Contractor vs. Employee: What Every Producer Should Know

We originally wanted to title this piece "Contractor vs. Employee: Dawn of Justice." But friends advised that it would confuse the readers, making them think we were reviewing the Batman/Superman film. 

Advice appreciated. Because the issue of whether to hire production crew as independent contractors or employees is so much bigger than the fate of Metropolis. 

This is about money and liability (which is also money). 

A LITTLE BACKGROUND

Twenty-five years ago the issue was much more simple. In the Portland market, if you were working on a project that wasn't a major film or TV show, you were most likely working as an independent contractor. Your insurance, your withholding, even what you reported as wages were up to you. 

This wasn't a problem with the law, which basically defaulted to the independent contractor status. You wouldn't hire a house cleaner or a handyman as an employee, so it didn't make sense to hire a grip as one. 

At the time union production jobs--where your FICA, insurance, overtime, and pension contributions were taken care of--were much more rare. Portland was occasionally getting a movie-of-the-week and even more rarely a feature film. But for the most part, unless you worked for a TV station, you were an independent. 

Additionally, budgets were typically tight and hard costs were higher. We were still shooting on film (with processing, transfer, and color correction), and editing at production facilities where an hour of post could cost the same as three day's pay for a PA. 

Clients also needed to allocate money for duplication, distribution, and expensive media buys. 

Under those conditions, many productions simply wouldn't have happened unless the crew was hired as contractors. Nobody was getting rich, but lots of people were working. 

WHAT'S DIFFERENT NOW

Today, it's much more common for crew to be hired as employees. 

Portland is now home to three series: Grimm, Portlandia, and The Librarians. (Soon to be four if we can get TLC to bite on Urban Squirreling With Bryndan McNew.) These are produced with union crews. 

On the commercial end, at Cine Rent West we're seeing national clients travel to Portland for production because of the great creative agencies and other talent we have here. 

So competition for good crew members has increased. 

But that's not what's pushing producers to more often hire crew as employees. That's been largely driven by two changes that have originated outside the production world. 

The first is liability. 

Now more than ever, people are considering the risk of getting sued. It used to be that your first thought after going down a flight of stairs on roller skates was, "I hope I'm OK." Now it's, "I hope I can get punitive damages." It must be a great time to be a lawyer. 

But you don't have to lose a court case to go bankrupt. Simply responding to a suit is hugely expensive. So it's wise to avoid it if at all possible. 

By hiring a crew member as an employee, you get the protection of workman's comp insurance. If he or she gets injured on the set, it's not a total disaster. 

The second is labor law. 

It's getting tougher to hire someone as an independent contractor even if they want you to. Have you ever looked at the various guidelines to determine if a crew member can be treated as an independent contractor? 

Here are the ones for the State of Oregon. And here are the Federal ones.

Cliff Notes version: If you have to show up at a location at a specified time, use equipment that's provided for you, and do work that's supervised, you are probably supposed to be an employee. 

WHY WOULD YOU WANT TO BE AN INDEPENDENT, ANYWAY? 

It's obvious why a producer would want to hire his or her crew as contractors. It's cheaper. You don't have to pay a payroll service, cough up half of the self employment tax, or provide unemployment insurance. 

But despite these advantages, some people still prefer to be hired as independents. 

For example, Portand-based producer and OMPA board member David Cress, whose credits include Portlandia and Gus Van Sant's Restless. 

Cress says that he prefers the cash flow control that comes with being treated as an independent contractor. Sony, which hired him as executive producer for Restless, would have preferred to treat him as an employee. But because Cress operates as an LLC and carries his own liability insurance, they were willing to treat him as an independent. 

He says that there's really no difference in his creative standing. As an independent he still has to sign non-compete and non-disclosure agreements. 

But Cress strongly recommends that producers treat their crew as employees. A payroll service can take care of the taxes, insurance, and legality. And writing one check to them is actual easier than paying a bunch of different individuals. 

"It protects everybody," he says. "If a guy working on your set picks up something heavy and hurts his back and can't work for three months, he's got no choice but to come after you." 

In this scenario, if the injured crewman met the conditions of being an employee, there's a good chance you'd be found liable. 

WORTH THE RISK? 

Every time you hire a crew as independent contractors, you're taking a calculated risk that can come back not just to you but to the client who hired you to do the job. Liability always follows the money. 

As clients become more aware of their possible liability they're going to start requiring everyone to follow the letter of the law. If you haven't yet, you would be wise to explore what you need to do to hire the crew for your next production as employees. 

It's just the smart thing to do. 

If something were to go wrong, you wouldn't want "Dawn of Justice" to describe the morning you have to show up in court.