Crew Members And Performers: Contractors Or Employees?

S

seunosewa

Well-known member
Hello,

According to some web articles, the basic rule that distinguishes a contractor and an employee is that you can tell a contractor what to do but not how to do it.

Considering the fact that every video or film production has a director and a producer who are artistically and logistically in control of every detail of the entire work, does it mean that actors and crew members in video production are necessarily employees?

My thinking was that when you hire a person for less than a month, the person can;t be an employee, but apparently even such a person is seen as a "casual employee" and not a contractor.

What's your take on this? Are all the people on the set employees of the producer and/or director? Because the director has ultimate control over the way the work is done on the set?

(For example, a director doesn't just tell an actress "look good"; he gets to approve the hairstyle and costume she will be wearing. The director can veto the DoP's equipment choices. And the producer can veto the director's choices too.)

What's your take on this? It seems so confusing. I don't want employees.

Thanks.
 
Well, in California they are most certainly employees since you have to buy worker's comp for them.
 
They're employees, no matter what people and other low budget producers might tell you. You don't need to rely on web articles, read the IRS statements about this. If you tell somebody where they have to be, when they have to be there, when they can leave and are in control of their actions while they're doing their work, they're employees. And that describes almost every single person on a film set, both cast and crew. Plain and simple.

The only exception I've seen was a special effects/prop guy who was commissioned to create a bunch of stuff. He was paid a flat amount of money, worked on his own time, with his own tools, in his own shop, under his own schedule and did things the way he wanted to. When he was done he returned and handed over the items. His work was that of a contractor and not an employee and you can tell by how the work was done. What you might find ironic about this story is that he was treated and paid as an employee. Why? Because it was a real full budget professional production of the kind that don't **** around with trying to bend the rules. Everybody was hired as an employee, even if they could have made the argument otherwise.
 
seunosewa said:
How I wish the answer wasn't so straightforward.
Click to expand...

LOL Sorry. I'm telling you, if you want to debate one answer over the other, I'm absolutely sure you can find people who will tell you that they're contractors. This debate has gone on in the independent film world for years and years and I'm sure that there are first, second and third time independent filmmakers who will insist that the crew they hire are not employees. But they're wrong :)

Blaine said:
Here's and interesting magazine article on it. Not film actors, but still actors and the same rules apply.
Click to expand...

That link's not working for me. I'll search around that site if you know the name of the article.
 
Something to note from that article so nobody gets the wrong idea. At one point the article says "Each actor signs a contract stipulating that they are in fact contract labor".

A lot of people think that if you can just get a crew member to agree to be an independent contractor or if you have them sign a deal memo that calls them an independent contractor, then you're home free. This is completely incorrect. The IRS is absolutely clear that the determination has NOTHING to do with what anybody wants to be called. The determination has EVERYTHING to do with how they do their work.
 
Sure, they're employees, but you won't find many indie filmmakers whatsoever who will pay them as employees. It's too difficult to do for small productions, and nobody really cares. My UPM for my last music video said the same thing, everyone does this at the low budget, nobody he knows has ever gotten caught and he's been in the business a long time.

The main reason I don't care is because there's not much of a penalty anyway as long as everyone is getting minimum wage, and since I've never paid someone below minimum wage they have no reason to complain. What are they going to do, complain that I paid them in full rather than withholding taxes? Of course not, so that means somehow the government would have to find time to investigate every little indie filmmaker who pays their buddies to help on their film or whatever. It's never going to happen.

There's the law, then there's enforceable laws. It may be the law in some states that people can't talk on the cell phone and drive until they're 21, but that's completely unenforceable because officers can't tell by looking at anyone whether they are 19, 20, 21, 23, etc.

Same goes for this argument. Yes, California does consider them employees, and yes, that means you should have payroll services take care of their pay and withhold the taxes, etc. But how are you going to do that on every shoot that comes together in a week or two? It's often impossible to manage.

