Who Are You Booking?

  • In the eyes of the IRS your crew member might not be considered an independent contractor (IC), but rather your employee. To help you determine the proper classification, consider these categories provided by the IRS.

Behavioral

Does the company control or have the right to control what the worker does and how the worker does his or her job?

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.)

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?

Things are getting trickier as individual states are starting to govern what they define as an Independent Contractor and who should be an Employee, and the Production Industry has taken notice. 

Always get things in writing before booking. Make sure you have a clear understanding of your terms for hiring before work is performed. 

Employee

Required to comply with when, where, and how to work

Works exclusively for the employer

Hired by the employer

Subject to dismissal, can quit at will

Has a continuing relationship with the employer

Does all work personally

Performs services under the company’s name

Paid a salary, reimbursed for expenses & fringe benefits (W-2 for taxes)

Is furnished tools, equipment, materials and training

Independent Contractor

Sets own hours, determines own sequence of work.

Can work for multiple clients; his or her services are contracted by job

Self-employed

A contract governs when the relationship ends

Works by the job, by contract

Permitted to employ assistants

Performs services under their own business name

Payment by the job by Invoice (1099 for self-employment taxes)

Furnishes own tools, equipment, and training

Risky Business: The New Rules

The states of CA, MA and NJ recently enacted the “ABC Test” to determine whether an employer can legally classify a worker as an independent contractor. Considering that most below the line positions would not pass this test, it is important to ensure that you know where your production stands.

Under the ABC test, a worker is only an independent contractor if they MEET ALL THREE PARTS of the test.

1. The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact.

2. The worker performs work that is outside the usual course of the hiring entity's business.

3. The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.

The second factor of this ABC test means you can’t hire someone to perform similar duties to that of your employee and expect them to be classified as an independent contractor. This greatly limits the types of workers you can hire as independent contractors.

If business owners are not able to prove that a worker meets ALL three prongs of this test, the worker is classified as an employee.