Independant contractor wages

[cmckeeman]

So a comedy club in Denver i was doing lights and sound at hires all the actors and technicians (for lack of a better term) as independent contractors, along with that they pay us based on the attendance of the shows for that month, which means that my pay would fluctuate, in some months i would get paid $20 or $30 for 5 hours of work which is $4 per hour, is this legal?

 

[avkid]

Talent does this all the time, but usually with minimum guarantees. (with contracts)
Have you signed a legally binding contract?

 

[Pie4Weebl]

That sounds like a load of bull.

 

[lwinters630]

The short answer is it can be.

The long answer will involve federal tax codes, unemployment and state employment codes. The IRS will consider many factors when determining independent contractor status, among them is "direction and control" and "usual course of business". Is what you do is in their normal course of business? A church or hospital or retail store can hire a custodian as an IC because their main business is healing people or providing a new suit.

A comedy club provides a place for customers to have an enjoyable time. Actors and technician are not their main business.

However, direction and control can be an issue. If they direct and control how you do your job, then all sorts of tax and employment codes will apply. If they tell the comedian to tell specific jokes, and to ware a certain outfit, how to walk and hold their hand, then they are directing and controlling them. In other words what is the difference between you and the bar tender or the waitress?

But, if they hire them under a written contract, with place and times, but not HOW to be a comedian, then they will probably be considered and IC.

As for your situation most likely it could be argued that you are indeed a IC and if your contract is a % of house, then it is legal.

Although I am not a lawyer and these are not actual case law examples, it should be a reasonable analogy. I would suggest to renegotiate your contract with some minimums dollars or find a different gig.

 

[cmckeeman]

Talent does this all the time, but usually with minimum guarantees. (with contracts)
Have you signed a legally binding contract?

i don't think i signed a contract and as far as i know there is no minimum if business totally tanks then so does our pay

The short answer is it can be.

Is what you do is in their normal course of business?

A comedy club provides a place for customers to have an enjoyable time. Actors and technician are not their main business.

However, direction and control can be an issue. If they direct and control how you do your job, then all sorts of tax and employment codes will apply. If they tell the comedian to tell specific jokes, and to ware a certain outfit, how to walk and hold their hand, then they are directing and controlling them. In other words what is the difference between you and the bar tender or the waitress?

As for your situation most likely it could be argued that you are indeed a IC and if your contract is a % of house, then it is legal.

Although I am not a lawyer and these are not actual case law examples, it should be a reasonable analogy. I would suggest to renegotiate your contract with some minimums dollars or find a different gig.

they had weekly, required non paid rehearsals (it was improv BTW) and there was a set thing we had to do, also i did decide to quit, tonight in fact. they didn't pay enough to get top billing in my time and freaked out when i gave a better paying job priority.

 

[Dover]

More than likely it is not. The answer depends heavily on the exact details of the "contract" and the work involved but from what you have said it sounds suspect. I am only going to answer the independent contractor part as I have some experience with that.

Because a business does not pay taxes on independent contractors the definition of who can be one is regulated by tax law. Does the club give you a form 1099 or W-2 at the end of the year? If it is a W-2, you are an employee and they are probably running afoul of the minimum wage laws. However if it is a 1099 then they saying you are an independent contractor and that brings up a host of different problems.

There are two reasons why I do not think that the current arrangement is legal:

To start with the definition of an independent contractor from the IRS web site:
The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.
I just don't see that working out, all the cast and crew doing things their own way so I have a hard time believing they are all truly independent contractors.

Second and seemingly most obvious is to be an independent contractor there must be a contract, usually well defined and for a set duration. The less defined an agreement is the more likely you are an employee. Also while it is possible to hire "independent contractors" that do not run business contracting their services
(like a DJ company) it is a lot harder to justify their status.

Another thing to note, independent contractors are are subject to self-employment tax, which if I remember right when added to all the other taxes a small business pays (independent contractors ARE small businesses according to the IRS) is almost double the tax rate an employee with a W-2 pays.
So I would advise you to pass on this opportunity.

Lastly here is the IRS website on the subject. If you want to know for sure just fill out a SS-8 form and send it in.

All in all this sounds like a tax evasion play on the part of the club.
Remember the FBI never got anything to stick on Al Capone but the IRS put him away for tax evasion.

Hope this helps
Dover

Edit: I am too slow it seems

 

[Van]

The short answer is it can be.

"Gong", Thanks for playing.

Check the IRS Website Dover Listed. Do you have a contractors License ? Are you Bonded ? Do you carry your own Workmans Comp? Did you set your hours ? Did you use your own tools ? If you answered "No" to any of those questions then you are not, in fact, an IC. < With a VERY few Minor exceptions>

 

[len]

I won't comment on the legality of it, but it seems like BS to me. Hanging a fixture or running a board takes the same amount of effort, skill, etc. for 1 ticket sold or 100. It's not your fault that the crowd doesn't show. If I were you I'd move on at the earliest opportunity. Even working in fast food you would probably make more money. It would certainly be more stable. Then go donate some time to a theater or church or something if you want to keep your hand in.

 

[JChenault]

The short answer is it can be.

"Gong", Thanks for playing.

Check the IRS Website Dover Listed. Do you have a contractors License ? Are you Bonded ? Do you carry your own Workmans Comp? Did you set your hours ? Did you use your own tools ? If you answered "No" to any of those questions then you are not, in fact, an IC. < With a VERY few Minor exceptions>

Van
Where did you see comments re "Contractors license, Bonding, Workmanship comp, Tools,". My understanding of the definition does not include these. When I have worked as an IC, I have not been bonded, carry workmanship comp, etc


To the OP it sounds legal to me. As the owner of the club I am contracting with the actors to put on a show my audience will like. I am contracting with the technicians to provide technical support for the show. The requirement to be there for rehearsals may be questionable, but if you we're not there how could you know enough to provide technical support?