Also, the line is significantly blurred for some positions, which is something that above you wouldn't have understood because a few people here think that a few classifications as an employee makes them so. That's wrong. If you hire a grip with a big grip truck and they bring all of their equipment to your shoot, they are already on the line of being an independent contractor. It's a silly, silly idea that because you asked them to show up at 10 a.m. that automatically makes them an employee. That's like saying if you call a plumber with his own business and ask if he can please be there before 4 p.m. because your toilet is running that he just became your employee. No, he didn't. That has little to do with him being an employee at all. Owning your own equipment and bringing them to a shoot actually already gives you a good argument for being an independent contractor. Editors would also often be independent contractors on indie projects. I don't think my editor would qualify at all, because I own the equipment and I told him when to show up and when to leave each day, etc., but if he owned his own equipment and I said, "Yeah we're shooting for having this short edited within 3 weeks," then he's going to let me know what days he wants to work so I can stop by for the editing sessions, at his place, on his computer. That's clearly an independent contractor.

As I said, I'm not indicating that everyone who brings any tools to your shoot is automatically a contractor, I'm only saying that it's a strong argument that if they're bringing a lot of tools and have one rate, they are more likely to argue they are independent contractors and if they think they are, and you think they are, frankly it doesn't matter what the government thinks because they'll never figure it out anyway. That contractor is accustomed to paying his own taxes, then, and you are reporting what you paid him (hopefully, if you're honest), so everything is taken care of. The IRS has better things to do than worry about that.

Another reason I said the time issue isn't the only one to consider, or even one of the more important, is because a director is definitely not an employee. A director is an independent contractor. Even if he has to show up at 8 a.m. and stay until 8 p.m., and has none of his own tools, that's irrelevant, he has significant creative say / jurisdiction of the work that is being done and is hired based on a fee, not an hourly wage, and if you're paid on a percentage fee, which is often the case, you are not an employee.
 
JonathanLB said:
The main reason I don't care is because there's not much of a penalty anyway as long as everyone is getting minimum wage, and since I've never paid someone below minimum wage they have no reason to complain. What are they going to do, complain that I paid them in full rather than withholding taxes? Of course not,
Click to expand...

Are you serious? They have plenty of reason to complain, and all those reasons are dollars. They're not making more money by you treating them as independent contractors, they're getting less. They have to pay self-employment taxes which are basically taxes that you, the employer, would otherwise pay.

Just because they may walk off the set with more money in their pockets doesn't mean they're ending up with more. They're ending up with less. The independent contractor status financially benefits the production more than the worker.

so that means somehow the government would have to find time to investigate every little indie filmmaker who pays their buddies to help on their film or whatever. It's never going to happen.
Click to expand...

Wrong again. Sure, if you're hiring your buddies, then nobody cares. If you're paying people under the table, then nobody cares. If you don't bother 1099ing people, then nobody cares. But if you're paying people a decent daily, weekly or even run of show rate on an independent feature, the loss of money for the worker can be significant if they are treated as an independent contractor.

And you can bet your ass that the government can find out. It's really easy and just takes the employee filling out the right forms. Back when I had to deal with unscrupulous or misguided producers, I had to fill out IRS tax form 4852. That lets the IRS know who the employer was and that they didn't withhold federal, ss, medicare. Yes I then have to pay MY part of those, but being an employee means that you don't ALSO have to pay the 7+% portion that is the employers responsibility. I believe there's another form letting the IRS know that you were misclassified by the employer, but I don't remember the number.

in California they are most certainly employees since you have to buy worker's comp for them.
Click to expand...

Yes, California does consider them employees, and yes, that means you should have payroll services take care of their pay and withhold the taxes, etc. But how are you going to do that on every shoot that comes together in a week or two? It's often impossible to manage.
Click to expand...

You seem to think that these things are determined by the States. This isn't something that California determines, this is federal tax code. This is the IRS and they don't really care if you think it's too hard to find a payroll company or an accountant.

If you hire a grip with a big grip truck and they bring all of their equipment to your shoot, they are already on the line of being an independent contractor. It's a silly, silly idea that because you asked them to show up at 10 a.m. that automatically makes them an employee. That's like saying if you call a plumber with his own business and ask if he can please be there before 4 p.m. because your toilet is running that he just became your employee.
Click to expand...

That's a ridiculous comparison. Scheduling a time that a plumber might show up at your house is nothing like hiring a grip for a film.

If you tell that plumber that he has to be at your house at 8am every day for 4 weeks, will work 12-hour days, will only have lunch at the 6-hour point along with everybody else, only has 30 minutes and then has to get back to work, will work 6-day weeks and only have days off that are determined by you, that he has to move from one pipe to another pipe whenever the AD tells him to, has to change things and follow instructions from a DP and you think he's an independent contractor, you're dreaming.



