Independent Contractor

[BillConnerFASTC]

I'm not sure any law will actually prevent or allw what an employer - or employee - might try to do, but pretty sure a state law will have little impact on federal law.

As a sometime employer these days, I find the federal guidelines to be much more likely to classify a person as an employee than an ic when its not clear. The test to declare a person annic is much tougher and more scrutinized.

But I don't like the AZ law. A stage hand paid hourly working an event is clearly (or rarely) an employee.

 

[SteveB]

Not following this logic Bill.

In a given scenario a promoter rents a hall/theater/arena, hires a performer and an event company to provide staging, lighting and audio according to the rider.

The promoter, in consultation with the event production company, states when certain aspects of the event technical services must be provided (the schedule). The event technical company then hires stagehands either from their own list, or from an IATSTE local, if the union has a contract with either the venue, promoter OR event technical company (or not).

The stagehands report to the venue at the appointed time and according to the schedule established by the promoter, usually expecting X amount of a day's work, for X amount per hour, to be paid via check or cash by the event production company, who in turn bills the promoter. Under some circumstances, the workers may be paid directly by the promoter, rather then the event production company. I have even seen scenarios where the promoter pays the union directly, who then distributes the checks. Paying the Union has sometimes been seen as an attempt by an employer to abdicate their responsibilities under IRS rules, by claiming the union is the employer.

Once the event producer and promoter establishes the work call time, all workers become employees, according to federal law, usually of the event production company. According to the IRS, if the employer retains control of when the worker does the work, that worker is automatically an employee.

The AZ has a caveat in that it states that ALL of certain conditions must be met, not just one. Problem is that the 2nd provision seemingly over-rides the first by simply declaring that all event workers are exempt. That can classify these workers as IC for every other potential interpretation of when and how they might be employees, including under the IRS rules. So bad law.

 

[BillConnerFASTC]

I stated and agree that the stage hands are employees (with a few rare exceptions) and should be entitled to all of those compliance benefits. I don't agree the AZ law change of an AZ drfinition changes what the IRS requires.

 

[ruinexplorer]

Please note that HB2112 is not yet law in AZ. This is still a bill at this point which I do not think has even passed the state Senate, let alone being signed into law. This of course does not invalidate any discussion we have had here. In fact it is extremely important to be aware of bills such as this as they could easily pop up in other states.

 

[ruinexplorer]

And now there's a fight in California over this.
http://www.orangecountyemploymentla...oyment-problems-for-stagehands-in-california/

 

[lwinters630]

Once the event producer and promoter establishes the work call time, all workers become employees, according to federal law

A start time does not create "direction and control". A stage hand may be directed to do things in a specific manor would create an employee relationship to the production company. However, a cleaning person, even though scheduled to start at 11pm, may not be an employee because "cleaning" is not the usual course of business of the production company.
It does get complex.

 

[SteveB]

According to the IRS, there are 4 categories they look at:

• Type of instructions given
• Degree of instruction
• Evaluation systems
• Training

Types of Instructions Given

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."

My thoughts and using the event as in my earlier post:

Under the Type of Instruction, when to work is key to establishing a worker as an employee as the business has removed the ability of an IC to set his/her own work schedule. From what I've read, this is almost the first and most important factor considered. As well, having a union or business making the choice to bring in additional workers takes that control away from an IC functioning as a GC, thus all the workers become employees. Where the work gets done as well establishes an employee, when the IC does not have the ability to say, assemble parts of a rig away from the event sight, or to prepare equipment off site. If the equipment is delivered to an event site by a 3rd party, to be assembled at the event site, the workers hired are employees, not having the freedoms assumed by an IC.

There are some clear guidelines by the IRS.

 

[BillConnerFASTC]

Well, aside from the fact that this is about AZ unemployment, not for IRS purposes, I don't think just one criteria of several or many is sufficient. There is a lot of work that is clearly independent contracting that has to be done on a schedule. Starting and stopping times are just one consideration of the control of the means and methods. This from the IRS:


Common Law Rules

Facts that provide evidence of the degree of control and independence fall into three categories:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.
The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

Don't like - they have a form:
https://www.irs.gov/pub/irs-pdf/fss8.pdf

 

[BillConnerFASTC]

Consider I hire a string quartet to play at a party at my house. I show the were to set up and tell them what time to start and finish, might even tell them what piece or kind of music I'd like. They are a group and sign a contract with me to do this. There is no question that from my position, these are independent contractors. Now if one person is the leader and hires the others, the rest of them might not be independent contractors, but no concern of mine.* They might, conversely, all be partners in the group and just agree to split the contract amount, before or after paying expenses - I don't know or care.

Those same musicians get a call from the hall to play for a touring show at the road house the next night, I'm pretty sure they'd be employees, and entitled to the benefits.

The distinction for the IRS has always been nuanced as far as I can tell for many situations.

*If they are employees of a contractor working for me, I should ask for a certificate of insurance that indicates they have the proper insurance, including workers comp if in fact they are W-2 employees, else I'm on teh hook if they are injured.

 

[ruinexplorer]

I was hoping to get some conversation going, specifically in regard to HB2112 in Arizona.

For those of you interested in politics, here's a link to the proceedings on HB2112 in Arizona.

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There are eight videos in all.

It passed. We'll see how this plays out.

 

[ruinexplorer]

Update: 2112 had gone back after these videos and then ended up being tabled (sine die). However, 2114 was passed setting up a requirement for declaration of independent contractor status. https://legiscan.com/AZ/text/HB2114/2016

Both of these bills came about after the governor made this executive order: http://azgovernor.gov/governor/news/2016/01/governors-council-sharing-economy