Question about crew contract agreement

[Bob K]

Mirror, in my case I'm most often not an employee of the production company, I'm an independent contractor.  I have a day rate that includes gear.  So, that may or may not be significant here.  Just want to be clear about it.

[Jan McL]

Radio mics are not much in your care or control since they're on the actors. Neither are time code slates. Neither is the gear controlled by you when at lunch under firewatch, nor when on a long-form narrative stored on a truck or in transit via aircraft to New Guinea.

 

Your first assignment is to lock your labor half in the basement, put on your businessman hat and figure out how to keep gear rate separate from labor rate, both in your thinking and in the thinking of your clients.

 

It's a leap, but everyone who's anyone other than a guy who wields a DP's bag of shit-gear has made that leap, survived and is the better for it.

 

If your bag falls off that cart the PA's pushing and creams someone's head, that COI with liability's gonna come in handy. Contractor or not. At the beginning of every show, I write the APOC with cc's to POC, UPM and production secretary attaching my equipment inventory saying:

 

"Attached is ______, LLC's Equipment Inventory for purposes of issuance of Certificate of Insurance. Certificate Holder should read _______, LLC, ___ Entrepreneur Street, Detroit, MI. Thanks! XOXOX -- Jan"

 

Note the attitude: that this is SOP.

 

I have one line item that is misc connectors, cables, adapters that I raise from time to time. 

 

Country of manufacture is for international travel. Google 'carnet'.

[Jan McL]

And by the way, if and when you draw a line through that responsibility for gear paragraph, initial at the beginning and end of every cross-out.

[Bob K]

Thanks for those insights Jan.  One line for "misc connectors ..." is helpful.  Also, the initials by the cross-outs on the contract.  I get the carnet.  So far I've only traveled to Canada by car, and didn't need one. 

 

I checked out your very nice website.  Love your "Sounds Good" directors chairs.  Hope you L.A. mixers realize that some of us out here are carrying bag kits with portable mixers and wirelesses, and booming at the same time.  I'm almost always the whole sound department,  Run-and-gun.  There's no PA pushing my cart.  I do appreciate all the good reasons that companies/clients should be responsible for equipment loss and damage.  Working on my inventory. 

[RPSharman]

Search for some threads about lumping gear and labor together. It's not technically legal to work as a 1099 independent contractor for the work we do. By "including" gear in your rate, you're not allowing the conversation about your "rental" being covered by insurance.

It's time to separate your labor and gear, and it's time to make sure every production covers you and your gear with proper insurance.

And yes, lawyers will say your gear is old and won't pay full replacement cost, that is why your inventory should include current models and replacement "cost" not "value". Keep the word "value" out of it.

You ought to have your own "contract" if you've been at this for over 20 years.

[mikewest]

Well covered Jan!

 

Yes those things out of our hands are a critical issue.

 

With my waterproof Lectros I state clearly they must be covered by the production insurance

as they are possibly put in high risk situations.

 

I remember leaving Tonga and looking out of the aircraft window only to see all my gear

on the ground outside the small terminal!!

 

Regards

 

mike

[Christopher Mills]

Elaborating on loan out.. I don't mean as an IC.. I mean as an LLC to process your employee labor checks..

You are in  fact an employee, by IRS standards.. But you are also an entity that books labor. making that an LLC can (ask your CPA) help you in this industry.

[Mirror]

Mirror, in my case I'm most often not an employee of the production company, I'm an independent contractor.  I have a day rate that includes gear.  So, that may or may not be significant here.  Just want to be clear about it.

 

You are not an independent contractor.  You do not meet the criteria of an independent contractor.  The IRS does not look at you as an independent contractor.

 

It's weird that you are fighting us on this point.  It's like battered women syndrome: you hate being treated like crap yet you go back to the same abusers time after time because you are comfortable in the part of the abusee because you know how to play that role.  

