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djimofon

paperwork, paperwork

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Hello to all of you.

I'm somewhat new here, although I've been reading some of the information and opinions shared on this site for about a year now.

I've been working as a recordist for indie films, regional commercials, corporate shoots and PSA's for about 6 years now (in the New England area), slowly building up my experience and a solid, repeat client base. This past week I was contacted to work on a project for 3 days in January, as part of a health care video. I exchanged emails with my initial contact person and then we spoke over the phone and all seemed well. I inquired about paperwork formalities and he told me he'd check with the HR person, but that he thought they would only require a W9 and possibly a standard form contract. The following day I was contacted by the HR person who forwarded the necessary paperwork, which I filled out, but hadn't yet sent. A day or two later both he and she contacted me to inform me of some changes in their company's contractor policies which were required by the state of Connecticut and the Federal government. Two of the stipulations were that I needed to have a business license and a $1,000,000 general liability insurance. I informed them that I had neither of these things and had never worked on a shoot where they were required.

The HR person initially told me that they would skirt these policies this one time, as I may or may not be covered under this new law. She said that the state was forcing these businesses to require this info from contractors as a "back door" maneuver to catch people that were not paying for health insurance, etc. Since I might only be doing a few shoots a year for them, potentially, it would still be way under the 500 hours that the state was trying to keep an eye out on.

 

Another day later, I received another email from this HR person with 2 more contracts and a statement saying that I would indeed need to meet these above requirements afterall and fill out additional paperwork.

 

Obviously, I'm running a business, albeit a very small freelancing one, and I'm aware that I need to follow local, State and Federal laws, but has anyone else encountered this and if so, what advice could you recommend? For one small job, and for not that much money, it seems like a hassle. Insurance of any sort gives me the willies, but considering my investment, it's probably high time I look into it. Does anyone have any suggestions? At least for my gear.

 

Thanks in advance.

Djim Reynolds

 

By the way, I didn't mention it but I'm based in the Boston area.

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I have never been asked to fill out paperwork like that. There are thousands of people like you and me who own small businesses that wouldn't meet the criteria of a $1M liability insurance policy.

I have an S - Corp with a EIN number and a business license. I submit W9s with this info to employers all the time. Producers send proof of insurance to me, not the other way around.

If you are the sole employee of your business, your business is not required to provide health insurance for you. I think you have to have over 30 employees for that to be the case. As an individual, you must have health insurance by Jan.1, unless they push that deadline if a certain website still doesn't work. The IRS will be the ones that verify you have bought health insurance, by matching up your S.S.# with the rolls submitted to them by insurance companies. So I don't quite understand why they are looking at businesses as small as ours to verify ACA compliance.

I am not a lawyer, and I work out of TN, so there could be laws in your state that I know nothing about. I think that the requirements that are being asked of you would prohibit me and all of the freelancers I know from working that job.

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Thanks for the input so far.

From my dialog with the HR person, it sounds like they are new to this game as well and are looking to follow the letter of the laws in their state (CT) and according to her, that the state is looking to the employers of contractors to basically police who they hire for them and should they discover people that are either not paying taxes, health insurance or other insurances, and are not licensed to do business in the state, then they will come down on the employer and then upon the contractor. Mind you, Connecticut is also the insurance capital of the country, so it's not surprising that they would implement a tactic like that to spur their businesses along, but this company is hiring me to work in my own state of Massachusetts, not in Connecticut.

 

I already have health insurance, so I'm not concerned about that (being in Mass., we're required to have it anyway). It sounds more like the employer is concerned that someone higher up is going to come sniffing around their business and they don't want to start off on the wrong foot.

 

I'm going to discuss it further with her on Friday and see where things stand. When I spoke with her yesterday, she said submit the W9 and the first signed contract and submit my invoice after the shoot, which is my standard practice. I have a feeling that she probably started talking with someone within her company, or their lawyer and they just want to cover themselves.

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People have all kinds of weird interpretations of this kind of thing, and many large companies use an outside payrolling etc service now that has all kinds of forms you have to fill out on their website just as though you were starting a permanent position with the company with benes etc..  I gave up on arguing with them about what they really needed and the fact that we were usually talking about a one-day job--just do what they want if you can, and tell them that if the insurance policy etc crap is a deal breaker then you are sorry.  Some people will just move on, some will see that what they are doing isn't a good fit for the situation and find a way to hire you anyway.

