Dept. of labor audit

[kicknargel]

So we're getting an audit from the state dept. of labor. I think it's mostly routine to check that we're reporting accurately, etc. But I imagine the question of classifying over-hire workers as contractors will come up.

Like most or all shops I'm aware of, our full-time people are employees, and we bring in temporary people as needed as contractors on 1099s. We call around to see who's available for the dates we need help. The entertainment industry is a freelance system; most carpenters and painters behave like sole proprietors and piece together their business from various gigs.

Does anyone have experience making that case on an official level?

 

[Footer]

Your going to get dinged hard for it. Yes, it does happen, and yes it is illegal to do. Overhire people are not independent contractors if you are telling them how to do their job and when to show up. You should be putting them on W-2's.

It is a massive problem in the industry that needs to be fixed. Many people don't report 1099's properly. Also, the business's that are doing the "hiring" is not reporting 1099's nearly as often as they should. You also run into all kinds of workman's comp and liability issues. The reason you are being investigated is most likely one of your "contractor's" reported you.

Not all shops do it. In my area, only the crappy ones that you don't want to work for do it. Why do you not want to put these people on your proper payroll?

 

[Dover]

Just be glad it is not the IRS. However I would still think you should find an accountant and perhaps a good lawyer.

Best of luck to you
Dover

 

[BillConnerFASTC]

Based on what my accountant and attorney tell me, its not black and white. Look up the 20 question/point IRS "test" for independent contractor status. You don't have to qualify on all 20 by any means but its a useful guide. There's room for interpretation but it generally is based on control.

 

[rsmentele]

A theater I worked at got hit by this too. They hired all actors and musicians as independent contractors, they failed to report their 1099's and the state got involved....

Needless to say they became employees shortly afterwords and had to file W-2's... That didn't make them happy either because then the amount they were contracted for was being taxed, meaning they took home less, and they felt we should pay the taxes... Silly Actors, welcome to the real world!!

But they found out shortly after that that they could claim unemployment after their contract was over, that meant they didn't need to go back to waiting tables for a few extra months!

 

[cmckeeman]

The theater i used to work at was telling us how to run the show, when to be there for the show, mandatory Wednesday rehearsals (improv club). And every so often the owner would get audited and never Dinged for having independent contractors working as employes.

 

[BillConnerFASTC]

Spinmasters....

 

[Footer]

The theater i used to work at was telling us how to run the show, when to be there for the show, mandatory Wednesday rehearsals (improv club). And every so often the owner would get audited and never Dinged for having independent contractors working as employes.

Plenty of companies do it, Crew One being one of the biggest offenders.

Interesting article here: Independent Contractors in the Entertainment Industry

 

[gafftapegreenia]

Plenty of companies do it, Crew One being one of the biggest offenders.

Interesting article here: Independent Contractors in the Entertainment Industry

(S)crew 1 and their 1099s, one of their many claims to fame. Is Rhino 1099?


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[Jay Ashworth]

I am not here to speak to Common Industry Practice, though whatever it is in an area, I expect it would carry some weight. But those 20 Items on the IRS list are likely pertinent here, and the most common are probably "has own professional tools", "has multiple clients"; at least 5 in a year is best, is what I hear as an IT independent, and "professional skills required".

 

[BillConnerFASTC]

I am not here to speak to Common Industry Practice, though whatever it is in an area, I expect it would carry some weight. But those 20 Items on the IRS list are likely pertinent here, and the most common are probably "has own professional tools", "has multiple clients"; at least 5 in a year is best, is what I hear as an IT independent, and "professional skills required".

I think of it as the means and methods issue - if you say build this and they do what you want how they want to do it and possibly employing other people and using their own tools and such - that's independent.

I am curious that after the circus fall in RI, that someone pointed out that circus performers are independent contractors. Seems like they have little control of when or what or who.

 

[Footer]

Is Rhino 1099?

Nope, you are their employee.

 

[carproelsofly]

Here's a very good document from NYS. The section covering Theatrical Productions is on page 5.

https://labor.ny.gov/formsdocs/ui/ia318.17.pdf

 

[SteveB]

The entertainment industry is a freelance system; most carpenters and painters behave like sole proprietors and piece together their business from various gigs.