Now whether or not this is a contract that I would take, probably not at this point in my life. At other points it might have been a good deal

 

[cmckeeman]

Training

If the business provides the worker with training on how to do the job, this indicates that the business wants the job done in a particular way. This is strong evidence that the worker is an employee.

check

Degree of Instruction means that the more detailed the instructions, the more control the business exercises over the worker. More detailed instructions indicate that the worker is an employee.

check

If you hire a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that the intent was to create an employer-employee relationship.

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If a worker provides services that are a key aspect of the business, it is more likely that the business will have the right to direct and control his or her activities. For example, if a law firm hires an attorney, it is likely that it will present the attorney’s work as its own and would have the right to control or direct that work. This would indicate an employer-employee relationship.

check

The more i look into it the more i think that i was an employee than an IC

 

[erosing]

The more i look into it the more i think that i was an employee than an IC

Most likely you were, actually qualifying to be an IC isn't easy as I'm sure you've noticed. Another thing to look at is your state tax info for the definitions of an IC. Lastly, get a CPA even if its just to help answer some of your questions at first, it'll cost you some but it'll CYA if nothing else. Find out who the local big designers are using or not using.

 

[bishopthomas]

You are, without a doubt, not considered an independent contractor by the government and the club could get in a lot of trouble. A sound company I sometimes work with (as an IC) has been audited twice in his life by the state labor department. The first time it cost him his house. He beat most of it the second time and only had to pay (I believe) about $100 in back social security on one person.

Beyond the W2/1099 issues.... Why the hell would you want to work somewhere like that? If you're an IC then you set your wages, that's one of the big stipulations of it. Working for the door? What are you, some low life musician?

 

[SteveB]

The short answer is it can be.


Where did you see comments re "Contractors license, Bonding, Workmanship comp, Tools,". My understanding of the definition does not include these. When I have worked as an IC, I have not been bonded, carry workmanship comp, etc

l

This right off the IRS website:

An employee is generally subject to the business’s instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.
When and where to do the work.
What tools or equipment to use.
What workers to hire or to assist with the work.
Where to purchase supplies and services.
What work must be performed by a specified individual.
What order or sequence to follow when performing the work.

Independent Contractor (Self-Employed) or Employee?

 

[museav]

I just don't see that working out, all the cast and crew doing things their own way so I have a hard time believing they are all truly independent contractors.

My projects can have an Architect, multiple Engineers and Consultants, a General Contractor and multiple Contractors, maybe a Construction Manager, perhaps a Commissioning Agent, etc. that may all be Independent Contractors yet the buildings get designed and built. Being an Independent Contractor does not mean you just do whatever you want whenever you want, which is why it can be a difficult delineation. I think this issue often gets misinterpreted and it seems to be more about how you perform the work, who performs the work and how you allocate your time rather than just defining the work to be performed and the time periods when that work can occur.

Check the IRS Website Dover Listed. Do you have a contractors License ? Are you Bonded ? Do you carry your own Workmans Comp? Did you set your hours ? Did you use your own tools ? If you answered "No" to any of those questions then you are not, in fact, an IC. < With a VERY few Minor exceptions>

I don't believe licensing and binding are relevant and Workers Comp depends on the State requirements, for example here companies with three or fewer employees are not required to address Workers Comp. As I noted above, the time work is performed can be a gray area, I believe that someone agreeing to provide security for a building or site from midnight to 8AM every day could still be an Independent Contractor since defining the time period is part of defining the work result.

As someone recently pointed out to me, with the healthcare reforms coming and the requirements for small businesses to provide an insurance option to employees is causing many small businesses to try to reclassify people as Independent Contractors and thus likely leading to a renewed focus on whether people are actually Independent Contractors.

What I am not clear on in this case is that whether an Independent Contractor or Employee, at some point you must have agreed to certain conditions and compensation or is indentured servitude making a comeback? If you plan to act on this issue in any way I suggest you first consult an expert and discuss your specific situation.

 

[seansbar]

freaked out when i gave a better paying job priority.

This is the key statement. They are expecting you to be an employee. Thus you should be paid as an employee, with a fair wage, and the correct taxes withdrawn.

 

[museav]

they didn't pay enough to get top billing in my time and freaked out when i gave a better paying job priority.

This is the key statement. They are expecting you to be an employee. Thus you should be paid as an employee, with a fair wage, and the correct taxes withdrawn.

But if they had no control over how you allocated your time and you were providing similar services for other parties then that leans toward your not being an employee. That's the other side of this, you can't get the benefits of being an employee and then do whatever you want when it works best for you. If you were my employee and told me you were giving other work priority, not discussed the situation but told me what you were doing, then one way or the other you would no longer be an employee and I'd be happy if you quit.

 

[bishopthomas]

Giving priority to better paying jobs is part of the world of independent contractors. Of course, if you bailed on the gig then that's a different story, but if you declined the gig from the start then they should have understood that that's the way it goes. I used to work with a company as an IC where I should have been an employee. He wanted to get out of the responsibilities of hiring people as employees but he also wanted the benefits of having someone as a full time employee. So when I had gigs booked with other people he took it personally and got upset. But that's the way the freelance world works, you can't have it both ways.

 

[gbirdsall]

I have worked several comdy clubs here in the LA area and have never herd of house techs being ICs.

I am always an employee, fed state and ss pulled from every check. I did get tipped out from the resturant in the venue and payed extra for every butt I put in a seat comp or not.

It sounds to me like he is trying to skate around the costs of employing someone.