[Bob K]

RP, thanks.  I see the need to separate the gear rental from my labor.  Actually, I'm doing that on this upcoming reality gig because they asked for it.  Using replacement cost on the inventory, rather than amount paid and date of purchase, is interesting too.  So far, I've been compiling dates and amounts paid.  Have you had any objections to that when you've had equipment losses?  As to independent contractors being "not technically legal," I have no idea what you mean.

mikewest, I once put my gear on a plane to North Dakota which I was not on.  Delta Airlines had made a mistake on the excess baggage charge, and a ticket agent corrected it by canceling and then rebooking my flight.  Only problem, she rebooked me on the next flight 12 hours later and when I got to the gate I was not allowed to board.  Delta then claimed they no longer knew where my bags were because "I had canceled" the flight.  I drove 8 hours through the night to get to that gig.  Fortunately, the cameraman picked up my gear in ND.

Christopher and Mirror, I wasn't aware I was fighting you about being an independent contractor.  I just thought you were jumping to a conclusion that wasn't accurate.  I do meet the IRS standards for 1099 independent contractor.  My long-time tax accountant says so too.  I also have some clients that pay me as an employee, mainly TV news networks.  But why would you think I'm an employee of a client that flys in and hires me for a day, and then flys back to NY, D.C. or London and pays my invoice?  I may not see these folks again for a year or 10 years, if ever.      
 

[studiomprd]

several folks: " All require proof of insurance, "

that just means that "they" have insurance; you need a COI issued to you (rental company)

 

bobK: " how do you calculate insurance cost if the client won't provide it?  "

by getting insurance and invoicing the production for it...

" does every last connector, cable and gizmo go on the inventory you send to clients, or do you draw a line somewhere?  "

I get that you are resisting this; deal with it.

(admittedly, many of us group similar items)

 

" she said she'd never heard of a client providing a COI.  The only calls she gets are from people like me needing a COI to present to clients who insist on it.  "

that is an oxymoron...

it just depends on who the agent's clients are!

 

" Maybe I'm still wrong, but it does seem there's a difference between me and a rental house "

yes, you are still wrong...

When I provide equipment, I'm the only one handling and using it.

nope...not true (just for one example, you put it on the actor...) you even admit it!

  I don't want make-up, wardrobe and PAs removing my body mics and transmitters, for example.  If there's a wardrobe change, I take the mic off.  (Though some don't cooperate.)

see 

I wouldn't want more of that because the production company is insuring my gear. "

deal with it,-- although it is rarely a problem.

mirror: " It doesn't matter that you are the only one that touches the gear. " (which never really happens)

It doesn't matter that you prefer to be the only one that touches the gear. Jan has given you some excellent insight and advice, as has Robert Sharman...

 

bobK: " I'm most often not an employee of the production company, I'm an independent contractor.  I have a day rate that includes gear. " then you may be putting yourself, and your insurance company, at the risks (as in that standard statement I mentioned before)  also you are adding to your tax liabilities, and you and the company hiring you are at risks.

make certain your insurance properly covers you as a business, not an individual, home owner or home renter. among the coverage you need is workmans comp insurance. 

" As to independent contractors being "not technically legal," I have no idea what you mean. "sounds to me like your business practices may have some issues...you need to get some clue, possibly from a CPA or other qualified tax adviser. I see you say you have a CPA... " why would you think I'm an employee of a client that flys in and hires me for a day, and then flys back to NY, D.C. or London and pays my invoice? " it isn't me think, or even you think,  it is IRS thinks, and a lot of other labor laws fall in step behind that one.

sure, many of us have been paid via an invoice, and there are also many who have later paid with consequences, thus many of the usual production companies refuse to pay for labor on invoices...

so for you, the solution is two (or more) line items on your invoice, and the first one is your "services" (aka labor) with any equipment rentals specified separately, even if as a package.

[Bob K]

Mike, on the equipment insurance issue, I have business insurance covering both liability and property, and I pay an annual premium for it.  You say if clients don't provide a COI, I shoud "get insurance and invoice the production for it."  I already have the insurance.  (Unless you mean I should get another policy specifically for the 2-day reality shoot I have coming up, and no one would sell me a 2-day policy.)  The question is, how much to invoice for two days of coverage.