?

I don't know ANY carpenters at shops, painters in any shop or other facility environment, or freelance stage technicians in general who work as independent contractors. They may well be part-time employees, but they ARE employees, even if they are freelancing at multiple venues.

This method of attempting to classify such workers as independent contractors, was prevalent when I started in the business 40 years ago, but is nearly non-existent in my area (NYC) currently as the State of NY cracked down on this practice. For good reason.

It would seem that the minute you require a freelancer to work a set schedule (and what shop doesn't) you must classify them as an employee. Not much wiggle room on that issue and as Footer stated, I suspect the state labor dept. is going to come down hard on you.








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[lwinters630]

I have experienced an IDES audit. Had a great attorney. After the audit, I worked with them on a audio series for independent contractors.

First don't talk with them n do it thorough your attorney.

There is an ABC test they use. The main point is, what's the difference between them and you. Why are you taxed and they are not.

Direction and control - if you tell them where, when, how, and with what. They're not independent.
Are they a business - do they advertise, have a company name, have expenses, file business tax return. If they are incorporated you are off the hook. And for all the above. .. You have to prove ít. Keep good records.
Do you have a contact - for each job - it doesn't matter what you call them, or what you think they are.

I think by now you have figured out your in deep dodo. Forget the account, take all your records to your attorney, they can do the audit there. It is safer.

 

[Footer]

Independent Contractor vs. Employee – misclassification can cost entertainment industry employers dearly. | Law Offices of Gordon P. Firemark

Another good one.

And to @kicknargel... Time to lawyer up. CDLE - Unemp Insurance:Worker Misclassification

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[BillConnerFASTC]

Direction and control - if you tell them where, when, how, and with what. They're not independent.

I don't believe it's so black and white unless you mean all of those, not just some. You tell an independent contractor to build a wood house here, they are still a independent contractor. But it is about control and what the usual working arrangements are and especially, if the contractor works for others in a similar relationship. I can hire four people to move boxes for a day and if they are regularly a group that move boxes for other people, they are an independent contractor - even though I'm controlling the what, when, where. If I put up a sign or add saying I need four people to move boxes and they usually wash cars or sweep floors, same work, same location, but not independent.

Let's face it, laws are written to keep lawyers employed as the highest priority, and these do that for sure.

 

[Footer]

I don't believe it's so black and white unless you mean all of those, not just some. You tell an independent contractor to build a wood house here, they are still a independent contractor. But it is about control and what the usual working arrangements are and especially, if the contractor works for others in a similar relationship. I can hire four people to move boxes for a day and if they are regularly a group that move boxes for other people, they are an independent contractor - even though I'm controlling the what, when, where. If I put up a sign or add saying I need four people to move boxes and they usually wash cars or sweep floors, same work, same location, but not independent.

Let's face it, laws are written to keep lawyers employed as the highest priority, and these do that for sure.

Its kind of like porn... I'll know it when I see it. In this case most of the time in our industry overhire people should be paid as employees. Crew chiefs and that kind of thing could go either way. No matter what, lawyers should be involved going forward. This is also something that if you can avoid paying someone as a contractor you probably should.

 

[BillConnerFASTC]

I suppose it depends on the task and how we individually visualize the situation but I'd say you're better off if you can get the work done by an independent contractor. Many fewer liabilities, much less paper work, and generally simpler. Works for something like a specific task - design or build props or a set or costumes; even provide sound system for this. Doesn't work if you want to hire 4 specific carpenters to work in your shop and do what you want when you want and how you want with your tools and supplies. Does work if you can send them plans and they deliver it. It's really how you organize it but having hired both ways - in a for profit business without an administrative department to do the crap work - I'll never add a wage or salaried employee again.

So, different perspective with different situation - sure.

 

[SteveB]

I'm curious as to how designers work when under a USA (or any other) contract. Are they employees of the theater ?, or independent contractors ?. They rarely bring their own "tools" - I.E. Console, instruments, dimmers, etc.... And they are usually working a technical schedule as determined by the venue. Who has experience with this ?, and what was your situation ?.


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