Independent contractor vs. film crew vs. employee - not sure which one
I've got a question regarding how video production crew contracts work, and how that relates to hiring a previous employee as a freelancer.
I manage a small in-house production department at a liberal arts college. Everyone in the department is an employee of the school. Recently, one of our previous employees offered to come back and assist with a few projects as a freelancer, or independent contractor. I have too much work to go around as it is, so I eagerly grabbed at the chance and passed it up the chain to Admin. They approved, and we started negotiating the contract/hire process.
This is where things have jammed. Due to the nature of the work, the folks upstairs aren't so sure we can hire him as an independent contractor because he'll be functioning exactly as he used to when he was an employee: using our equipment and collaborating with the team under my supervision. I've got him slated for some pre-production, DP'ing a few shoots, and starting a rough edit.
Apparently the IRS cares deeply about the details when it comes to folks either hiring on as employees or acting as independent contractors (not my wheelhouse), so the guys upstairs have thrown up flags since contractors apparently are supposed to provide their own equipment, and this guy will be using our cameras, lighting equipment, as well as editing on our systems.
So, my question is: how does this work in the "film production" world? Everyone on a crew (non-union) works from gig to gig, right? They're not required by law to furnish their own equipment, are they?
Where do I go to figure out how the film contract world works and how I can (or IF I can) apply it to our situation? I'm wondering if the guys upstairs are looking at laws for, say, construction contractors, and are completely oblivious to video production contracting laws. I'm searching the internet but haven't been able to find the answers to my questions yet.
Any help is appreciated. Thanks!
I'm not a lawyer but have been through this a zillion times, as a freelancer and as the producer who hires. First, it will help, and ask the admin people if this makes them happy, if he is incorporated, has his own Workers Comp policy and a history of being an independent contractor. Then they may be OK with you hiring him as such.
However, if your organization (or he) were to be audited, if he is using your equipment, you told him what his hours that day were, you supervised his work product, he received any overtime, (and there's about 9 other criteria) then the I.R.S would classify him as an employee and ding you for the taxes plus a fine.
This has been a problem in the biz for a long time, it's often the state's revenue department redefining freelancers because they need the taxes and then they report it to the I.R.S. If you do a search on this forum I'm sure it will come up.
Idea: Ask the admin folks- if he were to sign an IC Agreement, would that make them happy? That may give them cover. I have filmed for colleges and universities with no problem but I am incorporated and signed Work For Hire and IC Agreements.
All what Ned said, exactly right.
As for "They're not required by law to furnish their own equipment, are they?"...
Well, ignoring the "by law" part which is irrelevant... as to whether they do or not, it just depends. Often freelancers are hired just as a warm body. Just as often though, in our industry a freelancer may come with equipment. A freelance editor may work out of someone else's post facility, or they may work at home on their own system. A DP might be hired as a freelancer, along with his camera gear. A gaffer sometimes comes with lighting. Very often when you hire a sound guy, they come with sound gear (this is probably the most common scenario). It just depends on who you hire and what is needed.
Fantastic Plastic Entertainment, Inc.
Here is the I.R.S. definition, as found at: https://www.oregon.gov/ODA/shared/Documents/Publications/NaturalResources/2...
• Provision of tools and materials. Workers who perform most of their work using company-provided equipment, tools, and materials are more likely to be considered employees. Work largely done using independently obtained supplies or tools supports an independent contractor finding.
My understanding for this is many unscrupulous industries, such as carpet installation, limousine driving, etc. would fire everyone en masse and then hire them back as "independent contractors", just to avoid paying taxes, half the SS and benefits. So this rule is one of the acid tests to see if they were really on their own or should be considered an employee. Dukakis actually started it and cash strapped states, like my broke Land of Lincoln here, are desperate for funds, so they poke around certain industries to reclassify workers. On the positive side they also help workers who are being abused and should be treated as employees. The way our industry has responded is to use payroll companies to provide the fig leaf of not being the Employer of Record.