Of course not everybody follows the law. There are all kinds of people desperate for work, all kinds of sleazy producers trying to save a buck, all kinds of people who never even mention all of their income on their taxes, and some people who don't even know that they're paying more in self-employment taxes than they would pay if they were employees, but don't pretend that they're independent contractors. The odds are probably with you on not getting caught, but the question isn't "will I get audited?" the question asked is about what their legal status is and the answer is that they are employees. And don't fool yourself into thinking that the IRS will never find out if you treat them otherwise. There are reasons that productions spend money on payroll companies and are willing to pay the extra in taxes for employees.
 
Last edited:
Right, yet more unreality. It's nice you're all gung-ho about this issue, but I can tell you that nobody in Los Angeles worries about this. As I said the last UPM I worked with has done numerous small productions, up to feature films, and almost everyone does this same thing, not to say it's "right," but it's way too much of a pain for indie filmmakers who are barely stringing together a budget to notify a payroll company before a shoot in enough time to have the payroll company prepare checks for the shoot. And every employee I've worked with would be pissed if I paid them their day rate minus withholding for taxes, because they would act like I didn't pay them what I owed. So you're wrong about that, whether they know it or not, that's what people want. They want the cash now that they agreed upon. This is the way EVERYONE conducts business. I'm sorry the IRS has such silly tax codes that make someone who works for you for a day or two an "employee," because it makes no sense whatsoever, to anyone, but that's exactly why it's disregarded by smaller production companies and individuals. There's simply no way that the little guys can do business if we all had to use payroll companies for small shoots that are under-the-radar as it is.

Frankly, the whole way it's setup not only with taxes but with doing legitimate business in the film industry in general is made for you to be a slave, unless you break the rules and take the risks. If you want to play by all of the rules, first of all you need annual production insurance (otherwise you'll get completely ripped off), which is something I paid for, and it's not cheap for a little guy to afford that. Then you need to setup a corporation, whether it's an S-Corp or an LLC, and that costs a lot of money (we did that) or takes a lot of time, if you can figure it out yourself, but then you're taking risks that you did something wrong. Then you're expected to have a film permit for anything in Los Angeles that is going to run you a minimum of $700, and they say you need a filming permit for EVERY time you film, even if it's in your own home, which is the most absurd thing I've ever heard and completely unenforceable. In fact the constitutionality of that needs to be challenged. How a private organization, or the government at all, can say that you need to get a permit to film on private property is a complete violation of your constitutional rights and your rights as a private citizen. But that's what they claim. Now you need to get a payroll company to pay everyone as an employee, which takes 10 times longer than just writing them a check. Of course, they know this, that's why they do it. Every single little element is setup so that you, the little guy, are completely over your head if you want to do business. They want to make it so hard to do business as a little guy, so stressful, and so expensive, ultimately, that you decide, "Screw it, I guess I'll just go be a grip or a PA on that new Warner Bros. shoot." That's what they want because who pays the big bucks? The big studios. I'm not saying the studios are behind some conspiracy to make it tougher on the little guys, but I am saying that's exactly what in fact happens. While $700 is nothing for NBC to shell out to film a tiny pick-up scene somewhere in downtown L.A., because it's just an insignificant portion of their budget, for someone like me $700 is a large portion of even a pretty decent budget. It's definitely going to be 5-10% of my budget, if not more.

I shot a music video in Yucca Valley, CA, for about $3,000 that if filmed by the book, including paying union wages, would have cost almost $20,000. Yet wouldn't have looked or been any better at all. We filmed on open desert, which was technically the property of the Bureau of Land Management or whatever, and so we really should have had a permit to film there. Furthermore, we should have told our insurance company that, oh by the way, we'll be filming with fire about 10-15 feet behind the performers, oh and the lead singer is going to stand on a burned-out old car that's actually on fire, just for a few minutes, don't worry about it. So that's probably an extra, oh, couple thousand dollars in risk insurance there. So screwed by the government, screwed by the insurance company. Now, of course, we'd need probably minimum of one fire truck, two fire safety officers, each reaming us for $75-85/hr, about four times what they're worth for sitting there doing nothing, and we may need to pay a police officer (off duty) about the same rate to be there with us because it's a potentially dangerous area, or we'd need some sort of BLM employee there, etc.

