Earlier this year, the State of New York’s Unemployment Insurance Appeal Board (UIAB) issued a decision regarding an IC who had filed for benefits as an employee. The Assistant Production Manager (APM) of the New Year’s Eve ball drop at Times Square had been considered an IC by the production company. The production company agreed to provide services for the New Year’s Eve ball drop at Times Square for an alliance of area building and business owners. The APM was recruited by a manager who worked for the production company as an employee.
The written agreement defined the APM as an “independent contractor” engaged to provide “administrative and production management services as required.” She was expected to devote her full business time and attention for approximately one month prior to the New Year’s event. The APM was required to personally provide “such consulting services at such time or times and at such place or places as reasonably required.” The written agreement stated reasonable expenses would be reimbursed and that the production company retained the intellectual property rights to the individual’s work product.
- The individual performed “various administrative and production management tasks regarding the event” as required by the production company
- The individual also oversaw a team of production assistants
- The group operated out of a trailer and used materials and supplies furnished by the production company and/or the alliance of business owners
- The individual was paid 50 percent of the payment owed on or about December 5th (at the inception of the work) and the second and final installment on or about January 8th (after the completion)
- The individual received a 1099
After the event closed, the APM filed a claim for unemployment benefits and stated that:
- She was not in business for herself
- She had been recruited for the position by the production company
- She had been instructed as to when, where and how the work was to be performed
- She was required to report to a supervisor on a regular basis
- She was required to work an established work schedule, to submit reports on her activities, and to have her work inspected and/or reviewed
The New York UIAB’s final decision stated: “We conclude that the production company is the employer and exercised and/or reserved the right to exercise sufficient supervision, direction and/or control over the claimant and others similarly situated to establish an employment relationship.” This decision held the production company liable for employee and payroll taxes on wages paid to the Assistant Production Manager of the New Year’s Eve Ball Drop at Times Square. The decision also held other “similarly situated” workers (the production assistants) to be employees.
I invite you to begin 2013 free of misclassifications. Something to think about while watching the ball drop this year…
Happy New Year!
Disclaimer: Given the general nature and context of this article, the material presented should not be relied upon or construed as either tax or legal advice. For specific information on recent developments, the effects of particular factual situations or of a particular law in regards to your business, or before making decisions based upon this presentation, you should obtain the opinion of a qualified expert.