The stories I have heard regarding this issue is not about many audits uncovering unethical classifications, rather, when a "freelancer" gets seriously injured on a shoot, where big hospital expenses are incurred, and tort lawyers get involved, then this classification becomes very, very important. The lawyers will go for whomever has the deepest pockets (your college), and can be considered the Employer of Record. So if your college doesn't do it kosher, and something bad happens, then they will be on the hook, which is probably why they pushed back on your wanting to hire a former employee as freelance. Doesn't pass the smell test if a light fell off the grid onto his head. Besides expensive injuries, when a freelancer hurts a location, such as setting the curtains on fire (I've done that!) or chipping the marble staircase (I've done that too!) that's when your admin people would have preferred he was an IC with his own insurance!
Can you beat it by hiring him thru a temp agency? Then he can handle the equipment, unlike someone on "consultant" status.
[Ned Miller] "you told him what his hours that day were"
I'm also NOT a lawyer. (Jeez, how many times has THAT been said on this forum?) But my understanding has been that the real biggy in separating an IC from an employeeis whether or not you set the times and places where the work is to be done. If you say "before the 25th I need you to DP and provide a rough cut" then -- I BELIEVE -- it's much easier to make the argument that this person is NOT an employee.
I also whole heartedly agree with the IC having insurance. Insurance always seems expensive until you need it. Then it seems to be a bargain.
What we've done is paid him as an employee...he's probably still in the system, would now be considered part time so no benefits etc and we negotiate a fair staff hourly rate.
Tilt Media Inc.
Video Production, Post, Studio Sound Stage
here is a simple answer, that you can tell your freelancer (who is probably a kid that has no money, and can't afford anything) -
"if you are not a company or corporation in the state that you are in, and do not have an EIN #, and cannot fill in a W9 with a company or corporation EIN #, then you are an employee. I don't care if I hire you to clean out my garbage pails.
If you have not filed and pay taxes (even if they are zero) with the state of (whatever state you are in), then you are
an employee, and will suffer the financial consequences of being an employee (and I will have to match your social security contribution with every pay check).
There is nothing worse than trying to explain to some kid that is making $100 for the day, that taxes will be taken out of his paycheck, making his $100 into $66 dollars, because he has not filed for company status with the state.
If you do not follow these rules, you will (one day ) be screwed, as countless companies have.
Let me tell you a story of ignorance (my ignorance). I provide labor - and I am a corporation (C corporation). But I do not charge sales tax (I do NOW !). If I worked for you, and you needed an XLR audio connector, it cost me $3.00, and I bill you $3.00, and it's a "wash" - I make zero profit on it, and you pay me the three bucks, and we are even.
NOT ACCORDING TO THE STATE SALES TAX ADMINSTRATION !!!!
I worked for a massive corporation that had a line by line audit, and they wanted to see my sales tax information.
What sales tax information - I don't sell anything other than my labor, and I pay quarterly. I don't sell anything.
FAIL !!!!!! -- I now owed 15 years of delinquent sales tax, so I was lucky to be able to file for "sales tax amnesty" in the state of Florida, and only owed the past 3 years of sales tax (that I made ZERO profit on), with penalty of course, because I did not pay sales tax for the measly cable and connectors that I supplied to customers (just like you).
If you do not FOLLOW THE RULES you get punished. That's why (not to get political) when the police pull you over, you say "yes sir officer", and not "I don't charge any profit on my cable and connectors so go screw off, because I don't owe you any damn taxes".
If your idiot kid does not have a formal company or corporation with the state, HE IS AN EMPLOYEE. I don't care if he is a freelance plumber, and your toilet is overflowing. It's YOUR TOILET, and you own the toilet, and if he fixes your toilet, you better pay his disability insurance, and his employers contribution to social security, or you are in BIG trouble.
Rescue 1, Inc.
[Nick Ryan] "Recently, one of our previous employees offered to come back and assist with a few projects as a freelancer, or independent contractor. "
Just to add to what's already been said, why not hire him as freelance employee (basic a temp employ that works on a project by project basis)? In my experience this is how the majority of gigs work in LA (at least on the post production side).
It's often difficult to determine which classification to use. The IRS view is that most crew members, actors, and others working on a film production should be classified as employees, not independent contractors and that taxes should thus be withheld.