Could Baxter State Park run its remote cabin facilities at Daicey Pond and Kidney Pond using contractors instead of civil-service employees?

Plain-English summary

State Auditor Rodney Scribner wrote to Attorney General Michael Carpenter in January 1991 raising a concern about Baxter State Park's practice of using contractors, rather than civil-service employees, to operate the Daicey Pond and Kidney Pond cabin facilities. The Auditor's concerns: (1) the people running these facilities looked like Park employees (uniforms, similar duties, on Park premises, applying IRS employee criteria); (2) the Park was not withholding income tax; (3) the Park had told the Auditor it might expand this contracting practice. The Auditor wanted the AG to clarify whether these were really independent contractors or employees in everything but name.

Attorney General Carpenter sided with Baxter State Park. He affirmed the earlier conclusions of Assistant AG Paul Stern (Dec. 6, 1990) and Leslie D. Bloom of the Bureau of Employee Relations (Dec. 4, 1990): the contractors at Daicey Pond and Kidney Pond were not Park agents or representatives within the meaning of 12 M.R.S.A. § 904.

Section 904 requires that "agents and representatives of the Park" be hired pursuant to Civil Service Law. The AG read that to mean civil service applies when the Park hires employees. It does not, in its text, prohibit the Park from using contractors for appropriate functions. The Park's choice of staffing model is permitted where appropriate.

Why these facilities were appropriate for contracting: Kidney Pond's cabins had never historically been run by Park employees, having previously been leased to a private party until a recent policy change put them more directly under Park oversight (using a contractor model). Daicey Pond camps had been run by contractors for nearly a decade. No Park employees were displaced. The contractors had done a "magnificent job." The unique nature of the facilities, rental and upkeep of numerous cabins and diverse grounds, made independent operation appropriate.

The AG also responded to the Auditor's concern about expanded use. Park Director Caverly had told the AG's staff that the Park did not actually intend to use contractors beyond the existing Daicey Pond and Kidney Pond facilities, contrary to what Auditor Scribner had been told. The AG suggested that any specific future case be brought to the AG's office for guidance.

The classification question (employee vs. independent contractor) cannot be answered as a single bright-line rule. The AG identified "degree of employer control" as a vital factor and concluded that the substantial leeway given to the Daicey Pond and Kidney Pond contractors, and the relative lack of Park control over their day-to-day operations, supported the contractor classification.

Currency note

This opinion was issued in 1991. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Section 904 requires the Park's "agents and representatives" to be hired pursuant to Civil Service Law. Carpenter agreed with the earlier advice from Assistant AG Paul Stern and Bureau counsel Leslie D. Bloom. He wrote that section 904 does not prevent the Park from using contractors "where appropriate," and found the Daicey Pond and Kidney Pond arrangements permissible.

The opinion describes why these arrangements were distinctive: Kidney Pond cabins had previously been leased to a private party, Daicey Pond had used contractors for nearly ten years, and no Park employees were laid off when the Daicey Pond camps moved to contractors. The AG also emphasized that these contractors had "enormous leeway" and were subject to relatively little Park control. He declined to give a rule for other situations, saying each must be considered case by case.

The attached January 29 letter from State Auditor Rodney Scribner raised different facts and questions. He reported uniforms similar to Park employees' uniforms, work on Park premises, and concern about whether the Park should withhold income tax. Carpenter's reply addressed section 904 and the contractor relationship; it did not separately decide the withholding question.

Common questions

Why did the auditor think these workers might be employees?
Scribner's attached letter pointed to uniforms, work on Park premises, duties similar to park rangers, and what he viewed as IRS employee criteria. The AG focused on the contractors' day-to-day independence and relative lack of Park control.

Did the AG say other parks could use the same arrangement?
No general rule appears in the opinion. Carpenter called the Baxter State Authority unique within state government and said it would be unproductive to generalize from these arrangements.

Was Baxter planning to expand contractor use?
The auditor reported that it was. Carpenter replied that Park Director Caverly had told AG staff the Park did not intend to use contractors beyond its existing services.

Did the AG decide whether the Park owed income-tax withholding?
The auditor asked that question, but Carpenter did not give a separate withholding analysis. His conclusion concerned section 904 and the status of these contractors as Park agents or representatives.

Source

• Landing page: https://www.maine.gov/legis/lawlib/lldl/agops/agops.htm
• Original PDF: https://lldc.mainelegislature.org/Open/AG/Opinions/1991/ag_19910221.pdf

Original opinion text

State of Maine
Department of the Attorney General
State House Station 6
Augusta, Maine 04333

February 21, 1991

Rodney L. Scribner, CPA
State Auditor
Department of Audit
State House Station #66
Augusta, Maine 04333-0066

Dear Mr. Scribner:

I am in receipt of your letter of January 29, 1991, regarding Baxter State Park's practice of utilizing contractors at Kidney Pond and Daicey Pond facilities. I agree with the conclusions of Paul Stern in his letter of December 6, 1990, as well as those of Leslie D. Bloom at the Bureau of Employee Relations in a letter dated December 4, 1990.