 

philp

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You could politely say you'd still like to work with them, but you'll need to pass along the extra costs associated with doing so. The business license perhaps you could just pay for yourself (I'm assuming it's maybe a couple hundred bucks as they are here). But for the insurance, tell them you'll have to tack on the cost of the liability premium to your contract. Doing so, of course, means you may lose the gig. But for a short job, eating the cost of insurance will of course hurt your profits. Note that ime, one year of liability coverage doesn't cost much more than one week's worth of coverage.

 

But also consider that if indeed the state is cracking down on people avoiding taxes, insurance, and the like…then the state (well, the IRS) may question if the company should classify you as an employee of the company for the duration of the project. Background info:

 

Preserving Your Status as an Independent Contractor Follow these strategies to avoid being reclassified as an employee.

http://www.nolo.com/legal-encyclopedia/preserving-status-independent-contractor-30177.html

 

 

I'm asked about insurance, and am asked/required (in contracts) to indemnify multibillion dollar companies, more often than I was a decade or so ago. Even when I'm not the production company or producer but just a cog in someone else's machine. I negotiate where I can. Sometimes that means I charge more, sometimes that means I don't get the gig. 

 

As for licenses and stuff, I follow the rules as best I can. I know not everyone does that. But I want to do the right thing and I don't want to lose big time if the SHTF…or if I get audited (haven't yet, knock on wood). I own a house, have kids, etc and don't want take a crazy financial hit if something goes wrong. So I suck up the paperwork.

 

I'm mixing issues. Good luck Djim!

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Really, all they need to cover their asses in the event of a labor audit (I know because I had one laid upon me when I ran my own animation production company) is some kind of contract with you, a statement of work clearly identifying you as an inedependent contractor. It's just that simple...

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I think location sound is different from animation. For location sound, you're told when to show up and when to work, for example. And if you don't have a business license, that may play in too (or so an accountant tells me).

 

The IRS says, "The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done."

 

More detail here:

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee

 

But I find the Nolo information easier to understand and follow.

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While I think that each technician should be free to pursue the profession as they wish, my sense is that this discussion is running the wrong direction. Nearly all of the discussion has been oriented towards confirming status as an independent contractor and I think the OP should go the other direction and take pains to confirm his identity as an employee.

 

One of the reasons that states place ever more restrictive requirements on contractor work is that much of the work accounted that way is really employee labor.

 

The key elements of being an independent contractor have been discussed elsewhere on this site. Included among them are the freedom to set one's own hours, to stop at the contractor store on the way in to pick-up supplies and to leave early on Tuesday to meet with another client. Anytime the client sets call-times and controls the quitting time, the worker is an employee, not a contractor.

 

As an employee, he would have the benefit of Workman's Compensation in the event of an accident. He might also have a civil claim if the accident were the consequence of failure to maintain a safe workplace.

 

Since he provides equipment and rents it to the production, there is also a contractor relationship but that normally applies only to the equipment rental, not the actual work. And, for that enterprise, the contractor ought to have a business license and maintain separate books.

 

The expectation that the "contractor" should have an insurance policy to cover accident liability is pernicious when the worker has no control over where the work is done, no control over the schedule, no control over when to stop work because of weather, no control over pace and no control over what the action is. Providing such insurance gives the production carte blanche to behave recklessly, to pack people into moving cars for shots, to work at unsecured heights, to rent buildings with exposed asbestos for locations and then claim that any bad consequences are the responsibility of the not-so-independent contractors.

 

If they had any interest whatsoever in complying with the law, they would never operate this way. The very act of asking you to obtain this insurance is an act of circumventing the law.

 

David

 

A final thought-

Do you operate a sound recording service where you have several operators working for you? Do you have freedom to change at will who works what assignment? I'm not talking about finding someone to cover you when you happen to book a commercial; I'm referring to deciding, at your own discretion, to send Harry out tomorrow rather than Tom. If that's the case, you may be operating a contractor service. Other restrictions about hours would still apply but there might be some credibility to the contractor relationship.

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One of the first questions I ask a potential client is that they provide me with both an insurance rider for my gear, one for my vehicle (when applicable), and proof of insurance for me as a crew member (regardless of 1099 vs. W2 status)... if they can't provide that, I politely decline.

I'm typically about 50/50 between running things through my sCorp and going the W2 route... my gear is ALWAYS paid through

my sCorp though.

