What forms do your freelancers provide to you?
I have a new policy to get w-9s from freelancers BEFORE we do the job and not even wait till I'm about to cut a check let alone wait till the end of the year.
Now another items has come up. My insurance company is reviewing my liability policy and says that I must get copies of my freelancer's general liability policies and they may not cover damages incurred by a contractor. I'm waiting for specific wording on this, but do you require your subs to provide you with a copy of their general liability policy?
About 6 months ago our HR department, on advice from the company attorneys, mandated that we no longer use freelances unless they come through an employment agency. The general understanding was it was going to simplify payroll (1 check to the agency instead of a bunch of checks to everyone) and to help insulate the company against insurance issues. So far, none of the freelancers we use have had any problems with it. After reading your post, I think I now understand a little better why they wanted us to do that.
[Ron Gerber] "we no longer use freelances unless they come through an employment agency."
Wow... that's interesting.
I'm not sure what makes a freelancer any different from any other vendor. I personally have never ever hired a freelancer through an employment agency, and probably would be reticent to do so. All of the freelancers in our area (at least the ones that I work with) are well-established pros who work on their own without third-party representation.
Personally, I know these guys work hard and I would rather see all of what we pay them wind up in their pockets rather than some pencil pushers taking a cut.
I'm sure size matters... with a tiny company like mine (no such thing as HR, and speak to the "company attorney" maybe once a month) it is much easier.
Fantastic Plastic Entertainment, Inc.
I think what they were looking at that made freelancers different than other vendors was that the vendors actually had a business license or tax id number of some sort. In the past there had been some problems with the timeliness of paying freelancers and who was in charge of tracking down checks and invoices. There was a local agency that deals in production employment so they handle a majority of the bookkeeping (including all the taxes and paperwork).
Of course we had to raise our pay rate to compensate for the agency fee and a few of our freelancers weren't happy about the agency taking taxes out of their checks.
The other issue that was brought up was liability, basically the "freelancers" are employees of the agency and we are hiring the agency not the "freelancers" so if anything bad happens, they don't work for us.
I'm not sure how true that could be but that's the way it was presented to me. It's a long way around to do something very simple and it costs more but that's the way the bosses want it done.
I should also add that if any of our freelancers had their own business or tax id number, they didn't have to go through the agency.
Woah man! This is getting more complex the more I ask. Here's what sparked all of this: I had a worker's compensation insurance audit mid-2007 requesting the wages (and classifications) for employees and that of independent contractors. Also needed to provide proof via W-9s that these individuals were indeed contractors. That kept my workers comp policy in balance. I am told that I should also have a copy of each contractors General Liability Policy in my file too. So, for any freelancers who don't go thru an agency, do you have printed confirmation of a liability policy?
Being rich has nothing to do with wealth.
I'm not sure if we have any confirmation of liability. For our freelancers, if they are not going through the agency that we are using, they must have their own business - for example if I am hiring Joe as a grip, he has a business license and is doing business as Joe's Grip, Inc. and invoices us as the business or as any vendor would. They would be treated the same as the guy we buy tape stock from or the guy who fixes the AC when it breaks. I'm not sure what paperwork we are requiring from them to set them up as vendors. I think it was just and I-9.
Of course all of this started last year right after we had an audit.
There are three things in play for freelancers (at least here in Wisconsin where a pretty significant crackdown is underway).
The W-9 establishes that the freelancer has registered with the state as a business entity and is paying taxes on their income.
A certificate that shows a current workman's comp policy will make certain that you aren't going to have to pay for their workman's comp in the case of an audit. I was audited and had to track down a lot of workman's comp forms. If a freelancer is owner of an S-Corp and they have opted out of workman's comp, that works too, if you/they can prove it.
Liability insurance is the real tricky one. Mostly in the case of a claim where a freelancer knocked over a lamp that caused a major fire in a hospital MRI lab and it destroyed all the equipment. (Guess you won't be calling THAT guy back).
If you are the production company of record and that freelancer was NOT listed as an insured on your certificate of liability insurance that you provided to the client, AND the freelancer does not have his/her own liability policy, then your company will not be able to make a claim for the insurance. Could be lights out.
This is different than workman's comp, which the state requires that every employee has.
You can roll into your liability policy any freelancers you use, but they must be listed on the certificate of insurance for that particular job, and your premiums will be higher.
A better option is to have your freelancer talk to your liability insurance agent and get a $1,000,000 policy for themselves for about $500 a year. This is a VERY GOOD idea and will be good advice.
One company here in Wisconsin provides a list of things the freelancer (or even a staff member of another production company) must provide in order to work with them. One of the keys to get cooperation is to play nice, explain why the state requires these things, and why in this business it is a good idea to have insurance. Especially when equipment is so expensive and many things can go wrong when a crew is on the set with wires running all over the place. Especially small accidents that will become workman's comp claims.
One thing we do with workman's comp is this...workman's comp is based on the annual salary of the employees. I estimate high....maybe $10,000 over a best guess. This way, even if we are audited, (we were) they will look at the premium we were paying and discover that it covered the salaries of even the non insured freelancers (or those who we could not get a form from). In my audit we were high enough over that I got a $9 refund check after the audit because I paid in too much....apparently $9 too much.
Get a good agent who can roll together your office/equipment insurance, workman's comp, liability, and vehicle policies. If they can do all that, they will be an excellent resource when the auditor comes around, or when a claim is being filed against your company. I only found one company in our little town who could handle all this, but they do it well and I have peace of mind that I am insured.
For about $4000 a year!
Like in any insurance claim, the lawyers always go back to the original contract and certificate of liability insurance that was issued for the job. The contract is an important place to put any language (or if your client issues the contract to make sure the language is there) to protect you against any wrongful liability claims.
Your insurance agent should look over any contract that is written up for a big shoot to be sure it doesn't set your company up for any big claims against you. Most of the time with big direct clients like hospitals or phone companies or the like, they provide the contract. many times it states that they will NOT be liable for any accidents to the crew etc on the set for the shoot. Just be sure you have proof of coverage for your freelancers, or make sure you add them to your policy for that shoot so you are covered. Again, this is going to raise your premiums, and you will essentially be paying liability insurance for your freelancer, but your company will be safe.