 

You guys have convinced me I AM a rental house, and you make some good points about that.  So, I checked our local equipment rental company and they require insurance to rent gear.  They want "General Liability coverage and Property Coverage (all risk & replacement cost) that names (rental company) as an additional insured and loss payee."  And, if you don't provide that, they charge an "Uninsured Fee of 12% of the rental total."  That's not much.  In my case, I break out gear rental as $100/day.  So, I would add $12/day to my invoice?  $24 total for the upcoming 2-day shoot?  And, I still have a $250 deductible.  That doesn't make much sense to me.  Clearly a COI would be ideal, but I've never seen one and I don't think my colleagues here have either.  At least not on day jobs.  Maybe for full shows.  Thinking about it more, I might lose a lot of work if I required a COI for every day job.  

 

Now thinking I may ask about a COI, make sure the company knows they are responsible, then be sure to cross out the NOT (and initial) in the "production company is not responsible" clause, and add NO charge for my insurance.  This gets more complicated every time I think about it.  Does anyone get COIs for 1 or 2-day jobs?

 

On the contractor issue, I'm sure the IRS is fine with it.  I pay taxes on business income.  Never been an issue with the IRS.  Also, many labor laws are state laws, and of course they are different in each state.  Some production companies have hired me and insisted I fill out documents to become an employee.  Fine.  But, I had a 1-day job last year that required two more days just to get through the employment process.  On the other hand, I like being employed by news networks.  It's ongoing work, the paychecks come quickly and the rates are good.  But, they still require me to provide gear.  And, if all my work was as an employee I wouldn't be able to take business expense deductions on the cost of new equipment.  So, there are pluses and minuses. 

[Max Hirtenstein]

$100/day gear rental? i guess this thread won't be ending soon

 

(and yes I get a COI for almost every job, even 1 day gigs)

[Constantin]

And if you want to know the least amount to charge a production company for insurance, just divide your current premium you are paying by 365 and then multiply it by the amount of days you're being hired for.

[Bob K]

Constantin, $632/365 = $1.73.  And $1.73 x 2 days = $3.46.  I like the rental house rate of 12% better.

 

But, this exercise does make me think how affordable it must be for production companies to carry this insurance, and cover all their equipment rentals.

[Mirror]

Here is a link to how the IRS determines if one is an independent contractor or not.

 

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

 

This comes from the link:

 

"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. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.

If you are an independent contractor, you are self-employed. To find out what your tax obligations are, visit the Self-Employed Tax Center.

You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed."

 

It seems to me that your clients DO tell you "what will be done and how it will be done" thus making you an employee and not an independent contractor.

[Bob K]

Mirror, that's exactly correct.  We went through it in great detail here in MN about 20 years ago.  The IRS learned that large production companies were hiring the same crew people essentially every week, and paying them as independent contractors.  The IRS wanted to know if they should be employees.  There were only a couple dozen people so effected, but it brought hundreds more of us into question.  The production companies hired legal talent and months later the lawyers for both sides came up with a list of specific rules to determine who is, and who is not, an employee in this industry.  Not sure if those rules apply nationwide, but they probably do.

 

It was so long ago now, I don't remember what happened to those every-week crew people who were working for just one company.  I do know that those of us who work for mutiple clients, own equipment, and have a day rate rather than an hourly wage or salary, are independent contractors.  Later, the state of MN incorporated the rules into state law.  See them here:https://www.revisor.mn.gov/rules/?id=5224.0340

 

You shouldn't read too much into the "legal right to control" language on the IRS site.  Clients don't tell us how to direct, photograph, light or mix, any more than they tell carpenters, electricians and plumbers how to do home repairs, or doctors how to operate, or lawyers how to litigate.  They know what they would like in the end, but they rely on professionals to get them there.  As to my tax obligations, I've had the same tax guy for decades.  He knows all.

[Mirror]

Interesting...

