County.  So when we have a paper for the Spokane area we send it to a process server in Spokane.  On the other hand, if the IC I want to use covers Skagit County then he won't qualify as an IC under this part of the test.

In general, this should be one of the easier tests under which you can qualify a worker as an IC instead of an employee.  And you only need to get a correct answer from one of the three questions which make up the test in order to qualify.  Just remember it is only one test out of six and you must qualify under all six.

Sounds simple but the devil is in the details.  For instance, suppose you claim you cover the entire state.  In that case you won't qualify under the third question (separate location).  And if you serve papers and they do too then you won't qualify under the first question (different services).  Which means you had better hope they maintain and pay for a place of business separate from yours.  This last could get a little tricky.  Suppose they work out of their home (or their car), the question may get asked as to whether or not this is indeed a separate place of business!  You may think it is a separate place but an Administrative Law Judge may think otherwise.  And guess whose opinion counts!

I've written previously about the terrible situation in New York where process servers working for American Legal Process falsified thousands upon thousands proofs of service.  This practice has become known as "sewer service" because of the practice of dumping the actual service documents in the sewer instead of serving them.

Jeff Karotkin has done a fantastic job of following up on the situation and has recently posted new information on his blog at http://serviceofprocesslookingforward.blogspot.com/.  I urge everyone to read his material carefully and take it to heart.  

There are people in our industry who care about one thing and one thing only - the all mighty dollar.  And they'll do anything to get it.  They'll forge signatures, they'll rewrite and change proofs, they'll  .....  My gawd, it makes me shudder to even think about what is going on in our industry.

And don't think that just because we're way out here in Washington we're somehow immune.  I assure you, we're not.  Absolutely we're not.  It is happening here.  Be careful with whom you're dealing.  If a client asks you to do things that make you uncomfortable then trust your gut - stop dealing with them.

There continues to be a great deal of discussion regarding the differences between an independent contractor (IC) and an employee.  This discussion is healthy and I hope most process servers are paying attention to it.  I've discussed parts of this topic before but this time I'm going to examine the six part test used by L&I to determine whether a person is an employee or an IC.  Just keep in mind that I'm a lay person and not an attorney who is expert in this area of law.  Click here if you want to see L&I's pamphlet on this topic for yourself.  You'll find all six questions on page five but let's start here with supervision.

1.  Supervision: Do they perform the work free of your direction and control?

On page four of the pamphlet L&I provides some additional information on this topic.  

You ARE NOT supervising if you are only scheduling and inspecting the work.  

You ARE supervising if you are telling your worker or a subcontractor’s workers how to do the job, assigning tasks, training, keeping time sheets, paying a wage or setting regular hours.

In order for a process server to be an IC it appears the contractee (the boss) must have very little control over the work the IC is to perform.  The contractee can tell the IC when and where the work is to be done and can inspect the work for quality.  

However, in order to avoid turning an IC into an employee the contractee must not instruct the IC on how to perform the work, cannot assign specific tasks, cannot provide any training, can't do the IC's bookkeeping, must pay according to a contract, and cannot set the IC's hours of operation.

So how does supervision impact the use of process servers?  Now I'm more familiar with using employees so if you think any of my ideas regarding the use of IC's are wrong please post a comment with your thoughts on the matter.

Scheduling - It seems to me the contractee can tell the IC about the work the IC is expected to perform and to set certain parameters, such as a specific time frame, so long as those parameters were set by the contractee's client..  For instance, it seems reasonable the contractee could say the first attempt is to take place within four days so long as this was an expectation of the contractee's client.  Scheduling involves more than time, it also includes locations.  Therefore the contractee could specify service attempts are to be made at specific locations where it is expected the target will be found so long as the locations came from the client.

Inspecting - The contractee can inspect the end product or the IC's progress at any point after the job is assigned.  It can approve of the IC's work or find it unacceptable in meeting the terms of the agreement (written or unwritten) between the contractee and IC.  

Those are the things the contractee can do and maintain the IC as a contractor instead of an employee.  But what about the things the contractor can't do?

Tell the IC how to do the job - I take this to mean the IC must be familiar with the rules of service and the nuts and bolts of how to accomplish service.  The former would include knowledge of RCW's, court rules, and case law.  The latter would include techniques for getting people to answer the door, which brand of computer to buy, which software to use, which type of car to buy, or information on maps, GPS's, etc.  These are tools of the trade and the IC would be expected to know about them or, at least, how to find out about them.