In your letter, you indicate that the Park "intends to expand its use of this type of contract." My staff has informed me that in conversations with Park Director Caverly, he indicated quite clearly that the Park does not intend to utilize contractors for services beyond that which presently exist. With respect to the use of contractors for the Daicey Pond and Kidney Pond facilities, clearly that is permitted under 12 M.R.S.A. § 904.

Section 904 states that agents and representatives of the Park shall be hired pursuant to the Civil Service Law. In no way does section 904 prevent the Park from utilizing contractors where appropriate. The Kidney Pond and Daicey Pond facilities are unique in the Park; contemplating the rental and upkeep of numerous cabins and diverse grounds. The Park utilizes contractors there because this allows the Park to hire someone who can perform the varied numerous tasks to run the facilities without constant supervision.

Historically, Kidney Pond's cabins have never been run by Park employees. Kidney Pond cabins were leased to a private party until relatively recently. As a result of a policy change, this facility came more directly under the purview of the Park, with the Park utilizing a contractor rather than a lessee. Contractors have been used at Daicey Pond camps for nearly 10 years. No employees were replaced or laid off as a result of Daicey Pond camps going to contractors. Moreover, everyone agrees that the contractors at Daicey Pond have done a magnificent job.

You asked for specific guidelines in other areas. Because the Baxter State Authority is unique within State government, it is probably not productive to generalize based upon situations which exist at the Park. Further, each situation encountered has to be looked at on a case-by-case basis. The analysis includes many factors. For example, the degree of employer control is vital to determining whether an employer-employee or independent contractor relationship exists. Clearly, because of the enormous leeway and relative lack of control, we do not believe that the contractors at Daicey Pond or Kidney Pond are employees, i.e., agents or representatives under § 904. If you have a particular case you wish to present to us for our guidance, we would be happy to assist you.

I hope that this letter has been helpful to you.

Sincerely,

Michael E. Carpenter
Attorney General

MEC/tt

cc: Irvin C. Caverly, Jr., Director, Baxter State Park

STATE OF MAINE
DEPARTMENT OF AUDIT
STATE HOUSE STATION 66
AUGUSTA, MAINE 04333
Area Code 207
Tel. 289-2201

RODNEY L. SCRIBNER, CPA
STATE AUDITOR

January 29, 1991

Mr. Michael Carpenter
Department of the Attorney General
State House Station 6
Augusta, Maine 04333

Dear Mike:

Welcome you to your new role as Attorney General. My staff and I look forward to continuing the good working relationship that our departments have enjoyed over the years. I've enjoyed our personal acquaintanceship as well.

I'm sure that you have a number of important matters to address. However, I would appreciate your consideration of an employee/contractor issue at Baxter State Park (BSP). It is far reaching because other departments have similar situations and we feel important legal considerations are being overlooked.

Recently, my staff questioned BSP's practice of hiring contractors to run Daicey Pond cabins. Assistant Attorney General Paul Stern advised BSP that there was no violation of statute. This matter is still troubling to me and to my staff. We believe that Mr. Stern's response did not fully address the employee versus contractor issue.

We have two principal concerns. First, are these individuals agents or representatives of BSP? Second, should BSP withhold income tax from payments made to them?

In our discussion with BSP management, they stated that a major reason for treating the individuals as contractors was to limit BSP expenses for employee fringe benefits. We also noted that BSP does not withhold income taxes from the individuals. BSP intends to expand its use of this type of contract. It is therefore particularly important that they receive authoritative, accurate guidance in this matter.

For your consideration, we have highlighted what we believe to be relevant information in the accompanying attachments.

Attachment 1 - Paul Stern Letter of December 6, 1990
Attachment 2 - 5 MRSA §7032
Attachment 3 - 12 MRSA §904
Attachment 4 - IRS Circular E Employer's Tax Guide
Attachment 5 - IRS Publication 937 Business Reporting
Attachment 6 - BSP Standard Operating Procedures Manual
Attachment 7 - Contract for Special Services

Mr. Michael Carpenter — Page 2
Department of the Attorney General

The individuals in question are dressed in official uniforms similar to those worn by BSP employees; are perceived as representatives of BSP; serve in a capacity similar to park rangers; work on BSP premises; and appear to meet IRS employee criteria. We believe that there should be no question that legally they are employees of BSP and the contract relationship is a matter of form and not substance.

If you do finally conclude that these individuals are not BSP agents or representatives, we would appreciate specific, written guidance explaining your conclusion. Such guidance would be very helpful to us as we encounter similar situations on other audits.

Best personal regards,

Rodney L. Scribner, CPA
State Auditor

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Attachments