So the options you are facing are either don't make your music video, because you now cannot afford to pay for it, so you should sit home alone and lament about how unfair the laws are, until you eventually decide to just go be a PA or a grip on someone else's shoot, or you say screw the rules, I'm going to make this music video, we're going to take our chances that we don't get caught, and we'll do it our way.

Now, I filmed my last music video totally legit, full insurance coverage, permit from the city, paid location, all of that. But it wasn't cheap and I don't regret doing the first guerilla style. The big guys ultimately leave you no choice.

So do I care about the miniscule risk of the IRS saying oh by the way you mis-categorized this person? No, not really. When I get the money for a project that's substantial enough to do everything by the book, I'll certainly do it that way. But until then, I'll do whatever it takes to make it, because I'm not going to take the bigger risk of not making it anywhere because I'm so paralyzed by silly rules. If that's the path you want to take, go ahead.
 
Last edited:
"Take the time to set up an S-Corp. It costs $500.00. Take the time to hire a payroll company. It costs $100.00 a month to run payroll. And, if you think this is no big deal consider this:"

First, we run an S-Corporation. It can cost $500, or it can cost $5,000 if you have a partner and get lawyers involved. It depends what the situation is.

Second, $100/month for payroll is a lot of money to a small company, especially for no real benefit. Most people on indie projects don't want to be paid that way anyway, end of story. If you're doing projects with little guys, they want to be paid right there on the shoot, which isn't possible through payroll, at all, they want their $100 or $150 on the shoot day, at day's end. Everyone does it this way.

I am not saying that any time "everyone" does something it makes it right, I'm just saying there's a reason for it. It makes sense and saves everyone time. It's a ridiculous tax code anyway. If I owe you $200, I should pay you $200, none of this BS deducted from the check. It's just absurd.

You can do things however you want. I'll do them that way on my feature, and for really big projects, not for little stuff. It's like saying you should get a permit to film in your house because Film L.A. says that's the law for filming in L.A. No, it's not, because it's not enforceable and nobody cares. Nuff said.

I never said that I don't care about the law or want to exploit it, I just said that most small projects are never paid that way because it's too much hassle. Do you think students shooting short films, ANY students, EVER, ANYWHERE, IN THE HISTORY OF THE WORLD, have paid their employees through a payroll company? What world are you living in? Nobody does that, and nobody cares either. That crap is for major corporations with serious income to report, not for little guys who can't even afford to do that. Nobody pays for their shorts that way, or their reel in the real world. I've never heard of even one person being so stupid as to get a payroll company to do their short film. It's just laughable. You sound like the kind of person who has no idea how to operate in the real world because you're so concerned that you have to park exactly 6 inches from the curb that you pull out a ruler and measure it and keep going until you get it perfect, because some idiot with a 95 IQ made up this rule. Whatever, you can live by what rules you choose to, I'll live by what makes sense in the real world where people actually live.

Let me guess, you're the type of person who is going to send in sales tax on items you bought on eBay? LOL. That's such a stupid idea it's hilarious. The worst that can happen is some day down the road they ask for sales tax plus interest because they catch you. If that happens, you still win, because you inevitably made more money on that saved money than their interest charges. So you really can't lose. Not to mention that if you think it's ethical in any way that an item already bought and paid for, which has already had sales tax paid on it, should have to be paid TWICE for sales tax because a second person bought it, you really have to be a complete tool and slave to society. And I can't respect someone like that or their advice. So if you AREN'T the kind of person who is so concerned with the law that you'd do something that stupid, you know what I mean, and you know that you can't follow every ridiculous law that is passed just because some tool in office somewhere found another way to cheat you out of money that YOU deserve. It's not their money. It's yours.
 
Last edited:
Prodigi Pictures said:
Man...if the IRS ever stumbles across this page...
Click to expand...

I think the difference between you and JonathanB is that he doesn't give his full name or info. You Prodigi have. So yes you've kinda put yourself out there, while J-B hasn't.

Aliases are great for the Internet because no one knows who you are. :Drogar-BigGrin(DBG)

And for everybody else - we're just reading. So everybody but you, who spoke about this can claim, "I didn't know"
 
Hmm, I'm pretty sure JonathanB's first name is Jonathan and his surname starts with B. :) I don't think you can practice filmmaking as an anonymous person, anyway.
 
You must log in or register to reply here.
Back
Top