Assigning tasks - This deals with the means and methods of doing the work.  An IC needs to supply the means and control.  When the contractee steps in then the IC becomes an employee.

Training - IC's need to know how to do the job or they need to learn how to do it on their own.  It seems reasonable to me that the contractee should not be teaching the IC.  

Keeping time sheets - It is the IC's responsibility to monitor his own time.  If the contractee becomes involved in this it seems apparent to me the IC is no longer an IC but has become an employee.

Paying a wage - This implies regular remuneration based on a salary, an amount per hour, or an amount for each piece of work completed.  Taxes are withheld and paid by the contractee.  Seems obvious to me this will quickly convert an IC into an employee.

Setting regular hours - Once again it is fairly obvious that an IC would set his own hours and any move to set them on the part of the contractee would move the IC towards being an employee.  That said, if the IC didn't work the hours necessary to accomplish the job then the contractee would have every right to stop using that IC and find one that is ready, willing, and able to work the needed hours.

I'll take up the Separate Business question in my next post.

Needless to say, I could write volumes on this topic and not even scratch the surface.  In any event, here is a quick overview.

B&O Tax Increase
There is some talk of a B&O tax increase this year.  The last time the legislature increased business taxes to balance the budget was in 1993.  In November 1994 many incumbents were fired as a result.  With luck they'll remember that and only close some loopholes this year instead of saddling businesses with a major increase.  After all, we are the people who create the jobs in this state and pay the wages of every last state and local employee.

Sales Tax
Some legislators are considering either increasing the state portion of the sales tax from 6.5% to 7.5% and others are considering expanding the services on which the tax is applied.  Personally, I wouldn't mind it if they applied sales tax to process servers BUT only if they reduced our B&O tax to the same rate applied to retail sales.  That may sound crazy but it would actually improve our bottom line.  Of course it is crazy because they'll never do it.

Unemployment Tax
If you have employees you may have noticed an increase in your UI tax this year - even if you have a spotless record.  The UI tax is made up of two parts.  First is your experience record and the second is the social-cost tax.  Due to the economic downturn the social-cost part has increased dramatically, doubling and tripling in some cases.  However, Senator Holmquist and Representative Condotta are proposing a formula that will smooth out the increases over several years.  The same amount of money will be collected but over a longer period of time.  Not a bad idea at first blush.

Job Creation Tax Credit
This idea comes from Governor Gregoire - which means I don't trust it.  The idea is to give businesses a one time $2,000 B&O tax credit for each full time position they create and which stays in place for at least a year.  Once again, not a bad idea but there must be a catch to it somewhere.

Independent Business Association
This is a blatant plug for the IBA.  For a few bucks every year you receive one of the most informative newsletters around.  If you're not a member you should be.  I've been a member for years and am thankful they are there to take my money.  They represent small business in Olympia and, last time I checked, that includes all of us.  Check them out by clicking here - www.ibaw.net.

I've written previously about the use of independent contractors (IC's) as process servers and legal messengers.  Use the search tool to locate all the posts.  I won't repeat here what I wrote previously.

It has been learned through several sources that the Department of Labor & Industries (L&I) and Employment Security (ES) are indeed targeting process servers and legal messengers with plans to audit everyone in the state this year.  Their stated intent is to eliminate the use of IC's in our industry.  They are claiming none of us can pass the six part test they apply to determine whether or not a person is an employee or an IC.  Click here to open an L&I flier on this subject.  See page five for the six part test.

Some people in our industry think they can bury their heads in the sand and this threat will go away.  They think if they keep a low profile then they won't be noticed.  Following the "head in the sand" course is both foolish and risky.

It is foolish because it ignores the importance of working together as an industry to fight back against what appears to be an arbitrary decision on the part of the State of Washington.  Using IC's has been a part of process serving for many decades.  It has benefits for companies big and small.  The State is bound by its own laws and rules.  If bureaucrats are arbitrary in their application of those laws and rules then it is possible to hold them accountable.  But this is possible only if people work together.  Very few of us have the wherewithal to fight the State and win.  But by standing together it can be done.

It is risky because it assumes you won't be found out.  It is only a matter of time before all of us are found.  And when they find you the costs will be substantial.  The State can go back three years plus claim interest and penalties.  It is not a matter of "if" but of "when".  And don't think your competitors will remain quiet if they get audited and you don't.  It is a sure bet they won't give you that kind of competitive advantage.