[Christopher Mills]

Bob,

I know that regional IRS offices can and do rule in different ways.  But, as was pointed out above, if you are an IC, and it is approved by the IRS, you are paying a much higher tax in the form of the self employment tax.

If you don't mind this, and your regional IRS office has ruled it acceptable, then fine...  In my region, we are advised that we are  employees, because we are told what to deliver, and where to report, and when.

[studiomprd]

bobK: " Does anyone get COIs for 1 or 2-day jobs? "

yes!

" So, I would add $12/day to my invoice?  $24 total for the upcoming 2-day shoot? "

if you want to...

[Bob K]

UPDATE.  Thanks to all the help and good advice from you guys, I drew a line through "is not" in the "Producer is not liable for loss or damage" clause, replaced those words with "is," and initialed the change.  I noted the change in the accompanying email, and said "I'm sure you know you are liable for equipment loss or damage, and you must have insurance to cover that."  The producer replied the change was "fine."  The next day I received a COI.

 

The policy has a $70,000 limit, more than enough, but a $750 deductible.  (I never thought of that.)  Interestingly it also contains this language: "Lease or Rental Payment Fees: Limit - $0, Deductable - 72 hours.  72 hour deductible starts from when the claim is reported."  I have no idea what a "72 hour deductible is."  Any thoughts?

[Jan McL]

The production eats the deductible IME. Dunno about your other question.

[studiomprd]

bobK: " I have no idea what a "72 hour deductible is."  Any thoughts? "

yes, this is the 72 hour clause that is discussed in another recent thread about equipment insurance

 

BTW, I was thinking about this thread, and want to emphasize that while we like to think we are special, and unique --and this is OK-- in the big bad real world we are neither;  it is quite usual for contractors to be required to provide not only their tools but also insurance, bonding, and a lot of other requirements.

[Bob K]

Day 1 of the reality shoot went OK.  Everybody got a COI, thanks to you all!  Thanks Jan, that's a reasurance.  And, while I'm bound by a NDA to not say anything specific, yes the gear was at extra risk.

 

Christopher, I'm sure you mean the FICA tax (15.3%).  Employers pay half of it for their employees (7.65%).  So, yes, if you're self employed you pay all 15.3%.  But regarding income tax, the tax rates are the same for wages and business income.  And as I mentioned earlier, independent contractors get a break on income tax beacuse we only pay tax on profits (income minus expenses).  So we deduct the cost of equipment purchases, repairs, supplies, insurance, advertising, etc.

 

Mike, you're right.  There are many types of contractors, and many conventions as to how they operate.  I'm glad to know that in our industry the producer provides the insurance.  Oh, and I believe the 72-hr deductable is acturally more insurance coverage, and extra protection should a catastrophic loss put me out of business for more than 72 hours.

[Philip Perkins]

The 72 hour thing is a recent add to the equipment insurance biz, which basically says that the insurance company will not help you with any replacement gear for the first 72 hrs after the loss.  This means that if you are on a job the rental costs for gear to cover the first 3 days after your stuff is gone or busted is on either you or the prod. co, not the insurance company.  I was not able to find reasonably priced insurance that did not have this clause when looking for new coverage this year.

 

Re independent contractor or no, in CA the state (as well as the IRS) very much wants people like us to be employees.  This is not because they want to protect you, it's because they want their payroll deduction money NOW, not when you pay your taxes.  In CA they often threaten companies who they think could be payrolling/treating workers as employees for this reason.

 

philp

[Jan McL]

Thanks for the report. Good, except for the risk part. Yuk. The very idea makes my teeth clench.

 

While we're on the subject, doing my first show as a loan-out, which -- for the uninitiated and my own deeper knowledge I type gently and naively -- means that all gear rental and labor (less union dues) is paid without further deduction to my LLC. Have to figure out a red-flagless wage to pay myself so that the FICA is minimized.

 

As I finally take the time to think this through, realize the LLC may have to do something bureaucratic relative to its new employee, but what? Guess since it's the first time I've done, it will be OK if I wind up owing some state or another income tax...

 

Guess I'll use this post as a talking points memo for that phone call with the accountant.