There are as many different "employment classifications" for us nowadays as there are frame rates... bottom line: if you love your career, protect it. Don't assume your clients will have your best interest at heart. If you

have questions, take the time to research and get the right answers -- this is not a rehearsal.

~tt

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Check with the broker that handles your equipment or homeowner's insurance. A $1million general liability policy is pretty standard (I remember first needing one in 1984) and shouldn't cost all that much if it's added on to an existing policy. It's not a bad idea to have anyway in these litigious days.

 

As for the license I really cannot think of what the State of Connecticut would be "licensing" you to do. It's not as if you're an electrician or a plumber. Check this website (http://www.ct-clic.com/TradeLicenses/keywordSearch.asp). I added a bunch of terms and couldn't find anything relating to "sound recording" or "film making". Maybe the company has it wrong in asking you to be licensed.

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Whoa Whoa -

 

With regard to the insurance - THE CLIENT is the one that provides us with production insurance certs, NOT vice-versa. 
I need to be insured by them for their potentially bad arrangements (crew mistakes involving accidents, falling stands, or electricity / generators, for instance), possible lack of security, and damage caused by elements beyond our control - like talent damage to wireless mics.

 

The onus is on the production company, not me......

 

Turn the job down and wish them good luck in finding anyone that meets those requirements.

 

+11  --   something better always comes around.....

 

 

 

MF

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" has anyone else encountered this and if so, what advice could you recommend? "

of course, and follow the laws.

(that second one may be difficult, and or confusing, and state lines make it even worse.)

" THE CLIENT is the one that provides us with production insurance certs, NOT vice-versa. "

While that is typically true for most of us, that is not a universal concept in businesses hiring contractors.

I recently lost a major installation contract for a regular client due to a $1M insurance requirement, and homeowners or renters insurance didn't count!

 One difference is the work was done in the client's state, and so I had to get commercial coverage from my state to cover my interstate business, and provide the huge corporate client a certificate of insurance (covering them in case someone got hurt as a result of my work.

This particular contract went through the corporate office, and though I won the competitive bid, and had done lots of work for the individual locations, corporate attorneys insisted; I was actually given a break as their standard for contractors is $10M general liability minimum...

Business licenses are needed in the state you are doing the businesses in, not the state the company is in, but suffice to say in Djim's case the CN corporation is being a bit extra cautious;  what should happen is Djim  becomes an employee, with a box rental.

Thus the client insures him (Workman's comp, etc) deducts taxes, etc., and covers both their butt and his!

 

This IC stuff is neither going away, nor getting easier, simpler, nor more lax.

The States, and Fed's are looking for more tax collections, and the NSA is reading this!

and there will be more paperwork!

Edited by studiomprd

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In 2011, I had a university client request a 1M Liability policy to do a $10k project. The policy cost me about $350/for a year, I was specified as a "consultant," i.e., one who does not regularly engage in risky physical activities as part of one's work.  Hiscox Insurance Co. Inc.  

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This could be a requirement by the state, so the prodn company can get incentive money. 

 

I've had a couple of producers recently ask me for proof of insurance because Massachusetts required it for their incentives. Even though I'm firmly established as a proprietorship, have an 04- number, report sales tax etc… The statehouse pols probably required it to guarantee that legit Mass. businesses were getting the money, not producer's relatives or out-of-staters.

 

It could be the same in Connecticut.

 

Business insurance isn't expensive, and you want to protect your equipment anyway. You can stack it on your homeowners (or probably renters) policy. So all I had to do was call my insurance agent and ask for a certificate.

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I would the the company's big concern is that the IRS might reclassify you as an employee, not a contractor, and they'd therefore have to pay employment taxes for you. That and their lawyers wanting little contractors to indemnify their company (for no good, or at least no fair, reason) could be behind all this.

 

Anyway, good luck Djim. And let us know what you decide to do and how this all works out.

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" (for no good, or at least no fair, reason) "

that is a one-sided view...

the companies and corporation look at it differently, especially as they have deeper pockets and more to lose.

This is their side of due diligence: they do not want to be stuck for a huge liability because some cheap little contractor (well for sure too cheap to have their own insurance) screws up, and someone gets hurt due to that contractor's neglience, carelessness, sloppiness, cheapness, or omission...

and that is on top of all the government regulations and scrutiny for which they are exposed to significant costs...

out there in the real world, you should have your own insurance, particularly if you want to be an IC.

That is just the way real life works...

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