We have two powerful weapons with which to defend ourselves - KNOWLEDGE and COOPERATION.  We must educate ourselves about the law and we must work together as an industry.  

Take a single piece of paper and tear it in two.  Easily done.  The paper yields to your strength.  Now take a ream of paper and tear it in two.  Try as you might, you will not be able to tear the ream of paper.  

In my last post I proposed the following thought experiment:  "Suppose the changes take place and service via e-mail is considered just as valid as in person service.  What happens then?"  There are several possibilities.  The outcome would depend, in large part, on exactly how the new rules are put into effect.  I'll try to dream up 2 or 3 scenarios, perhaps one of you will be able to suggest some others.  For the moment, at least, we're only talking about initiating documents, such as the summons and complaint or those of a similar nature whose purpose is to initiate an action.

The Wild West Scenario.  Suppose the rules were changed to allow service to be effective by simply sending an e-mail containing the summons and complaint to the defendant's "e-mail address of record."  The e-mail can be sent by the attorney or the plaintiff if he is acting pro se.  An address of record would be any e-mail address shown to be used by the defendant.  This address might be supplied by the defendant when he signs a contract or otherwise publishes it or lists the address in the public domain or in any way uses the address for correspondence.  Such an address might be found on a person's (either real or in law such as a corporation) website or social networking page.  It might be found during the course of e-mail exchanges between the parties or discovered through some sort of private investigation or through an examination of some type of public record.  

In any event, the bottom line in this alternate universe is there would be very few process servers because their services simply would not be needed - for the most part.  I suspect those few remaining diehards could demand a premium payment for their services in serving those few individuals who are such Luddites that they don't have e-mail addresses at all.

This is science fiction and I don't see it happening within my lifetime (I'm almost 57, be kind and give me another 20 or 30 years).

The Not So Quite Wild West Scenario.  In this alternate universe the rules are changed such that the e-mail must be sent by a disinterested 3rd party (process server) using very specific software which would keep a complete and accurate record of everything relating to the service e-mail.  For instance, it would record each of the Internet servers through which the e-mail passes on its way to the defendant.  It would record the time of arrival on the defendant's computer along with the time the e-mail was opened and how long it was open.  The e-mail would be structured in such a way that no spam filter could block it and it could not be deleted until it was opened.  The process server's software would be subject to some specific requirements, such as being unhackable, etc.

I think there is a reasonable likelihood this scenario, or some variation of it, could become a reality at some point in the not too distant future.  A number of technological advances will need to occur as well as some social and legal changes.  If it does come to pass then, once again, I see the number of process servers across the nation being reduced dramatically.

Also, I wonder who will be the disinterested 3rd party.  Will it be a process server?  Some kind of private business?  Or will it be the court itself or some combination of the court and someone else?  Will there be any need to involve anyone outside that formal legal system itself?

The Most Likely Scenario.  E-Service has a place in our future, I don't doubt that at all.  Some participants are betting it will be a big part and are pursuing business models based on that possibility.  But I'm not so sure, at least not for the near to mid future.  I think this because the legal system is cautious and traditional.  There are still a lot of technological issues to resolve.  But there are also a number of legal and social issues which must be addressed.  We will see (as we already have) the courts allow the use of e-service as an alternative method of service but not as a primary method.  For instance, here in Washington service via snail mail has been allowed for many years but only under certain restricted circumstances.  Anyone wanting to use snail mail service is required to obtain a court order allowing its use and must convince the court substantial efforts have been made, without success, to serve the defendant using personal service or one of its variations.  

So I am not afraid of e-service.  I am not concerned it is going to put me out of business tomorrow or even 10 years from now.  I intend on watching its evolution and will make every effort to be prepared to fill my client's needs as they morph due to legal, social, and technological changes.  I will also attempt to influence those changes as they occur.

Conclusion.  Jeff Karotkin has been writing about change for some time.  I'm sure he and I disagree on certain specifics regarding e-service but our areas of agreement are far greater.  He is correct in arguing we must be prepared to change as the world of process serving changes around us.  To do otherwise is to have our head stuck in the sand.

Finally, in my opinion, we must not give e-service a boost by showing ourselves as dishonest or incompetent.  Forgery and sewer service must stop and those who perpetuate it must be brought to justice.

In my last post I compared e-service to snail mail service.  I also gave a definition of service of process - "The delivery of a writ, summons, or other legal papers to the person or entity required to respond to them."  In many states, over many years, process servers have fought legislation intended to allow the use of snail mail in any of its various forms.  We have been successful because we've consistently been able to establish that snail mail is not as reliable as service performed by a process server.  A survey conducted by WSPSA found a bad address rate for certified snail mail in the neighborhood of 35%.  And yet the courts consistently allowed judgments against people even when there was no signature on the green receipt card.

The question to ask now is, "How reliable is e-service compared to normal service?"  At this point I don't know of a way in which this can be reliably tested.  With the snail mail comparison we could actually go into the courts, pull files, and accumulate data.  But since there are no courts allowing e-service at this time there are no files to pull.  If anyone knows of such a court I would be very interested in hearing from you because a study of their files would be most interesting to perform.

To the best of my knowledge, e-service is currently being allowed only in those circumstances which would otherwise allow for use of an alternative form of service, such as publication or mailing.  The requirements, mainly in terms of diligence, for alternative service tend to be rather strict in Washington.  Or, to put it another way, if you want an alternative means service overturned then shortcut the diligence aspect of it.  Therefore I have no great concern with e-service - so long as it remains an alternative form of service.

But suppose that changes.  Jeff Karotkin has pointed out in his blog that some website's Terms of Use are including language which allows the owner of the website to serve its users via e-mail.  And how many of us actually read the ToU's?  I sure don't.  Which means many of us have probably agreed to such language when we've registered as users of some websites.  Now whether or not the actual use of that language will hold up in court is a good question.  It might or it might not but it wouldn't take much of a change in a statute or court rule to allow it allow it to be upheld in the courts.

Again, suppose the changes take place and service via e-mail is considered just as valid as in person service.  What happens then?  In my next post I'll look into my crystal ball and attempt to answer that question.

How many of you have been following the advance of technology in the legal field and, specifically, process serving?  Certainly nearly all of us use computers to generate our proofs, exchange e-mails, and maybe even do our accounting.  Fewer of us have interactive websites, scan documents for transmission to affiliates, or generate electronic documents that never see a piece of paper until the receiver prints them (if they are ever printed at all).  And even fewer of us think about the implications for the industry as a whole.  So I ask you to take a moment and think about this question, "Where is the ever expanding world of technology taking us?"

I've ruminated on this topic for quite some time and had long talks (and e-mail exchanges) with other process servers around the country.  And like any other attempt to predict the future such musings are subject to many variables and any conclusions are far more likely to be wrong than right.  So let's take a look at one factor that might affect the entire industry and that is e-service.

There has been a lot written lately about e-service but I think very few of us are really taking it seriously.  In fact, I would go so far as to say many of us have our heads stuck in the sand or, even worse, simply don't care whether e-service happens or not.  In part this may be because we don't understand how, in theory, e-service is supposed to work.  

In my mind there is a great deal of resemblance between e-service and snail mail service.  But, as technology has done in so many other situations, e-service has the potential of being faster, less expensive, and more reliable than snail mail.  And e-service certainly has the potential of being faster and less expensive than regular "person to person" service.  Is e-service more reliable than regular service?  It might well be if we continue to have sewer service episodes such as just came to light in New York and a couple of other areas of the country.  Indeed, we are not immune to this sort of problem as I am familiar (most unfortunately) with the forgery of proofs of service right here in Washington.  

To get a handle on e-service we need to take a step back and ask, "What is service of process?"  And here is a nice succinct answer, "The delivery of a writ, summons, or other legal papers to the person or entity required to respond to them."  Of course the various states have promulgated distinct rules relating to service but they all come down to some form of delivery.  Those added rules, despite their variations, are there to improve the reliability aspect of service.  

In Part 2 of this series I will discuss and compare snail mail service, regular service, and e-service in greater detail.

There have been some rumors floating around regarding the use of IC's in the process serving industry and the Department of Labor & Industries.  The more serious of those rumors have hinted L&I is going to eliminate the use of IC's in the process serving industry and that only employer/employee relationships will be allowed.  Frankly, this didn't seem plausible to me so I decided to go to the source and called Bill Moomau.  Bill is the Supervisor of the Classification Department at L&I.  I've found him to be a gentleman and he genuinely listens to what I and other WSPSA members have had to say.  And, most importantly, he lays it on the line - says what he means and means what he says.  Many WSPSA members may recall Bill as our speaker in Vancouver at our 2009 Annual Conference.

I spoke with Bill on the phone the other day.  The conversation lasted about 15 to 20 minutes.  I asked him point blank if it is L&I's intent to eliminate the use of IC's as process servers.  He said "No."  However, he went on to say that L&I will expect anyone using IC's to satisfy the six tests they use to determine whether a person is an employee or an IC.  I've written about these six tests before and you can read them by clicking here.  If all six of the tests are satisfied then, and only then, can the person doing the work be considered an IC.  If even a single test is failed then the person is an employee.

An interesting aspect of the entire L&I program is that it exists as much to protect the employer as it does the employee.  In fact, it was seen as a great boon to business when it was instituted.  You see, employers had a problem before L&I was created.  The problem was that when an employee was injured on the job the employee would sue the employer.  If the employee won then the employer was directly responsible for the damages suffered by the employee.  Today, the dollar amounts under that old system would be enormous.  Now I'm not saying L&I is a perfect system (it certainly could use some changes) but the alternative is almost unthinkable.

There are some big advantages (and disadvantages) to using IC's.  The "system" allows for their use and will continue to allow their use but you have to follow the rules.  Use the search tool in this blog to locate all the articles I've written on the IC topic.  Search for "independent contractors".  Each article has links to additional information.  Educate yourself on this topic and implement whatever changes are necessary to conduct your business in an ethical and legal manner.  

I received my audit results in the mail today and, as expected, I failed.  The failure rate was 19% and the Department of Licensing classifies that as failure.  Now wait a minute.  If I missed 19% that means I got 81% correct.  That's a B- not an F!  They must not grade on a curve.

My office had conducted 43 look-ups during the audit period and only 35 were listed in our logs.  Of those, 5 were shown as "no record found" and they reminded me these also need to be logged.  There were 3 plates which weren't logged at all and they were probably my error as opposed to being a mistake on the part of the other 2 people in my office who have IVIPS access.  Everyone once in a while I find myself forgetting to log a look-up.  (I suffer from AMA syndrome - Advanced Middle Age.)  And, of course, they mentioned we weren't using our sub account numbers properly but hey, I pointed that out to them.

Some of the things they detailed I had already spotted and described in earlier posts on this topic.  Frankly, I wouldn't mind another audit in the near future just to see how effective the changes were.  In speaking with the DoL people I found them to be courteous and attentive.  With luck an on going conversation has begun which will result in a better understanding for everyone involved.

So, overall, it was painless.  We've instituted some new procedures in our office to shore up some of our weak points and now we move on.  

The sequence of events over the past 24 hours has been very interesting and productive.  I've learned about some more things my office hasn't been doing quite right on our IVIPS record keeping and had a fascinating conversation with Hannah Fultz of the Department of Licensing.  

It turns out there was an "issue" (she didn't go into details) in the not too distant past where IVIPS information was used inappropriately.  This, in part, triggered the current round of audits and the results are not good.  They're finding a failure rate in excess of 80%.  Needless to say, DoL is taking this very seriously.

I was surprised to learn there are over 8,000 IVIPS users.  This tells me that process servers and PI's are a small fraction of the total.  Hopefully we are an even smaller fraction of the "issues".

In speaking with Ms. Fultz we both concluded a major reason for the current failure rate is a lack of understanding on the part of users as to the requirements in the contract.  I'm generally pretty good about reading and deciphering such things but obviously (since I now know I wasn't doing everything properly) I missed some important aspects of the contract and therefore failed to institute appropriate procedures in my office.  Now that my understanding is better I've instituted multiple procedure changes which address the problems.

Ms. Fultz also mentioned there are some changes being considered for the current contract.  More than anything they need to know the information is being used appropriately.  To do that they need to be able to conduct audits which result in accurate information and in a much lower failure rate.  So, as part of their process, they are going to explore methods of educating users about their responsibilities and record keeping requirements.

I told her that she and I are on exactly the same page.  Speaking for WSPSA (hope that was okay to do Madam President) I assured her the association would cooperate in any way possible to educate our members to improve our audit scores.  I mentioned WALI but explained I couldn't speak for them in the same way that I felt I could for WSPSA.  I urge any WALI member reading this to bring it to the attention of an appropriate person on the WALI Board.  Perhaps WSPSA and WALI can work together on this in some fashion.

IVIPS is an incredible resource.  We need to protect it.  We need to cooperate with DoL and we need to police our own.  My fear is that a loose cannon somewhere will abuse IVIPS and, as a result of their actions, I will lose access.